Singapore government runs fast-track consultation on beneficial ownership and CSP regimes
ACRA had already consulted on similar proposals in 2021 and 2022, resulting in publication of a first draft Bill in November 2023. Important new measures include compulsory reporting of company beneficial ownership, full disclosure of nominee directors and shareholders and tighter regulation of corporate service providers (CSPs).
The Companies and Limited Liability Partnerships (Miscellaneous Amendments) Bill adds new obligations concerning the transparency of beneficial ownership ('controllers') of companies and limited liability partnerships (LLPs). Companies and LLPs will be required to keep a register of registrable controllers starting on the date of incorporation or registration. Currently, this is required only within 30 days of incorporation or registration.
The rules on nominee shareholders are also being significantly tightened, to prevent the misuse of nominee directorship arrangements to create shell companies. Currently, only Singapore-based companies have to maintain registers of nominee directors and nominee shareholders. The information is not submitted to the authorities or made publicly available. In future, both resident companies and foreign companies will have to collect all nominee information and submit it to ACRA, which will hold it in a central register and make the nominee status of a director or shareholder of any company publicly available. However, only certain government agencies will be able to access the full information for administrative or enforcement purposes.
New offences will be created of failing to make annual checks on controllers or nominees about changes in their circumstances or to fail to report them accurately to the Registrar. The maximum fine will be SGD25,000.
The existing definition of 'nominee shareholders' in the Companies Act will be broadened to align with the definition used by the Financial Action Task Force (FATF). The FATF definition includes shareholders who either vote or receive dividends on behalf of another person.
The second bill, the Corporate Service Providers Bill, tightens the regulatory regime for CSPs. Currently, entities are required to register as registered filing agents (RFAs) only if they wish to file transactions with ACRA on behalf of their customers. The proposed amendment aims to address this regulatory gap, to prevent customers engaging CSPs that are not RFAs to facilitate illicit activities. It will require all business entities that carry on a CSP business in Singapore to be registered with ACRA, even if they do not file transactions on behalf of their customers with ACRA.
Further, a person will be able to act as a nominee director of a company only if the appointment is arranged by a registered CSP. The CSP will have to be satisfied that the person is fit and proper. Breaches of this requirement will attract fines of up to SGD10,000 plus daily fines of SGD1,000. All registered CSPs will also be within scope of the anti-money laundering regulations, subject to criminal prosecution.
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