On 3 April 2024, the Ministry of Transport (“MOT“) introduced the Transport Sector (Critical Firms) Bill (“Bill“) in Parliament. The Bill was read for the second time and passed on 8 May 2024.
The introduction of the Bill follows a review of the existing sectorial legislation by MOT and its statutory boards, the Civil Aviation Authority of Singapore, the Maritime and Port Authority of Singapore and the Land Transport Authority (collectively, “Authority“). The Bill aims to strengthen the resilience of key firms in Singapore’s air, sea and land transport sectors and safeguard their provision of essential transport. The cruciality of keeping maritime and aviation links open during the pandemic years is a poignant reminder of the need to continually undertake reviews to enhance Singapore’s resilience as a global hub.
To this end, the Bill proposes amendments to four Acts, namely, the Bus Services Industry Act 2015, the Civil Aviation Authority of Singapore Act 2009, the Maritime and Port Authority of Singapore Act 1996, and the Rapid Transit Systems Act 1995. The amendments add to and clarify existing provisions within the legislation that go to ownership, control and key officer appointments, as well as introduce new provisions – expressly the right to designate entities as a “designated operating entity” or a “designated equity interest holder” and manage resourcing and operational controls.
Notably, the Bill complements the Significant Investments Review Act 2024 (“SIRA“). The SIRA came into force on 28 March 2024 and sets out a new investment management regime that applies to both local and foreign investors, for entities that are critical to Singapore’s national security interests. Entities that are critical to the national security interests of Singapore but are not caught by the existing sectoral legislation may be designated under the SIRA.
Key features of the Bill are summarised below and include changes that will complement existing ownership and management controls in the current transport licensing regimes.
(a) Introduction of the Designated Entities Regime. Key entities involved in the provision of essential transport services in Singapore may be designated under the Bill’s designated entities regime. Such entities can be designated by the relevant Authority under their respective sectoral legislation.
Designation can be as a “designated operating entity” if the entity directly provides essential transport services in Singapore, or a “designated equity interest holder” if the entity holds equity interest in a designated operating entity (collectively, “Designated Entities“). The Designated Entities will not be concurrently designated under the SIRA.
(b) Ownership Controls. Notification and approval obligations will apply to buyers, sellers and the Designated Entities for specified changes in ownership or control of Designated Entities.
Buyers into Designated Entities will be required to notify the relevant Authority after becoming a 5% controller, and to obtain the relevant Authority’s approval before becoming a 25%, 50% or 75% controller, or an indirect controller. A person acquiring as a going concern any part of a designated operating entity’s business relating to the provision of essential transport services in Singapore, as well as the designated operating entity, will also be required to obtain the relevant Authority’s approval. Sellers will be required to seek the relevant Authority’s approval before ceasing to be a 25%, 50% or 75% controller. Designated Entities will need to notify the relevant Authority of the above-mentioned changes in ownership and control after becoming aware of the events.
(c) Controls over Management Appointments. Designated Entities will be subject to approval requirements to appoint and remove the chief executive officer and the chairperson of the board. Designated operating entities that are also a licensee under the relevant Authority will further require the Authority’s approval for the appointment and removal of the directors of the board.
(d) Operations and Resourcing Controls. Designated Entities will be required to notify the relevant Authority of events that could materially impede or impair the provision of essential transport services in Singapore. Advisory guidelines on these notification requirements will be provided after the Bill comes into force. In the extreme scenario where the designated operating entity becomes unable to provide essential transport services safely and reliably, to ensure service continuity, they may also be issued with a special administration order by the Minister.
(e) Remedial Directions. Under specific circumstances remedial directions may be issued, such as if prior approval was not sought or conditions of approval were not complied with. In such case, the relevant Authority may direct the transfer or disposal of equity interest in Designated Entities, or the removal of key appointment holders.
(f) Appeals. Parties may appeal to the Minister for Transport regarding decisions by the relevant Authority on designation and applications for approval on ownership or management appointments.
Click on the following links for more information:
- MOT Press Release titled “Introduction of the Transport Sector (Critical Firms) Bill” (available on the gov.sg website at www.sgpc.gov.sg)
- Transport Sector (Critical Firms) Bill (available on the Parliament Singapore website at www.parliament.gov.sg)
