Legislation

Financial Advisers (Amendment) Act 2003 (A15/2003)

The Financial Advisers (Amendment) Act 2003 was passed on 2 September 2003, gazetted on 6 October 2003, and comes into operation on 22 December 2003.

The changes to the Financial Advisers Act (‘FAA’) (Cap 110) are primarily technical modifications to clarify the MAS’ administration of the FAA and improve the consistency of requirements between the FAA and SFA.

To implement the changes, the MAS has issued the following regulations and notification:

• Financial Advisers (Amendment No 2) Regulations 2003; and
• Financial Advisers (Appointment of Officers to Exercise Power to Grant Exemption) Notification 2003 (GG 2953/2003).

Securities and Futures (Amendment) Act 2003 (A16/2003)

The Securities and Futures (Amendment) Act 2003 was passed in Parliament on 2 September 2003 and gazetted on 6 October 2003. All the provisions of the Securities and Futures (Amendment) Act 2003 will come into force on 22 December 2003 except for ss 56(e), (g) and (h), which have not come into force yet.

Sections 56(e), (g) and (h) deal with amendments to s 239 of the SFA in relation to invitations to the public by a prescribed corporation to deposit money with or to lend money to the prescribed corporation. Such invitations do not constitute a public offer for subscription or purchase of debentures of the prescribed corporation.

The Securities and Futures (Amendment) Act 2003 makes changes to the prospectus regime in the Securities and Futures Act (‘SFA’) (Cap 289). Most notably, the Securities and Futures (Amendment) Act 2003 introduces a new document, the offer information statement.

To implement the amendments, the Monetary Authority of Singapore (‘MAS’) has issued the following regulations and notification, which will also take effect on 22 December 2003:

• Securities and Futures (Offers of Investments) (Exempt Purchasers) Notification 2003 (S548/2003);
• Securities and Futures (Prescribed Corporations) Notification 2003 (S547/2003);
• Securities and Futures (Offers of Investments) (Shares and Debentures) (Transitional and Savings Provisions) Regulations 2003 (S546/2003);
• Securities and Futures (Offers of Investments) (Collective Investment Schemes) (Transitional and Savings Provisions) Regulations 2003 (S545/2003);
• Securities and Futures (Licensing and Conduct of Business) (Amendment) Regulations 2003 (S543/2003);
• Securities and Futures (Offers of Investments) (Shares and Debentures) (Amendment) Regulations 2003 (S542/2003);
• Securities and Futures (Offers of Investments) (Collective Investment Schemes) (Amendment) Regulations 2003 (S541/2003);
• Securities and Futures (Clearing Facilities) (Amendment) Regulations 2003 (S540/2003);
• Securities and Futures (Exemption from Securities Hawking Prohibition) Regulations 2003 (S539/2003); and
• Securities and Futures (Appointment of Officers to Exercise Power to Grant Exemption) Notification 2003 (GG 2957/2003).

Acts Passed But Not in Force Yet

The following Acts have been passed in Parliament in November 2003. However, the Acts have not been gazetted and have not come into force yet:

• Consumer Protection (Fair Trading) Act 2003;
• Insurance (Amendment) Act 2003;
• Computer Misuse (Amendment) Act 2003;
• Maritime Offences Act 2003;
• Regulation of Imports and Exports (Amendment) Act 2003; and
• Urban Redevelopment Authority (Amendment) Act 2003.

For a summary of the changes to be made pursuant to the above Acts, please refer to the December 2003 issue of The Singapore Law Gazette.

Planning (Amendment) Act 2003

The Planning (Amendment) Act 2003 has been passed in Parliament on 11 November 2003. However, the Act has not been gazetted and has not come into force yet.

Among other things, the Planning Act (Cap 232) will be amended to introduce a new tax, the temporary development levy and to update the definition of the Development Baseline.

