Legislation

Companies (Amendment) Act 2005 (A21/2005)

The Companies (Amendment) Act 2005 (the ‘Amendment Act’) came into effect on 30 January 2006. The Companies Act (Cap 50) (‘CA’) will be amended to adopt several changes recommended in the final report of the Company Legislation and Regulatory Framework Committee (‘CLRFC’) that was published on 22 October 2002.

The key amendments arising from the Amendment Act include:

1   the abolishing of the concepts of ‘par value’ and ‘authorised capital’;

2   the introduction of an alternative capital reduction process which does not require court sanction;

3   the liberalising of the financial assistance restrictions to allow financial assistance to be provided in additional circumstances, eg where not more than 10 per cent of the company’s paid-up capital and reserves are involved, or where it is approved by a unanimous resolution of shareholders;

4   the allowing of share-buybacks to be funded out of profits as well as capital so long as the company is solvent;

5   the allowing of repurchased shares to be held as treasury shares; and

6   the introduction of a more effective and efficient statutory form of merger and amalgamation process.

In line with the amendments arising from the Act, the Accounting and Corporate Regulatory Authority (‘ACRA’) has issued a news update stating that new e-forms will be introduced and amendments will be made to the following current e-forms:

1   Apply for a new company name;

2   Incorporate a private company;

3   Incorporate a public company – Limited by shares;

4   Summary of returns by local company having a share capital;

5   Main return by local company having a share capital;

6   Notice by local company of alteration in share capital other than increase in capital;

7   Return of allotment of shares;

8   Notice of redemption of redeemable preference shares;

9   Notice by local company of transfer of shares / list of shareholders;

10 Notice of purchase or acquisition of ordinary shares / stocks;

11         Notice of purchase or acquisition of non-redeemable preference shares; and

12 Conversion of company type.

Pursuant to the Companies Act (Amendment of Second Schedule) (No 2) Notification 2005, the Second Schedule to the CA has been amended with effect from 30 January 2006 with the deletion of items 120 to 124 and 129 to 141, relating to fees payable to the Registrar of Companies.

Trust Companies Act 2005 (A11/2005)

The Trust Companies Act 2005 (A11/2005) (the ‘Act’) came into force on 1 February 2006. The Trust Companies Act (Commencement) Notification 2005 (S832/2005) was gazetted on 
6 January 2006.

The Act repeals the current Trust Companies Act and introduces a new regulatory framework for trust companies operating in Singapore. The Act seeks to establish a sound regulatory framework for trust companies to ensure high standards of business conduct, professionalism and competence in the trust services industry in Singapore.

The following regulations have been gazetted and are operative from 1 February 2006:

1   Trust Companies Regulations 2005 (S836/2005).

2   Trust Companies (Appeals) Regulations 2005 (S835/2005).

3   Trust Companies (Transitional and Savings Provisions) Regulations 2005 (S834/2005).

4   Trust Companies (Exemption) Regulations 2005 (S833/2005).

Competition Act (Commencement) (No 2) Notification 2005 (S864/2005)

Divisions 1, 2, 3 and 5 of Part III and Parts V and VI of, and the Third Schedule to the Competition Act 2004 have come into force with effect from 1 January 2006. Essentially, the provisions relate to the prohibition against anti-competitive agreements and abuse of dominant positions; and the enforcement of such prohibitions.

Further, the following Competition Act related amendments, regulations and order have also become operative with effect from 1 January 2006:

1   Competition (Amendment) Act 2005 (A40/2005) which was gazetted on 28 December 2005. The amendments here relate to the issues of self-incrimination not being an excuse for non-disclosure of information in an investigation under the Competition Act, enhanced powers of the officers of the Competition Commission of Singapore (the ‘CCS’) in an investigation and the empowering of certain officers of the CCS to prosecute offences under the Competition Act.

2   Competition Regulations 2005 (S866/2005) relating to issues such as notifications for guidance or decision.

3   Competition (Composition of Offences) Regulations 2005 (S867/2005).

4   Competition (Fees) Regulations 2005 (S868/2005).

5   Competition (Transitional Provisions for Section 34 Prohibition) Regulations 2005 (S869/2005).

6   Competition (Amendment of Third Schedule) Order 2005 (S870/2005) relating to the definition of vertical agreements and agreements with net economic benefit.

Stamp Duties (Amendment No 2) Act 2005 (A392005)

The Stamp Duties (Amendment No 2) Act 2005 (the ‘Act’) has become operative on 1 January 2006. The Act was passed in Parliament on 21 November 2005.

The Stamp Duties Act is amended to give legislative effect to the following measures:

1   to extend relief from ad valorem stamp duties under s 15 on restructuring and merger of companies to business trusts;

2   to expand the scope of stamp duty relief from ad valorem stamp duties under s 15 to include transfer of mortgages when companies enter into restructuring or merger exercises;

3   to require companies amalgamating under the new s 215 of the Companies Act to pay ad valorem stamp duties;

 4 to repeal the seller’s stamp duty on sale of residential properties within three years of purchase; and

5   to extend stamp duties exemption to transfers of foreign stocks by way 
of gift.

Goods and Services Tax (Amendment) Act 2005 (A38/2005)

The Goods and Services Tax (Amendment) Act 2005 (the ‘Act’) came into effect on 1 January 2006. It was passed in Parliament on 21 November 2005.

The following are the changes that will arise from the Act:

1   the repayment of input tax upon failure to make payment to the supplier;

2   the enabling of the Minister for Finance to prescribe the types of services comprising the repair, maintenance, broking or management of any ship or aircraft which are to be treated as international services under the Goods and Services Tax Act;

3   the empowering of the Minister for Finance to prescribe the types of services in connection with the provision of an electronic system relating to the import of goods into, or the export of goods out of, Singapore which are to be treated as international services for the purposes of the Act; and

4   the compulsory filing of returns under the Goods and Services Tax Act.

Goods and Services Tax (International Services) (Amendment) Order 2005 (S892/2005)

Pursuant to the power of the Minister for Finance to prescribe the types of services comprising the repair, maintenance, broking or management of any ship or aircraft which are to be treated as international services under the Goods and Services Tax Act (the ‘prescribed services’), the Goods and Services Tax (International Services) Order 2005 has been amended with effect from 1 January 2006 to provide for the prescribed services in the new Sixth Schedule and Seventh Schedule.

Estate Duty (Remission for Deaths in Quick Succession) Order 2005 (S896/2005)

In the case of any two persons both dying on or after 1 January 2006, the later death occurring not more than 24 months after the earlier death, subject to conditions, there will be allowed, from the estate duty payable on the estate of the later deceased, a remission of estate duty of the amount determined in accordance with a given formula. The percentage of remission varies according to the length of the period between the two deaths, ranging from 100 per cent for six months or less, to zero per cent for more than 24 months.

Central Provident Fund Act (Amendment of First Schedule) Notification 2005 (S830/2005)

Pursuant to the Central Provident Fund Act (Amendment of First Schedule) Notification 2005 (S830/2005), the First Schedule to the Central Provident Fund Act has been amended effective from 1 January 2006 to lower the ceiling on salaries on which CPF contributions must be made from S$5,000 to S$4,500.

Effective from 1 January 2006, an employer must make CPF contributions at the rate of 33 per cent of the employee’s monthly salary subject to a maximum of S$1,485.

Of the 33 per cent, employers may recover from the employee’s salary, 20 per cent of the employee’s monthly salary subject to a maximum of S$900.

Elizabeth Wong

Allen & Gledhill