On March 31, 2017 the government of Singapore amended the Companies Act in order to increase the transparency of company ownership and reduce the opportunity for Singapore companies to be used for illicit purposes. To comply with the amendment, local companies, foreign companies and LLPs are required to maintain a Register of Controllers.
Similar to other statutory register requirements, the Register of Controllers requires companies to:
- Maintain a record of all individuals and entities that hold a significant interest or significant control in the company
- Identify and obtain the particulars of each controller
- Keep the record up-to-date with any changes to the controller’s’ status or particulars
In this guide we will cover the details of how to set up a Register of Controllers; these include:
- The key facts to maintain a Register of Controllers
- Who is considered a controller
- The necessary particulars a company must record in its Register of Controllers
- How to take reasonable steps to identify a controller
- How to add controllers to the Register
- How to keep a Register of Controllers up-to-date
Key facts for a Register of Controllers
- The Register of Controllers is a private company document that will not be made available to the public.
- Companies must create a register of controllers within 30 days of incorporating in Singapore.
- In the event a company fails to maintain a Register of Controllers the maximum penalty is S$5,000.
- The Register of Controllers must be made available to the Accounting and Corporate Authority (ACRA) and any other Singapore government agency upon request.
- Companies are required to take reasonable steps to identify and obtain information on controllers.
- A company has made “reasonable steps” if it sends notices to any person whom they know is a controller or who is likely to know the identity of a controller.
- At a minimum, companies are required to send notices to all directors and members of the company on an annual basis.
- Companies are required to keep the particulars in the Register of Controllers up-to-date.
Who is considered a controller
According to the Companies Act, an individual or entity that has “significant interest” or “significant control” in a company is considered a controller. Below defines significant interest and significant control.
For companies with share capital, an individual or entity is considered to have significant interest if it meets any of the following criteria:
- The individual or entity directly or indirectly holds 25% or more of the shares in the company, both local and foreign.
- The individual or entity directly or indirectly holds shares with 25% or more of the total voting power in the company
For companies without share capital, an individual or entity has significant interest if they hold the right to more than 25% of the profits in the company.
What is significant control?
To hold significant control in a company, an individual or an entity must satisfy at least one of the three following criteria.
1. The individual or entity holds the right to appoint or remove directors who have a majority of voting rights at directors’ meetings.
Olivia Lim, only holds 5% of the shares in XYZ Pte. Ltd. and holds no voting rights in the company. However, in XYZ’s company constitution, Olivia has the right to appoint or remove directors from the company. In this case, Olivia holds significant control and is therefore considered a controller of XYZ Pte. Ltd.
2. The individual or entity holds more than 25% of the rights to vote on those matters that are to be decided upon by the members of the company. Certain matters that must be decided by the members of the company include:
- Altering the company’s constitution
- Changing the company’s name
- Appointing directors
- Appointing or removing an auditor
- Deciding a voluntary winding up
Vanessa King is the retired first employees at XYZ Pte Ltd. She only holds 10% of the shares of the company. However, in the company constitution, she holds 25% of the rights to vote on matters that are to be decided by the members of the company. In this case, Vanessa King has significant control of XYZ Pte Ltd and must be registered as a controller.
3. The individual or entity holds the right to exercise or actually exercises significant influence or control over the company. According to the Companies Act, an individual or entity may not have significant interest in terms of ownership of the company or voting rights, but they still have the direct power to, “ensure that a company generally adopts the activities which they desires”.
Such an individual or entity is seen to have absolute decision making or veto rights in decisions related to running the company; these include:
- Adopting or changing the company’s business plan
- Changing the company’s line of business
- Borrowing from lenders
- Appointing or removing the CEO of the company
- Approving or changing profit sharing schemes
- Granting share options
The retired co-founder of XYZ Pte Ltd, Sarah Lim, is no longer a shareholder in the company. However, she still has the final rights to approve new business plans. In this case, Sarah has significant influence on the business and is considered a controller of XYZ Pte Ltd.
In general, an individual or entity that qualifies as a controller must be added to the Register of Controllers. However, certain controllers are considered exempt if they meet any of the following three requirements:
- The individual has significant interest or control through another controller in the same company
- The company is a controller through a local company or foreign company that is exempt from maintaining a Register of Controllers
- The company is a controller through a local or foreign company that is required to keep a Register of Controllers
Setting up a Register of Controllers
The Register of Controllers is separate from the electronic register of members of private companies that is kept by ACRA. All companies are required to keep their own register including companies that are dormant, undergoing winding up, receivership, judicial management, or striking off.