Brief highlights are as follows:

• section 3(3) will be amended to provide that the use and operation as two or more separate entities of any building approved for any use specified in the Second Schedule (inserted by clause 18) involves a material change in the use of the building;
• section 35(1) will be amended to provide that development charge will not be payable in respect of development of land authorised by a planning permission or conservation permission which is granted for a specified period of 10 years or less;
• section 36 will be amended to update the definition of the Development Baseline:

It is expected that s 36 will eventually be repealed and re-enacted to further revise the definition of Development Baseline to disregard any development for the land as allocated in:

(a)   the Master Plan approved by the Governor in Council on 5 August 1958; or
(b)   the Master Plan as the result of any alteration or addition made under s 6(1) of the repealed Planning Act prior to 24 April 1982;

• a new s 39A will provide that the Minister for National Development may remit the development charge payable by any person in whole or in part; and
• there will be introduced a new Part VA (consisting of new ss 40A to 40D) relating to the imposition of a temporary development levy. New s 40A provides for the imposition of a new tax (temporary development levy) in respect of the grant of planning permission or conservation permission which is for a specified period of 10 years or less and sets out the basis for determining the temporary development levy.

Income Tax (Amendment) Act 2003

The Income Tax (Amendment) Act 2003 has been passed in Parliament on 11 November 2003. However, the Act has not been gazetted and has not come into force yet.

The Income Tax Act (Cap 134) will be amended to implement the income tax changes announced in the 2003 Budget Statement.

Some of the amendments are as follows:

• section 10C will be amended to provide that contributions made by an employer to an employee’s medisave account in lieu of hospitalisation or outpatient medical benefits, up to $1,500 per year for each employee, shall not be deemed to be income of the employee for that year;
• section 14(1)(f) will be amended to provide that where such contributions are made, a deduction of an amount of up to $1,500 for each employee per calendar year will be allowed to the employer;
• sections 13, 42, 43N and 45 will be amended to extend the period of the debt market incentive scheme to 31 December 2008;
• there will be introduced a partial tax exemption on prescribed amount of interest derived during the period from 1 January 2003 to 31 December 2004 by any individual from deposits of moneys in any standard savings, current or fixed deposit account with any approved bank or licensed finance company in Singapore. There will be a full tax exemption on interest from such savings derived on or after 1 January 2005;
• new ss 13(7A), (7B), (7C) and (7D) will be inserted to provide for tax exemption on foreign-sourced dividends, foreign branch profits (ie gains or profits derived from outside Singapore from any trade or business carried on by a foreign branch of a company resident in Singapore) and foreign-sourced service income received in Singapore on or after 1 June 2003 by persons resident in Singapore, if the following conditions are satisfied:

(a) the foreign-sourced income is subject to tax of a similar character to income tax under the law of the territory outside Singapore from which the income is received;
(b) the highest rate of tax levied on gains or profits from any trade or business carried on by any company in that territory is not less than 15% at the time the foreign-sourced income is received in Singapore; and
(c) the Comptroller of Income Tax is satisfied that the tax exemption will be beneficial to the person resident in Singapore.

• sections 13A 13B, 13E, 13H and 14M will be amended to remove the tax treatment of deeming as interest, any exempt one-tier dividend paid on shares of a preferential nature out of income exempt from tax;
• section 13G(1) will be amended to provide for tax exemption on specified income derived by any foreign trust, or any eligible holding company established for the purposes of a foreign trust, administered by any trust company in Singapore;
• a new s 14P will be introduced to provide for a tax deduction for patenting costs, subject to certain conditions;
• section 35(1) and (1A) will be repealed and re-enacted to clarify that any unutilised capital allowances in respect of one source of income may be deducted against income from other sources before income from all sources is aggregated to form statutory income;
• section 43P is amended to provide for qualifying income of approved global trading companies that meet more stringent criteria to be taxed at a concessionary rate of tax of 5% instead of 10%;
• a new s 43Q is introduced to provide for qualifying income of approved financial sector incentive company to be taxed at a concessionary rate of tax of 5% or 10%;
• section 44 (deduction of tax from dividends) will be amended to clarify that:
  • all companies paying dividends from which tax has been deducted or is deductible shall furnish to each shareholder a dividend certificate;
  • a company may pay both franked dividend and exempt (one-tier) dividend, on the day it exercises the option to move to the one-tier corporate tax system, so long as that company has sufficient s 44A balance for the purposes of paying the franked dividend on that day; but for any dividend paid by any company on any day after the day it has exercised the option, the company shall not be entitled to pay franked dividend and if it does so, it shall not be entitled to utilise its s 44A balance for payment of the franked dividend;
  • any company which has exercised the option to move to the one-tier corporate tax system is not allowed to carry forward its s 44A balance for the purposes of paying franked dividend;
  • any company which has exercised the option to move to the one-tier corporate tax system is not allowed to utilise its s 44A balance for payment of franked dividend any more; and
  • all companies paying dividends from which tax has been deducted or is deductible shall submit to the Comptroller a s 44 statement under s 44(8);
• section 45 will be amended to extend the due date of payment of tax deducted from interest, from the current 10 days to the 15th day of the month following the date the interest becomes liable to be paid to a non-resident;
• section 50A will be amended to allow tax credit unilaterally in respect of foreign tax payable on:
  • income derived from any professional, consultancy and other services rendered in any territory outside Singapore and the income need not be foreign-sourced; and
  • royalty derived from territory outside Singapore, subject to certain conditions;
• section 96 will be amended and a new s 96A will be introduced to provide for heavier punishment for serious fraudulent tax evasion.

