Proposed changes to companies act on digital meetings and minority protection

On 6 February 2023, the Ministry of Finance (“MOF”) and the Accounting and Corporate Regulatory Authority (“ACRA”) issued their responses to key feedback received on proposed amendments to the Companies Act 1967 (“CA”) with respect to: 

  • facilitating digital general meetings and digital board meetings; 
  • clarifying the application of existing digitalisation provisions to documents under the CA; 
  • other areas concerning digitalisation; and 
  • review of the threshold for the compulsory acquisition of shares under section 215 of the CA. 

Facilitating digital general meetings and digital board meetings 

The current version of the CA does not contemplate the ability of companies to conduct general meetings via electronic means. During the pandemic, companies were able to rely on the temporary measures due to COVID-19 to held general meetings despite lock-down. The proposed amendments to the CA below formalise companies’ ability to conduct general meetings through electronic means. 

MOF/ACRA have accepted to include provisions permitting companies to hold general meetings digitally and in more than one location, and to amend certain specific provisions in the CA to address any ambiguity as to how shareholders’ rights may apply to digital meetings. Such proposals specify that companies that hold digital general meetings must use technology that enables members to attend, listen, speak and vote at the meeting, and to specify that companies may hold digital general meetings unless expressly prohibited by their constitution.  

Additional safeguards and requirements may be introduced subsequently via subsidiary legislation, which is likely to be inspired by or adapted from current how-to guidance for system service providers that enable the holding of digital general meetings. 

Clarifying and refining the application of existing provisions on electronic transmission of documents and communications 

As a corollary to the ability to conduct general meetings via electronic means, the amendments in this section also seek to formalise companies’ ability to send and receive documents from various parties in electronic form, now all documents that the CA requires or permits companies or directors to send to members, officers or auditors could be sent in electronic form. Companies would be required to accept proxy instructions given by electronic means. 

Clarification would be provided on the operation of provisions allowing the electronic transmission of notices and documents to members, officers or auditors. The same will be done for the electronic safekeeping and storage of documentation, including for the purposes of inspection.. 

Review of the threshold for the compulsory acquisition of shares under section 215 

Under the existing Section 215 of the Companies Act, the right for a person (an “offeror”) to compulsorily acquire all the shares of a company (including those held by dissenting shareholders in a scheme or contract involving the transfer of those shares) is subject to the offeror having achieved a 90% acceptance threshold for the relevant scheme or contract, with certain exclusions (notably shares held by a nominee or a related corporation of the offeror are excluded from computing the 90% acceptance threshold).  

The exclusions are now proposed to be expanded, and would exclude shareholdings held by close relatives, corporate entities controlled by the offeror, the ultimate controller, as well as individuals or corporate entities controlled by the ultimate controller.  

MOF/ACRA have accepted the proposal with modification and following the public’s feedback, will modify the threshold to establish control of a body corporate to 50%, instead of the 30% threshold that was originally proposed. This will be in line with similar concepts in the CA and the Singapore Code on Take-Overs and Mergers. 

The next step for this round of legislative changes is the tabling in Parliament, and if successfully passed, the amendments would be brought into force on a date to be notified in the government gazette. 

Li Ke Cheng 

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