Regulatory Update: New Regulatory Requirements to Maintain a Register Of Nominee Directors and a Register of Registrable Controllers

With effect from 31 March 2017, all companies, foreign companies and limited liability partnerships (LLPs) will be required to maintain a register of beneficial owners (termed as registrable controllers). Companies will also be required to maintain a register of nominee directors. The registers shall be kept at prescribed places mandated by law and the information therein shall be made available to the Registrar and public agencies upon request.

REGISTER OF NOMINEE DIRECTORS

Who is a Nominee Director?

A director is a nominee if the director is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of any other person.

For example, Mr A is a nominee of Ms B if:

  • Ms B is a shareholder;
  • Ms B appoints Mr A as director; and
  • Mr A acts in accordance with the instructions of Ms B

What must companies do now?

  • Establish a register of nominee directors

KNOWLEDGE

STEP TO BE TAKEN

If the company has been told that an individual is a nominee director

The company must enter into its register the information received from nominee director

If the company has not been told of any individual who is a nominee director

The company must enter into its register the following:
As of [date], the company has not received any information on nominee director of the company

  • Receive information, enter it on the register and keep the register up-to-date

AREA

ACTION

When an individual becomes a nominee director

The nominee director must inform the companywithin 30 daysafter (i) the date of incorporation or (ii) he/she becomes a nominee director

The nominee director must provide the following information of the nominator:

If the nominator is an individual,

  • Full name
  • Aliases, if any
  • Residential address
  • Nationality
  • NRIC or passport number
  • Date of birth
  • Date of becoming a nominee director

If the nominator is a corporation,

  • Company name
  • Company registration number or UEN
  • Registered office address
  • Legal form
  • Jurisdiction or country of incorporation
  • Name of corporate entity registered of the jurisdiction, if any
  • Date of becoming a nominee director

Note: Companies that are incorporated before 31 March 2017 has 60 days from 31 March 2017 to comply

When an individual ceases as a nominee director

The nominee director must inform the companywithin 30 days after he/she ceases as a nominee director

When there is a change in the particulars of the nominator of the nominee director

The nominee directors must inform the company when there is a change in particulars within 30 days after the date of such change

Are there any exemptions?

Only the following locally-incorporated companies are exempted:

  • Companies listed on SGX
  • Companies that are a Singapore financial institution (eg banks)
  • Companies that are 100% owned by the Government
  • Companies that are 100% owned by a statutory body under a public Act for public purpose
  • Companies that are 100% owned subsidiary of the above mentioned only
  • Companies that are listed outside of Singapore

REGISTER OF CONTROLLERS

Who is a registrable controller?

A controller may be an individual or a legal entity who has a significant interest in, or significant control over, a company, a foreign company or a limited liability partnership (herein referred as the “Relevant Entities” and each, the “Relevant Entity”).

By default, all individual controllers are registrable. A controller (A) of a company (X) is registrable unless:

  • controller (A)’s significant interest in / significant control over company X is only through one or more controllers (B) of company X; and
  • B is required to keep a register of controllers or
  • B is one of the exempted entities (see below)

In this situation, company X will enter in its register controller (B) instead of controller (A) as its controller.

What is ‘significant interest’?

For companies (including foreign companies):

with share capital

without share capital

A person has a ‘significant interest’ in a company if that person, directly or indirectly:

(i) Has an interest in more than 25% of the shares in the company; or

(ii) Has an interest in one or more voting shares in the company and the total votes is more than 25% of the total voting power in the company

A person has a ‘significant interest’ in a company if that person, directly or indirectly, has a right to share in more than 25% of the capital or profits of the company


Note: Section 7 of the Companies Act on ‘deemed interest’ must also be taken into consideration. For example, where a legal entity (A) has an interest in a share (eg. 25%) in company X, and –

  • an individual/legal entity (B) is; or
  • the associates of an individual/legal entity; or
  • an individual/legal entity (B) and his/her/its associates

are entitled to exercise or control the exercise of not less than 20% of the voting power in the said legal entity (A), that individual/legal entity (B) is deemed to have an interest in the entire 25% interest held by legal entity (A) in company X, that is, individual/legal entity (B) is a controller of company X.

For LLPs:

A person has a ‘significant interest’ in a LLP if that person, directly or indirectly:

  1. Has a right to share in more than 25% of the capital or profits in the LLP; or
  2. Has a right to share in more than 25% of any surplus assets of a LLP in a winding up

What is ‘significant control’?

For companies (including foreign companies):

  • A person has a ‘significant control’ in a company if that person, directly or indirectly:
  1. Has a right to appoint or remove directors who hold majority of voting rights at meetings of director; or
  2. Has a right to exercise or actually exercises significant influence over the company

For LLPs:

  • A person has a ‘significant control’ in a LLP if that person, directly or indirectly:
  1. Has a right to appoint or remove the manager or majority of the managers of a LLP;
  2. Has a right to appoint or remove person holding a majority of voting rights at management meetings of the LLP;
  3. Has more than 25% of rights to vote on matters to be decided by the LLP’s partners; or
  4. Has a right to exercise or actually exercises significant influence or control over a LLP

What entities are exempted?