Central Provident Fund (Amendment) Act 2003

The Central Provident Fund (Amendment) Act 2003 has been passed in Parliament on 11 November 2003. However, the Act has not been gazetted and has not come into force yet.

Section 24 of the Central Provident Act (Cap 36) provides that precious metals and securities purchased by a CPF member and the proceeds from the sale of such precious metals and securities and any moneys in any fixed deposit account maintained by a member with a bank, under any investment scheme established under CPF subsidiary legislation which allows the member to invest his CPF savings and whereby the member is obliged to repay the proceeds into the Central Provident Fund, shall not be attached, sequestered, levied upon for or in respect of any debt or claim or be subject to any right of set-off by the bank for any debt owing by the member to the bank.

Section 24 will be amended to clarify that benefits derived from insurance policies (including investment-linked insurance policies) are protected under the section.

High Court (Admiralty Jurisdiction) (Amendment) Bill 2003 (B32/2003)

The High Court (Admiralty Jurisdiction) (Amendment) Bill 2003 proposes to amend the High Court (Admiralty Jurisdiction) Act (Cap 123) to implements the recommendations of the Attorney-General’s Chambers in its Consultation Paper, Admiralty Jurisdiction of the High Court: Arrest of Ships on Demise Charter to Secure the Obligations of the Demise Charterer (LRRD 1/2003).

The provisions of the High Court (Admiralty Jurisdiction) Act as they presently stand do not permit a claimant to arrest a vessel under demise charter (bareboat charter) even where the demise charterer is himself the person liable to the claimant. If a debt is owed by the beneficial owner of the ship, a claimant may arrest that ship to secure payment of the debt, subject to certain conditions. However, if the debt is owed by a demise charterer, the claimant may not arrest that same ship even though the demise charterer has the same control of the ship as an owner.

Maritime claims may be pursued by an action in personam or an action in rem. An action in personam is an action against the defendant personally. An action in rem, unique to admiralty law, is an action that is pursued against the ‘thing’ (‘the res’) rather than a person. The ‘thing’ is usually the ship and the action is commenced by the arrest of the ship.

Section 4(4) will be amended and modelled after the UK Supreme Court Act 1981. At present, under s 4(4), the High Court may arrest a ship in connection with which a claim arises, only where the person who would be liable in personam is the full beneficial owner of the ship. The amendment extends the present right of action in rem by allowing the High Court to arrest a ship where either the owner or the charterer by demise (the bareboat charterer) is the person who would be liable in personam. A claimant who succeeds in establishing a claim in relation to the ship is entitled to satisfaction from the proceeds of the sale of the ship, notwithstanding that the owner of the ship is not liable in personam on the claim. Such an owner is, however, not personally liable for any shortfall between the judgment sum and proceeds from the sale of the ship; his liability extends only to the loss of the ship (or the value of the security put up to obtain its release). The amendment therefore creates not only procedural rights but also certain substantive rights in favour of a claimant.

Human Organ Transplant (Amendment) Bill 2003 (B33/2003)

This Bill seeks to amend the Human Organ Transplant Act (Cap 131A):

1. to include livers, hearts and corneas within the purview of the Act as organs which may be removed for the purpose of transplantation from the body of a deceased person;
2. to allow the removal of organs for transplantation in cases involving any cause of death. Presently, a transplant is permitted only where the death was caused by accident or resulted from injuries caused by accident; and
3. to regulate living donor organ transplants. A new Part IVA comprising ss 15A to 15D will be introduced for this purpose. Only the kidney or liver may be transplanted from the body of a living donor.

Elizabeth Wong
Allen and Gledhill