On 6 May 2026, a significant milestone was reached in Singapore's corporate governance landscape when selected provisions of the Corporate and Accounting Laws (Amendment) Act 2025 (the "Amendment Act") came into force[1]. The amendments to the Companies Act 1967 ("CA") represent a carefully calibrated effort by Singapore's lawmakers to strengthen shareholder protections, enhance corporate accountability, and prevent the misuse of corporate vehicles for unlawful purposes.
The reforms reflect Singapore's continuing commitment to maintaining a regulatory framework that promotes investor confidence while preserving the country's reputation as one of the world's most business-friendly jurisdictions. By balancing stronger governance safeguards with targeted regulatory streamlining, the amendments seek to ensure that companies remain competitive while operating within a transparent and accountable corporate environment.
Safeguarding Shareholders' Protection
A key focus of the Amendment Act is the enhancement of shareholder rights and protections, particularly in situations where corporate actions may disproportionately affect minority investors.
- Two-Tier Approval for Selective Off-Market Share Buy-backs
Section 76D of the CA permits companies to repurchase their own shares through selective off-market buy-backs, subject to shareholder approval. Prior to the amendments, such transactions required approval by way of a special resolution, with the votes of the selling shareholders and their associates excluded.
While this framework provided a degree of protection, concerns remained that shareholders within the same class whose shares were not being repurchased commonly referred to as the "Affected Class" did not have sufficient influence over transactions that could materially impact their rights and interests.
To address this concern, the amended legislation introduces a mandatory two-tier approval mechanism:
- Tier 1 – Company-Level Approval
The proposed buy-back must first be approved by a special resolution of the company, requiring at least 75% approval from eligible voting shareholders, excluding the selling shareholders and their associates.
- Tier 2 – Class-Level Approval
A separate approval must also be obtained from at least 75% of the shareholders within the affected class of shares, again excluding the selling shareholders and their associates.
This dual-approval framework ensures that shareholders within the affected class have a meaningful voice in determining whether the transaction should proceed. The amendment significantly strengthens minority shareholder protections by preventing situations where a buy-back benefits certain shareholders at the expense of others holding the same class of shares.
- Specifying the Approval Threshold for Variation of Class Rights
Section 74 of the Companies Act governs situations where a company seeks to vary or abrogate the rights attached to any class of its shares. Previously, the approval requirement was dictated solely by the company’s constitution, with potential ambiguity if the constitution was silent. The amendment now provides a statutory backstop: if the constitution does not specify a threshold, any resolution to vary or abrogate class rights must be approved by at least 75% of the total issued shares of that class.
The existing 5% threshold which gives dissenting shareholders the right to apply to court to cancel the variation remains unchanged. Together, these provisions create a predictable, two-step safety net: a clear super-majority voting requirement, followed by a judicial review pathway for a determined minority.
- Compulsory Acquisition Threshold
In takeover scenarios, an offeror who secures 90% acceptance can compulsorily acquire remaining shares. Previously, shares issued after the offer date (e.g., from options or convertibles) were disregarded in the threshold calculation, potentially sidelining holders of such instruments.
The amendment now includes shares issued post-offer pursuant to pre-existing convertible securities (“Existing Convertible Securities”) in the 90% computation. Crucially, once the threshold is met, the offeror retains the right to issue a compulsory acquisition notice within two months even if later conversions cause the percentage to dip below 90%. This protection extends to all dissenting shareholders, including those allotted shares subsequently.
Strengthening of Regulatory Framework
- Heavier Penalties for Breaches of Directors' Duties
To strengthen the regulatory framework for companies, directors who breach their duties such as failing to manage companies in the companies' best interests or not acting with reasonable diligence now face heavier penalties. Maximum fines have increased from S$5,000 to S$20,000, and for serious offences, directors may face both the fines and imprisonment of up to 12 months.
The Act also requires a director who ceases to qualify to act as a director by virtue of certain provisions of the CA or a court order to notify the company of this as soon as practicable but not later than 14 days after the disqualification. The director must also give notice to the Registrar if he or she has reasonable cause to believe that the company will not do so.
- Preventing Misuse of Companies for Unlawful Purposes
To strengthen Singapore's anti-money laundering regime, directors will now be automatically disqualified from acting as directors if they are convicted of money laundering offences under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, 1992. The existing list of offences that disqualify individuals from holding director positions has also been expanded.
The Act also provides that the Registrar, the Registrar of Limited Liability Partnerships, and the court must not restore the name of a company, foreign company, or limited liability partnership ("LLP") to the register where: (i) the entity is likely to be used for an unlawful purpose or for purposes prejudicial to public peace, welfare, or good order in Singapore; or (ii) it would be contrary to national security or interest for the name to be restored.
Additionally, the timeline of the striking-off process for a company and LLP will be shortened to reduce the likelihood of misusing inactive companies or LLPs for illicit purposes such as money laundering.
- Accountability in auditing
Audit reports must now identify the public accountant primarily responsible for the audit engagement by name. Previously, audit reports were signed by accounting firms without identifying specific responsible auditors, though auditor names were available in ACRA's Bizfile register.
Conclusion
The 6 May 2026 commencement of the Corporate and Accounting Laws (Amendment) Act 2025 marks a decisive step in the evolution of Singapore's corporate governance landscape. It reflects a deliberate policy choice to raise standards without sacrificing business competitiveness, tougher on misconduct, leaner on outdated process requirements, and more protective of shareholder rights.
These changes position Singapore to continue attracting quality investment while ensuring that the rights of all stakeholders particularly minority shareholders are meaningfully protected. As the remaining provisions of the Amendment Act are progressively implemented, companies, directors, and investors alike should remain attentive to the evolving regulatory landscape and take proactive steps to align their practices with these heightened standards of corporate governance and accountability.