Only the following entities are exempted:

Local companies –

  • Companies listed on SGX
  • Companies that are a Singapore financial institution (eg banks)
  • Companies that are 100% owned by the Government
  • Companies that are 100% owned by a statutory body under a public Act for public purpose
  • Companies that are 100% owned subsidiary of the above mentioned only
  • Companies that are listed outside of Singapore

Foreign companies –

  • Foreign companies that are a Singapore financial institution (eg banks)
  • Foreign companies that are 100% subsidiary of a foreign company that is a Singapore financial institution
  • Foreign companies that are listed outside of Singapore

LLPs

  • LLPs that are a Singapore financial institution
  • LLPs which partners are listed on SGX
  • LLPs which partners are a Singapore financial institution
  • LLPs which partners are 100% owned by the Government
  • LLPs which partners are 100% owned by a statutory body under a public Act for a public purpose
  • LLPs which partners are 100% subsidiaries of a company mentioned above
  • LLPs which partners are listed outside of Singapore

What must Relevant Entities do now?

  • Establish their controllers

KNOWLEDGE

STEP TO BE TAKEN

If the Relevant Entity has been told that an individual is a controller of that Relevant Entity

If the Relevant Entity was given that information, and that necessary details, by or on behalf of the controller itself, the Relevant Entity should enter the necessary details on the register.

If the Relevant Entity has reasonable cause to believe that an individual or legal entity is one of its controllers

The Relevant Entity must give that individual or legal entity a notice asking him/her/it to confirm whether he/she/it is a controller and, if he/she/it is, asking that he/she/it confirms or correct the details included in the notice.

The notice must that state that the individual or legal entity must comply within 1 month.

If the Relevant Entity believes that someone else has information about either:

(i) One of the Relevant Entity’s controllers; or

(ii) Another person who may have information about one of the Relevant Entity’s controller

The Relevant Entity must give that individual or legal entity a notice asking him/her/it to confirm whether he/she/it knows of any controller, and to provide the information of the controller.

  • Receive information, enter it on the register and keep the register up-to-date

AREA

ACTION

Obtaining information

The Relevant must ensure that it obtains the following information in respect of each controllerwithin 30 days after incorporation:
If the controller is an individual,

  • Full name
  • Aliases, if any
  • Residential address
  • Nationality
  • NRIC or passport number
  • Date of birth
  • Date of becoming a controller

If the controller is a corporation,

  • Company name
  • Company registration number or UEN
  • Registered office address
  • Legal form
  • Jurisdiction or country of incorporation
  • Name of corporate entity registered of the jurisdiction, if any
  • Date of becoming a controller

Recording information

The Relevant Entity must enter the above information in the register in respect of each controllerwithin 2 business daysafter obtaining the information.
The Relevant Entity should also record the steps that it took to identify its controllers such as the date it sends out the notices and the receipt of replies.

Note: Relevant Entities that are incorporated or registered before 31 March 2017 has 60 days from 31 March 2017 to comply

Updating information

If the Relevant Entity believes that an individual or legal entity has ceased to be a controller, or a controller’s particulars on the register have changes, the Relevant Entity must give notice to that individual or legal entity, seeking confirmation as to whether the change has occurred.

Such notice must be sent at leastannually.

Note: The regulations set out further details in relation to what notice sent by a Relevant Entity must contain as prescribed by law

What are the penalties for non-compliance?

Failure to provide the information required is an offence. The Relevant Entity, and every officer of the Relevant Entity who is in default, shall each be guilty of an offence and shall each be liable on conviction to a fine not exceeding $5,000.

For more details, please refer to the ACRA’s website at https://www.acra.gov.sg/CA_2017/#

Next steps and how we can help you?

With these new regulatory changes, compliance costs and administrative burden will inevitably increase, however these far outweigh the costs of non-compliance in the longer term. We can assist our clients in meeting their new legal obligations, to include:

  • Creating and maintaining a register for each of the companies in each Relevant Entity’s group;
  • Advising Relevant Entities on the steps necessary to obtain the requisite information on its beneficial owners and those of the other companies in its group;
  • Drafting and issuing the statutory notices prescribed by law to be sent to persons who may be known as controllers
  • Issuing reminders of the Relevant Entity’s obligations at agreed intervals; and
  • Preparing the necessary board resolutions to authorise the foregoing actions (if applicable)

If you are a Relevant Entity and wish to discuss your new legal obligations and how we can assist you in complying with them, please contact your usual account manager at Hawksford Singapore, or alternatively, contact us at  support@hawksford.sg or +65 6222 7445.

 

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