Week 1: Introduction and Overview of

Singapore Company And Finance Law

Topics 1 and 2
a. Introduction
b. Sources of Singapore Company
Law
c. Business Organisations
d. Types of companies
e. Incorporation of companies
(chapters 1,2 and 4)
f. Incorporation and its effects (chapter 3)
g. Tutorial Questions
a. Introduction
 Overview of Introduction

• History of Singapore Company Law

• Definition

• Functions

• Structure of Companies
History of Companies and
Company Law
 History of companies in Singapore
• Evolved from Middle Ages in England as means of allowing a group
of people to hold and deal with property
• Entity was independent of the members
• Right to create such bodies given by the Crown
• In a UK, 1844 Act businesses were allowed to incorporate by filling
out form and paying a fee
• Concept of limited liability introduced in 1855 whereby liability of
investors was limited to amount agreed to invest
 Pre-1967
• 1940, Companies Ordinance (based on English Companies Act,
1929)

• 1965, following union of Malaysia and Singapore, Singapore

draftsmen collaborated on the drafting of the Malaysian
Companies Act, 1965.

• Singapore’s independence in 1965, derailed this Act’s

enactment with the result that Singapore law was left with
unmodernised company law
 1967 – 1985:
Establishment of a SCL Framework
• Urgency in implementing a SCL framework following independence.
• First reading of Companies Bill in late 1966.
• First edition of Singapore Companies Act (Cap. 50) (SCA) came into
force on 29 December 1967 (similar to Malaysian Companies Act
1965, in part to facilitate trade between two countries)
• Singapore’s strategy was export led industrialisation
(i) foreign investment via MNCs that would provide tech and capital; and
(ii) SOEs to develop key infrastructure
• Positioned itself as low risk investment location: low labour unrest /
tax incentives
• As of 1965, economy began growing by 9%
• Only minor amendments to SCA between 1967 – 1984.
 1985 - 2000
• Recession in 1985
• Pan-Electric Industries collapsed and SGX closed (first and only time)
damaging Singapore’s reputation as a financial centre
• Consequently, significant reforms to corporate regulation and
insolvency with enactment of SC (Amendment) Act 1987.
• New regulatory framework with more comprehensive changes
brought in 1989.
• Economic Committee established that advised SG needed a risk
management centre with money market and capital market activities.
• This resulted in diversification of the SG economy (reducing reliance
on manufacturing) and financial sector grew to 12% GDP by 2000.
 2000 and beyond
• Huge shift in approach to regulation in 2001 (merit to disclosure based).
• SGX wanted to build up financial services sector and to increase foreign
listings on SGX.
• New challenges for SG’s evolving financial services industry (e.g. should dual
class shares be permitted).
• New development = Singapore Exchange Regulation Pte Ltd. (RegCo) in late
2017.
• RegCo (focus on regulation) is a subsidiary of SGX (focus on commerical
operations) but:
- is meant to be independent of SGX
- Majority of RegCo directors must be independent of SGX
- RegCo’s board is answerable to Monetary Authority of Singapore (main regulator of
SG capital markets)
 Features of SCL
• Autochthonous (local law not law of UK) (progressively, starting
with 1967 SCA)

• Reciprocal relationship with the economy

• 2007 foreign innovations should only be imported “if it would

serve a useful purpose in our context” – Steering Committee

• Steering Committee reviewed the SCA in 2007 and submitted

report in 2011 – largest overhaul of SCA since independence
 Four Levels of Government
Control and Influence
• First level: Primary legislation
• Second level: Secondary legislation
• Third Level: Statutory Bodies
• Fourth level: Government influence on companies
• MNCs (multi national companies)
• GLCs (government-lined companies)
• Privatisation
• Large local companies
 Factors Influencing Legislative
Responses (generally and SCL)
• Domestic political and economic events
• Foreign laws and economic events
• Particular areas impacting SCL:

• Regulation
• Insolvency
• Protecting Interested Parties
• Directors’ duties
Company: Definitions
 What is a company?
• A structure registered under Companies Act
• An artificial (created only by following process
make application to Accounting and Corporate
Regulatory Authority (ACRA*)) or merely “legal”
entity
• Companies, as a form of business, were developed
to:
o Allow large groups of people to pool their resources; and
o Undertake an activity too large for one person (or a
group of partners)

*Accounting and Corporate Regulatory Authority

 Legal Definition of a Company

Section 4 (1), Companies Act (Chapter 50):

“company” means a company incorporated pursuant to this Act or

pursuant to any corresponding previous written law;
 Functions of a Company

• For profit / not for profit

• Formed to enable single person, small / large group to enjoy

benefits of treating as separate legally from the people that run
the business, ltd. liability, investing public to share in profits of
business without taking part in its management.
Structure of a Company

*Accounting and Corporate Regulatory Authority

 Structure of companies
• The company
• A shareholder (owner or investor)
• A director or operator who manages the activities of the company
• A director must reside in Singapore (what if I want to form a company
in Singapore?)
• A company secretary (can be the director)
• Shareholder is provider of funds (one of two ways for company to get
funds)
• Can be one person company from 2004 (means that the company can
have one shareholder and one directors only and can be the same
person)
Basics of a Company
• 4 key features:
• Separate legal entity (discussed in part 3 of the lecture)
• Separate from directors and shareholders
• Management is in the hands of the directors
• Concept of separation of powers
• Transfer of shares
• Restriction in private companies but not in public companies
• Limited liability
• Concept applied to shareholders as company liable for own debts and
obligations
Key people involved in a company
• Directors and officers
• Shareholders
• Financial Creditors (secured and unsecured)
• Trade creditors (secured and unsecured)
• Employees
• Third party claimants (law of torts)
• Duty of care
• Government regulators:
• ACRA, IRAS, MAS, Competition and Consumer Commission and any other
Government Body which may regulate the activities of the company
b. Sources of Company Law
 Overview of Sources and
Enforcement
Sources

