2024 Corporate Regulatory Updates in Singapore

April 20, 2024
8:36 am

To combat the ever-evolving threats of money laundering and terrorist financing, the Ministry of Finance (MOF) and the Accounting and Corporate Regulatory Authority (ACRA) have introduced significant legislative reforms in Singapore. These changes, encompassing a broad spectrum from mandatory registration to stringent penalties for non-compliance, are designed to solidify Singapore’s position as a transparent and well-regulated financial hub.

For company secretaries, this is a call to action, requiring us to navigate these reforms adeptly and uphold the highest standards of integrity in all corporate dealings. Read on to know more about the key aspects of these legislative updates, their implicationsfor Corporate Service Provider (CSP)s, and best practices for compliance.

Proposal of the new CSP Bill

The MOF and the ACRA are proposing a new bill specifically for CSPs. This legislative move aims to enhance regulatory oversight and increase transparency within the CSP sector.

Mandatory registration: All entities providing corporate services are required to register, regardless of whether they file documents with ACRA BizFile, ensuring comprehensive compliance. This requirement is designed to maintain compliance with both new and existing regulations.
Criminal penalties for compliance failures: Under the new regulations, CSPs and their senior management may face criminal penalties for failing to adhere to anti-money laundering (AML), countering the Financing of Terrorism (CFT), and proliferation financing (PF) regulations. Fines can reach up to S$100,000 for each violation, emphasizing the accountability of senior management in preventing such financial crimes.
Regulations targeting nominee directors: Stricter control and legal requirements are set for nominee directorships to prevent misuse. In particular, outsourced nominee directors must be managed by registered CSPs and meet stringent ‘fit and proper’ criteria. Additionally, the regulations extend to restrictions that limit the number of nominee directorships an individual can hold, which aligns with international benchmarks. Currently, there are no limits to the number of companies a director can be involved in.
Increased transparency and accountability measures: Enhanced disclosure requirements regarding nominee directors and shareholders to ACRA, intended to enhance the transparency and accountability of corporate structures within the sector.

Compliance alert regarding timely and accurate Annual Return submissions

This amendment highlights the legislative efforts to modernise the regulatory framework and promote punctual and precise filing with the ACRA.

ACRA’s proactive measures: To encourage timely submissions, ACRA actively sends email reminders to officeholders to reduce late filings which can incur penalties of up to S$600.
Ease of compliance through digital tools: The use of digital platforms is encouraged for smoother submissions and interactions between businesses and the regulatory authority.
Legal implications of misleading filings: Misleading ACRA in any filings is legally punishable, including fines of up to S$50,000 or imprisonment for up to two years.
Best practices for compliance: Obtaining unanimous approval from all directors and shareholders before filing returns is crucial, and ensuring all submitted documents are accurate and truthful.

Internal controls for compliance: Businesses should implement stringent internal controls, such as thorough verification processes, to maintain the integrity of filings and comply with regulatory requirements.

Digital communications enhancements for businesses

The MOF and the ACRA are proposing updates to the Accounting and Corporate Regulatory Authority Act 2004 and the Companies Act 1967 to streamline Singapore’s corporate governance system.

Introduction of digital communications: Key proposals include transitioning all statutory correspondences and notices to digital mailboxes, facilitating faster and more efficient communication.
Mandatory email updates: New regulations will require all business entities, position holders, shareholders, and members to keep their email addresses updated with ACRA to ensure timely receipt of communications.
Enhanced filing and data accuracy: The amendments propose giving the Registrar of Companies the authority to access specific government databases to improve the accuracy of ACRA’s registers.
Updating directors’ registers: There will be improvements to the directors’ registers to include comprehensive disqualification status details as prescribed by the Companies Act 1967, promoting greater transparency.

Simplification of financial reporting for foreign companies: The legislative changes aim to ease financial reporting requirements for foreign companies, aligning with Singapore’s commitment to creating a business-friendly yet strictly regulated environment.

Changes in the FIMA Bill

The Financial Institutions (Miscellaneous Amendments) (FIMA Bill) is a critical legislative measure introduced to strengthen the regulatory framework managed by the Monetary Authority of Singapore (MAS). It targets amendments to six major legislations, including the Financial Advisers Act 2001, Securities and Futures Act 2001, and Trust Companies Act 2005.

Enhancing investigative powers: A key objective of the Bill is to boost MAS’s investigative capabilities. The Bill proposes standardising and enhancing the procedures for investigations across all MAS-regulated legislations, allowing MAS to perform more effective and thorough inquiries into suspected infractions.
Empowering MAS: The proposed changes grant MAS the authority to compel individuals to participate in examinations and provide statements. It also would permit MAS personnel to enter premises without prior notice, helping prevent the potential destruction of evidence.
Streamlining evidence transfer: The Bill includes provisions to improve the process of transferring evidence between MAS and other law enforcement bodies like the Police and the Public Prosecutor’s office.
Improving regulatory collaboration: By facilitating better coordination between MAS and law enforcement, the Bill aims to improve the efficiency of handling cases that may involve criminal activities, thereby bolstering Singapore’s capacity to address financial crimes and uphold the integrity of its financial system.

Snapshot of recent amendments and their key takeaways

Conclusion

The suite of legislative updates proposed by the MOF and the ACRA marks a significant step forward in strengthening the regulatory framework for CSPin Singapore. By imposing stricter compliance requirements, enhancing penalties for non-compliance, and tightening controls around nominee directors, these changes aim to bolster transparency, accountability, and integrity within the sector. As Singapore continues to refine its corporate governance systems, CSPs and their management teams must adapt to these changes, ensuring they meet the new standards and contribute to a more robust financial environment. These legislative efforts protect the business ecosystem and reinforce Singapore’s reputation as a transparent and well-regulated financial hub. .