The Companies (Amendment) Act was passed in October 2014, making the most extensive changes to the Companies Act since the Act was enacted in 1967. Over 200 amendments were made. The ramifications of the amendments are still being understood.
Among the policy changes:
More companies qualify for audit exemption
The amendments introduced the concept of a “small company” that is exempted from audit. A “small company” is a private company that fulfills at least two of the following three quantitative criteria:
- Total annual revenue of not more than $10 million;
- Total assets of not more than $10 million;
- Number of employees not more than 50.
A company has to qualify as a small company in each of the previous two financial years in order to qualify for audit exemption in a particular financial year. This is expected to benefit 25,000 companies.
CEOs now have a statutory duty to disclose
Before the amendments, only the directors were under a statutory duty to disclose conflicts of interest in transactions and shareholdings in the company and related corporations. With the amendments, the duty of disclosure has been extended to the chief executive officers of companies.
Register of Members not required for private companies
Private companies are no longer required to keep a register of its members. With the legislative amendments, ACRA will be the one maintaining the register of members of private companies in electronic form. Private companies will have to file information concerning share ownership and changes in share ownership with ACRA. The date of filing of the information into the register will be taken as the effective date of, for example the entry of a person as a member of the company.
Alternate address can be shown on public records
With the changes, individuals can use an alternate address at which he can be located, instead of his residential address, for ACRA’s public records.
Send notices and documents electronically
Companies can specify in their constitutional documents the mode of electronic transmission to be used. Hence, notices and documents may be given to members through electronic communications with the consent of members.
Removal of one-share-one-vote restriction for public companies
Public companies can issue shares with different voting rights, subject to companies’ articles. This means that shares with very limited voting rights can be issued (such as voting on a resolution to wind up a company), and this gives public companies greater flexibility in capital-structuring. Whether listed companies can do so will still depend on any changes in the listing rules of the Singapore Stock Exchange.