Executive Summary
On 6 May 2026, selected provisions of the Corporate and Accounting Laws (Amendment) Act 2025 (“Amendment Act“) took effect to, among other things, amend the Companies Act 1967 (“CA“) to implement the following key changes:
- Specifying shareholders’ approval threshold for variation of class rights;
- Requiring two-tiered approval for selective share buy-back of part of shares in a class;
- Fine-tuning computation of compulsory acquisition threshold;
- Increasing the maximum penalty for offences relating to breaches of directors’ duties; and
- Expanding the list of offences that disqualify a person from acting as a director, including offences under the anti-money laundering law.
By way of background, the Corporate and Accounting Laws (Amendment) Bill was passed in Parliament on 5 November 2025. When fully in force, the Amendment Act will amend the Accountants Act 2004, the CA, the Insolvency, Restructuring and Dissolution Act 2018, the Limited Liability Partnerships Act 2005 (“LLP Act“), the Limited Partnerships Act 2008 and the Variable Capital Companies Act 2018 (“VCC Act“) to implement the above changes and other changes that will ease the regulatory burden for Singapore business vehicles and strengthen safeguards against the misuse of Singapore business vehicles for unlawful purposes. For a summary of these changes, refer to our December 2025 Legal Update on “Parliament Passes Law to Prevent Misuse of Companies, Protect Shareholders and Ease Regulatory Burden“.
A summary of the changes which came into force on 6 May 2026 is set out below.
Safeguarding Shareholders’ Interests
| Old Provisions | New Provisions |
|---|---|
| Specifying Shareholders' Approval Threshold for Variation of Class Rights | |
| Section 74 of the CA protects the rights of shareholders where a company's share capital is divided into different classes of shares.
Section 74 of the CA provides that, where the company's constitution allows the variation or abrogation of rights attached to any class of its shares and the class rights have been varied or abrogated accordingly, the holders of at least 5% of the total number of issued shares of that class of shares may apply to the General Division of the High Court ("Court") to cancel the variation or abrogation. However, before the amendment, section 74 of the CA did not specify the threshold for shareholders' approval to vary or abrogate class rights. This was left to the company to specify in its constitution. For example, the model constitution for a private company limited by shares prescribed under section 36 of the CA provides that the rights attached to any class of shares may be varied with: (i) the consent in writing of the holders of 75% of the issued shares of that class; and (ii) the sanction of a special resolution passed at a separate general meeting of the holders of shares of that class. | For greater clarity, the revised section 74 of the CA provides that where a company's constitution allows the variation or abrogation of rights attached to any class of its shares, any resolution to vary or abrogate any class rights must be approved:
|
| Two-tiered Approval for Selective Share Buy-back of Part of Shares in a Class | |
| Section 76D of the CA allows a company to buy back its own shares through a selective repurchase in accordance with an agreement authorised in advance by a special resolution of the company, excluding the votes of shareholder(s) whose shares are being repurchased and their associates. The approval process before the amendment may not sufficiently protect the interests of other shareholders holding shares of that same class whose shares are not being repurchased as part of the selective share buy-back exercise ("Affected Class"). The approval process would better protect the other shareholders in the Affected Class if they were afforded greater influence over the decision to approve the selective purchase of shares in the Affected Class and if approval was required to be sought on a class basis. | To better safeguard the rights of the shareholders within a class of shares that is the subject of a selective off-market purchase, where not all shares of that class are purchased, the revised section 76D requires two tiers of approval:
|
| Fine-tuning Computation of Compulsory Acquisition Threshold | |
| Section 215 of the CA provides that a person ("offeror") is entitled to compulsorily acquire the shares of any dissenting shareholder where a scheme or contract involving the transfer of all shares, or all shares in a specific class, in a company ("target company") has been approved by the prescribed threshold of shareholders of the target company. The prescribed threshold is the holders of at least 90% of the total number of shares of the target company (excluding treasury shares), or of the shares of that class (other than shares already held at the date of the offer by the offeror, and excluding any shares in the target company held as treasury shares) ("90% threshold"). Before the amendment, in computing the 90% threshold, new shares issued after the date of the offer were disregarded. Thus, the shares of the holders of options or convertible securities issued on or before the date of the offer and who are potential shareholders of the target company were excluded. | In order to protect the rights of holders of options or convertible securities issued on or before the date of the compulsory acquisition offer ("Existing Convertible Securities"), the revised section 215 provides that in determining the 90% threshold, shares that are issued after the date of the offer pursuant to the exercise of Existing Convertible Securities are counted. The revised section 215 clarifies that once the 90% threshold is reached, the offeror has the right to issue the notice of compulsory acquisition within two months of attaining the threshold, and such a right will not be invalidated if, due to newly issued shares arising from conversion, the approval drops to below 90% after it had initially crossed 90%. This right to issue a notice applies to all dissenting shareholders, including shareholders whose shares were allotted after the right to issue a notice has arisen. |
Preventing Misuse of Singapore Business Vehicles
To strengthen safeguards against the misuse of Singapore business vehicles for unlawful purposes, on 6 May 2026, the CA, the LLP Act and the VCC Act were revised to disqualify persons convicted of money laundering offences from acting as a director or taking part in the management of a company, a foreign company or a variable capital company.
Strengthening Companies’ Regulatory Framework
The regulatory framework for companies has been strengthened as follows:
- Increasing the maximum penalty for a breach of section 157 of the CA. Section 157(1) requires directors to act honestly and with reasonable diligence, while section 157(2) prohibits officers and agents from misusing company information for personal gain or to the company’s detriment. The maximum fine has been increased from S$5,000 to S$20,000, with imprisonment for up to 12 months, or both.
- Requiring a director who ceases to qualify to act as a director by virtue of certain provisions of the CA or a court order under certain provisions of the CA 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.
Our Comments
These legislative changes have a direct impact on both compliance practices and corporate transactions. For example, the introduction of higher approval thresholds for the variation of class rights and selective share buy-backs is designed to reduce the risk of abuse of power by majority shareholders and to strengthen protections for minority shareholders. However, these legislative changes may lengthen transaction timelines, so stakeholders should factor in additional lead times and communication strategies. Companies should review their constitutions and, where appropriate, update them to reflect the new mechanics for class-rights variations.
If you have any queries on the above matters or wish to find out more about this development or other changes that are not covered in this Update, please reach out to our team members set out on this page.
For regional Corporate & Commercial matters, please see Rajah & Tann Asia’s Regional Corporate & Commercial Practice for more information.
Disclaimer
Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.
The contents of this publication are owned by Rajah & Tann Asia together with each of its member firms and are subject to all relevant protection (including but not limited to copyright protection) under the laws of each of the countries where the member firm operates and, through international treaties, other countries. No part of this publication may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose save as permitted herein) without the prior written permission of Rajah & Tann Asia or its respective member firms.
Please note also that whilst the information in this publication is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as legal advice or a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. You should seek legal advice for your specific situation. In addition, the information in this publication does not create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this publication.
