The Singapore company act was first enacted in 1967 and the company law is applicable to all incorporated companies in Singapore. The act contains different aspects including the life cycle of the company, from the incorporation process to operations and also guidelines for management. Additionally, the act contains some special segments that are only applicable to special types of a company such as foreign office branches that were set up in Singapore. On other hand, companies also comply with the laws of Securities and Future Act (SFA), Listing rules and code of corporate governance and Singapore Code of Takeover & Merger. The Company Legislation and Regulatory Framework Committee (CLRFC) updates the laws of Singapore company act at 1999 and few key changes were made during the review process. Among them the permission for establishing one director private company, abolishing the statutory audit requirement for the dormant company and the private company those have annual less than 5 millions Singaporean dollars turnover and remove per value share concept and share capital authorization is important.
After the review on Singapore company act conducted at 1999, another steering committee was appointed at 2017 by the Ministry of Finance (MOF) and they made few reviews regarding the directors. Among them, one of the reviewed points was the definition of shadow director and requirements of qualified directors for the company. The MOF accept the recommendation of steering committee regarding the definition of director and according to definition whoever controls the majority portion of directors is regarded as the director of the company. Regarding the appointment of director the Singapore company act says, the director should be appointed by an ordinary resolution passes at general meetings and also regarding the qualification of the director, the law says it is unnecessary to appoint corporate directorship in Singapore. Additionally, the company act does not officially prescribe any professional or academic qualification for the directors or comply with any specific training for the directors. The law also does not enforce any maximum age limit for the directors; however minimum age limit applies which is over eighteen years. Another key point was,
Singapore company act is strict in term of conviction or offense and the law automatically disqualifies any director who is convicted or charged for the offense of fraud or dishonesty. The disqualified directors may apply to the high court and if permission is granted then they may work as a director. Else they have to take part as management team member of the company. Additionally, the act clearly mentions that a director of the company may resign from the company by giving written notice of resignation and the acceptance of resignation is not conditional for the acceptance of the company. Also, the law state that the company cannot mandate to send any director into retirement. However, if any director decision becomes contradictory with the existing provision then the company may remove the director by the resolution. During termination, if the company needs to pay compensation to the director and the paid amount is more than the amount of his three years salary then shareholder’s approval is required. Other than that the law states that the company’s director got complete authority over the company and the director manages the company according to the constitution.
The Singapore company act also provides a right to the shareholders of the company. According to section 178 and 184, all companies are required to have resolution tabled in general meetings by the poll votes. Any written resolution is considered to be passed when the majority of the shareholders signs the resolution. If the company transmit or circulate documents or publications or notices or resolutions through electronics media then by the law the company should be less perspective and restrictive. Singapore company act allows a member to receive company notice and documents electronically.
Singapore company act states that the subsidiary of the company may receive or transfer his/share of its holding company, provided that the subsidiary has no right over voting and meeting of the holding company. If any share remains undisposed after 12 months period then the court may allow transferring if the maximum aggregate limit of 10% share of the holding company remains as a treasury share or deemed share. Additionally, the holding or subsidiary company divest the holding within six months where the excess aggregate limit of 10%.
Companies act also provide the right of issuing nonvoting shares or the shares with multiple votes. In the Asian context, where one or two major shareholders controls the company. This law allows not voting and multiple voting share majority to control detriment of minority shareholders. Singapore company act also provides the guideline about the holdings and subsidiary companies. The company A is a subsidiary company of another company B if the company B holds the majority right of voting for company A.