Companies can choose to keep their register electronic or as hard copy document as long as it meets the specific format required by ACRA. Furthermore, companies can choose to keep their register of controllers in their office or in the office of their registered filing agent. Note, as a part of annual return filing, companies must declare where they will keep the Register of Controllers.
What particulars need to be entered:
- Full name
- Aliases, if any
- Residential address
- Nationality Identity card number or passport number
- Date of birth
- Date on which the registrable individual controller became an individual controller of the company
- Date on which the registrable individual controller ceased to be an individual controller of the company, if applicable
- Name or unique entity number, if any
- Registered office address
- Legal form of the entity jurisdiction where, and statute under which, the entity was formed or incorporated
- Name of the corporate entity register of the jurisdiction where the company is formed or incorporated, if applicable
- Identification number or registration number of the registrable corporate controller on the corporate entity register of the jurisdiction where the registrable corporate controller is formed or incorporated, if applicable
- Date on which the registrable corporate controller became a corporate controller of the company and
- Date on which the registrable corporate controller ceased to be a corporate controller of the company, if applicable
When creating a Register of Controllers, companies are required to take reasonable steps to identify and obtain particulars of controllers.
To take reasonable steps, companies must send notices to the following people:
- Any person who is a known controller
- Any person who is likely to be a controller
- Any person who knows of a controller or is likely to know of a controller
Notices can be sent electronically or in hard copy and must meet the specific format outlined by the Companies Act. At a minimum, companies are required to send notices to directors and company members on an annual basis.
Notices sent to controllers
A notice sent directly to a controller requires the individual to:
- State whether they are a controller of the company
- State if they are likely to know of other potential controllers of the company and give the particulars of the potential controller
- Provide any additional information required by the company
Notices sent to persons who know of controllers
A notice sent to a person who knows of a controller or is likely to know the identity of a controller requires the individual to:
- State that they are aware of a controller or have reason to believe they know of a controller
- Give the particulars of the controller
- Provide any additional information required by the company
When a notice is not required
There are certain cases where a company is not obligated to send a notice to a director or member including:
- A controller or someone who knows a controller has already presented the required particulars to the company and the particulars are accurate.
- The company is confident that the certain member or director does not qualify as a controller or does not have knowledge of any likely controllers of the company.
Adding controllers to the Register
The timeline for when a controller must be entered
Companies are required to add a controller to the register two days after the controller’s particulars have been confirmed. A controllers particulars are considered confirmed when:
A controller or their filing agent has replied to a notice confirming they are a controller and provides the required particulars.
A controller reaches out directly to the company confirming they are a controller and provides the required particulars
What if a controller does not reply to a notice?
In the event a controller fails to confirm their particulars, the company must still add or update the controller in their register with a note indicating that the particulars have not been confirmed. Furthermore, the company must enter the particulars in their registry within two business days after 30 days from the date the notice was sent.
What if the particulars are incorrect?
A company will not be held liable if the controller provides incorrect particulars when replying to a notice.
What if the controller is a foreign entity?
In the event a controller is a foreign entity, companies are required to identify and obtain the particulars of the controllers of the foreign entity.
What if a company has no controllers?
According to the Companies Act, if a company is confident they have no controllers they may enter the following statement into their Register of Controllers:
“As of [date], the company knows or has reasonable cause to believe that there are no registrable controllers in relation to the company.”
Keeping controllers’ particulars up-to-date
As a part of maintaining a register of controllers, companies are obligated to keep the particulars in their register controllers up-to-date. On an annual basis, companies are required to send notices to all controllers to verify if there are any relevant changes to their particulars. The Companies Act defines relevant changes as:
- The controller’s particulars are incorrect and need to be updated
- The individual or entity no longer qualifies as a company controller
Additional cases when sending a notice is required
Apart from sending annual notices, companies are also required to send a notice to the controller in the following cases:
- If the company knows or has reasonable grounds to believe that a relevant change has occurred.
- The company has received credible particulars (eg from a news or police report) that a relevant change has occurred.
When sending a notice is not required
There are cases when a relevant change has occurred but the company not obligated to send a notice; these include:
- A registered controller has already provided updated particulars to the company
- The company knows for a fact and has documented that no relevant changes have occurred.