- Legislation – primary, secondary, delegated

- Common law
- Constitution

Enforcement

- Statutory Bodies e.g ACRA / MAS / SGX (through legislation)

 Source of Company Law I:
Companies Act
• This is the main statute regulating companies in Singapore
o Evolving legislation that is subject to change
o Changes arose from external events e.g. GFC
o Government policy
• Examples of things it deals with
• Registration and formation of companies
• Membership and internal management
• Financial reporting
• Audit requirements
• Administration of companies in financial difficulties
Source of Company Law II: Case law

• Singapore has a “common law” system of law in which the

recorded decisions of courts operate as binding statements on
(lower courts) the way in which statutory provisions are to be
interpreted
• Those decisions may also themselves be a source of legal rules.
 Source of Company Law III:
Statutory Bodies Delegated Legislation
• ACRA - The Accounting and Corporate Regulatory Authority is a statutory
board under the Ministry of Finance of the Singapore Government. ACRA is
the national regulator of business entities, public accountants and
corporate service providers in Singapore.
• MAS - The Monetary Authority of Singapore is Singapore's central bank and
financial regulatory authority. It administers the various statutes
pertaining to money, banking, insurance, securities and the financial
sector in general, as well as currency issuance.
• SGX - Singapore Exchange Limited is an investment holding company
located in Singapore and provides different services related to securities and
derivatives trading and others. SGX is a member of the World Federation of
Exchanges and the Asian and Oceanian Stock Exchanges Federation
 Statutory Body I: ACRA
Mission: to provide a responsive and trusted regulatory
environment for businesses, public accountants and corporate
service providers.
Role: to achieve synergies between the monitoring of corporate
compliance with disclosure requirements and regulation of public
accountants performing statutory audit. (more overleaf)
Formation: a statutory board on 1 April 2004, following the merger
of the then Registry of Companies and Businesses (RCB), and the
Public Accountants' Board (PAB).

*Accounting and Corporate Regulatory Authority

 ACRA’s Functions
Administer the Accounting and Corporate Regulatory Authority Act (Cap 2A), the Accountants Act (Cap 2),
the Business Names Registration Act (Cap 32), the Companies Act (Cap 50), the Limited Liability
Partnerships Act (Cap 163A) and the Limited Partnerships Act 2008 (Act 37 of 2008);

Report and make recommendations to, and advise the Government on matters relating to the
registration and regulation of business entities, public accountants and corporate service providers;

Establish and administer a repository of documents and information relating to business entities,
public accountants and corporate service providers and to provide access to the public to such documents
and information;

Represent the Government internationally in matters relating to the registration and regulation of
business entities, public accountants and corporate service providers; and

Promote public awareness about new business structures, compliance requirements, corporate
governance practice and any matter under the purview of the Authority.

*Accounting and Corporate Regulatory Authority

 Statutory Body II: MAS
• The Monetary Authority of Singapore (MAS) promotes sustained, non-inflationary economic
growth through appropriate monetary policy formulation and close macroeconomic
surveillance of emerging trends and potential vulnerabilities.
• The Monetary Authority of Singapore (MAS) is Singapore’s central bank and integrated
financial regulator.
• As central bank, MAS promotes sustained, non-inflationary economic growth through the
conduct of monetary policy and close macroeconomic surveillance and analysis.
• MAS manages Singapore’s exchange rate, official foreign reserves, and liquidity in the banking
sector.
• As an integrated financial supervisor, MAS fosters a sound financial services sector through
its prudential oversight of all financial institutions in Singapore – banks, insurers, capital
market intermediaries, financial advisors, and stock exchanges.
• MAS is also responsible for well-functioning financial markets, sound conduct, and investor
education.
• MAS also works with the financial industry to promote Singapore as a dynamic international
financial centre.
 MAS Functions: II
• To act as the central bank of Singapore, including the conduct
of monetary policy, the issuance of currency, the oversight
of payment systems and serving as banker to and financial agent of
the Government.
• To conduct integrated supervision of financial services and
financial stability surveillance.
• To manage the official foreign reserves of Singapore.
• To develop Singapore as an international financial centre.
 MAS Legislation: III
• In 1970, Parliament passed the Monetary Authority of Singapore
Act, leading to the formation of MAS on 1 January 1971.
• The MAS Act gives MAS the authority to regulate the financial
services sector in Singapore.
• MAS has been given powers to act as a banker to and financial
agent of the Government.
• MAS has also been entrusted to promote monetary stability, and
credit and exchange policies conducive to the growth of the
economy.
 Statutory Body III: SGX
• Some companies are “listed” companies- Their securities are listed
on the public stock market by the SGX
• SGX – Company that provides a trading facility for securities
issued by companies listed on its’ exchange
• Listing = securities issued by the company can be bought and sold
by investors through a public, organised, listed market
• Companies agree as part of a contract with the SGX that they
will comply with rules imposed under the SGX Listing Manual
 SGX Listing Manual
Covers: a variety of matters, including imposing additional
disclosure requirements that a company must meet before the
company enters into certain types of transactions or issues new
securities

Purpose – ensure market for listed companies’ securities is

informed, and that the interests of companies’ public shareholders
are protected