Transport Sector (Critical Firms) Act 2024 in Force with Key Transport Entities Subject to Increased Regulatory Controls

Introduction

On 1 April 2025, the Transport Sector (Critical Firms) Act 2024 (“TSA“) came into operation. The TSA implements measures to enhance the resilience of essential transport services in Singapore and lays the foundations to protect Singapore against possible future disruptions to her essential transport firms.

The TSA introduces a designated entities regime by amending 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 to:

1. introduce controls, or augment or extend existing controls, in respect of ownership, management appointment, operations and resourcing to designated providers of essential transport services and their equity interest holders who are designated; and
2. extend the existing power of the Minister for Transport to make special administration orders in relation to licensees, to designated providers of essential transport services.

Initially, 19 key transport entities across the air, land and sea transport sectors have been designated. Among them, 17 key transport entities that provide essential transport services into Singapore have been designated as “designated operating entities” and two key transport entities have been designated as “designated equity interest holders”. The designations take effect on 15 April 2025.

In this Update we provide an overview of the key aspects of the TSA and the business implications.

Key Aspects of the TSA

The TSA empowers the Civil Aviation Authority of Singapore, the Land Transport Authority of Singapore and the Maritime and Port Authority of Singapore (collectively, “Authority“) to designate key transport firms and apply relevant controls over them under their respective sectoral legislation.

Designated Entities Regime

As highlighted during the opening speech by Minister for Transport and Second Minister for Finance, Mr Chee Hong Tat, at the second reading of the Transport Sector (Critical Firms) Bill, the TSA is not intended to apply to every entity which provides a transport service in Singapore. Instead, entities within the transport sector will be designated if they:

1. are involved in the provision of essential transport services in the air, land or sea transport sectors; and
2. they are strategically important within the transport sector, for example if the services they provide are not readily replaceable, due to significant market share or specialised expertise.

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 and has a strong nexus of control over their subsidiaries that are designated operating entities (collectively, “Designated Entities“). Entities will be designated by the relevant Authority under their respective sectoral legislation and will not be concurrently designated under the Significant Investments Review Act 2024 (“SIRA“). To learn more about the SIRA, please read our Legal Update titled “The Significant Investments Review Act – Balancing National Security and Investment Opportunities”.

The following entities have been designated, effective 15 April 2025:

1. Designated operating entities:

• • Air transport: Changi Airport Group (Singapore), Changi Airport Fuel Hydrant Installation, SATS Airport Services, SATS Asia-Pacific Star, SATS Catering, SATS, Scoot, SIA Engineering Company and Singapore Airlines.
  • Land transport: SBS Transit, SMRT Buses, SBS Transit Rail, SMRT TEL and SMRT Trains.
  • Sea transport: PSA Marine, Jurong Port and PSA Corporation (being a former designated public licensee).

2. Designated equity interest holders:

• • Land transport: SMRT Corporation.
  • Sea transport: PSA International (holding an equity interest in PSA Corporation).

Ownership Controls

The TSA allows the relevant Authority to have oversight of significant changes in effective control of Designated Entities as follows:

1. Any person who becomes a 5% controller of the Designated Entity must notify the relevant Authority within seven days after becoming a 5% controller.

2. Any person who intends to become, or ceases being, a 25%, 50% or 75% controller of the Designated Entity must seek the relevant Authority’s approval.

3. The relevant Authority’s approval must be sought for any person intending to become an indirect controller (meaning someone that is able to exert control over the directors or trustee managers of the Designated Entity) or any person intending to acquire and continue operating without disruption any part of the designated operating entity’s business relating to the provision of essential transport services.

4. Designated Entities must notify the relevant Authority within seven days after becoming aware of any of the above ownership changes.

Management Appointment Controls

Designated Entities are 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 additionally require the relevant Authority’s approval for the appointment and removal of board directors. These controls allow the relevant Authority to be kept apprised of any changes to the key personnel responsible for the management of Designated Entities.

Operations and Resourcing Controls

Designated Entities must notify the relevant Authority of events that could materially impede or impair the provision of essential transport services in Singapore. The TSA extends the relevant Authority’s step-in powers via a Special Administration Order to cover designated operating entities and licensees across the air, land and sea transport sectors. This is to safeguard service continuity in extreme scenarios and unlikely events, such as where a designated operating entity or licensee becomes unable to provide essential transport services safely and reliably.

These controls seek to ensure that companies are equipped and able to operate their services under all circumstances, including times of crisis, and in the event of significant changes within a relevant sector.

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 an equity interest in Designated Entities, or the removal of key appointment holders.

 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.

Business Implications

Harmonising our laws across the transport sector aims to strengthen the resilience of key firms in Singapore’s air, land and sea transport sectors, reduce the regulatory burden on entities as they evolve and will provide greater consistency on commercial and investment controls in Singapore’s transport ecosystem thereby ensuring that Singapore’s transport industry remains open, pro-business and investor-friendly.

Investors into these critical transport sectors need to be aware of these regulatory requirements and ensure that the necessary notification or approval requirements have been satisfied before completing their transaction. Designated Entities must also implement comprehensive processes to ensure compliance with the controls and adequate continuity of business planning. This includes maintaining accurate records of equity interests, voting power, and any changes in control; and maintaining and regularly reviewing a business continuity plan that sets out procedures and systems necessary to restore the reliable and secure provision of essential transport services in the event of any disruption. The relevant Authority will provide their respective Designated Entities with sector-specific guidance on compliance with certain requirements.

Please contact our team if you wish to discuss how best to navigate the changes introduced.

Click on the following links for more information:

Available on the Singapore Statutes Online website at www.sso.agc.gov.sg:

• • Transport Sector (Critical Firms) Act 2024
  • Bus Services Industry (Designated Operating Entities) Notification 2025
  • Civil Aviation Authority of Singapore (Designated Operating Entities) Notification 2025
  • Maritime and Port Authority of Singapore (Designated Operating Entities) Notification 2025
  • Rapid Transit Systems (Designated Entities) Notification 2025

Available on the Ministry of Transport website at www.mot.gov.sg:

• • “Opening Speech by Minister for Transport and Second Minister for Finance, Mr Chee Hong Tat, at the Second Reading of the Transport Sector (Critical Firms) Bill”