On July 2, 2024, Singapore’s parliament approved the Corporate Service Providers (CSP) Bill, which mandates that all businesses offering corporate services in or from Singapore must register with the Accounting & Corporate Regulatory Authority (ACRA). Additionally, the Companies & Limited Liability Partnerships (Miscellaneous Amendments) (CLLPMA) Bill was passed, aimed at strengthening the transparency of beneficial ownership in Singapore companies and LLPs. The CSP Bill also includes provisions that disallow individuals from serving as nominee directors of companies for business purposes unless their appointments are arranged by a registered CSP and they have been evaluated as ‘fit and proper persons’ by the CSP.

Qualifications of a Nominee Director

The new requirements were created to address the abuse of nominee directorships by CSPs that arrange or facilitate unqualified individuals to serve as nominee directors for shell companies. The government has noted instances where individuals, clearly unfit for the role, were appointed as nominee directors by non-compliant corporate service providers. To determine if someone is a fit and proper person, the registered CSP is required to take reasonable measures to ensure the individual is not legally disqualified from serving as a director and must also consider other factors outlined in subsidiary legislation. This may include, but is not limited to, reviewing their compliance history to assess their ability to take on additional directorships.

Disclosure of Nominee Directors, Nominee Shareholders and Nominators to ACRA

To enhance transparency, the Bill will now mandate that companies submit complete details of nominee arrangements to ACRA, including the information of nominee directors and shareholders, as well as the identities of the nominators behind them. However, while a person’s role as a nominee director will be made public, the identity of the nominator will not be disclosed to the public.

Enhancements to the maintenance of Registers of Nominee Directors and Nominee Shareholders

In the previous round of enhancements to Singapore’s corporate governance, which took effect on October 4, 2022, companies were required to maintain registers for their nominee directors and shareholders. The new Bill introduces three additional measures:

• The maximum penalties for companies and LLPs committing offenses related to their registers will increase from SGD 5,000 to SGD 25,000. These offenses include failing to maintain registers, not keeping information current, or not correcting inaccurate details.
• Providing false or misleading information about their registers to ACRA will now be considered an offense, punishable by a fine of up to SGD 25,000. This applies to individuals who did not exercise reasonable due diligence in ensuring the accuracy of the information submitted to ACRA.
• Companies and LLPs will be required to verify and update their controllers’ information annually. If a company cannot identify a registrable controller, it must list all individuals with executive control, such as CEOs or directors managing the company’s daily operations, as registrable controllers. This aims to ensure that those with effective control are appropriately identified.

  
  

Takeaway

These heightened standards should be viewed as an enhancement to Singapore’s reputation as a responsible global participant, which will, in turn, enable the economy to reap economic benefits. Companies must clearly understand their obligations under these new rules, including the scope of those obligations, and adapt their corporate governance procedures and practices to meet the elevated standards established.