Board Matters Quarterly - Issue 14: December 2012

Regulatory updates

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1. MAS simplified and enhanced requirements on disclosure of interests in listed entities

In October 2012, the MAS introduced a new disclosure of interests (DOI) regulatory regime to streamline and enhance the existing DOI requirements in listed entities by directors and substantial shareholders. The new regime takes effect on 19 November 2012.

  • Consolidate all DOI requirements in the SFA
    Currently, directors and substantial shareholders of a listed company are required to report their interests, and changes in interests, in securities to the company under the Companies Act, and the SGX under the SFA. Reporting requirements for business trusts and real estate investment trusts (REIT) are found in the Business Trusts Act and the SFA respectively. Separately, the listed entity is required to announce such information to the market under the SGX listing rules.

    Under the new regime, all notification requirements in respect of interests in listed entities (corporations, business trusts and REIT) are streamlined and consolidated in the SFA.

  • Simplify notification process for directors and substantial shareholders
    Directors and substantial shareholders are no longer required to separately report their interests and changes in interests in securities to the SGX. Only the holding company is required to aggregate the interests of every related corporation for its reporting purposes. For each subsidiary, it only needs to report its own interests. This will cut down the volume of reporting by large corporate groups and reduce compliance costs.

  • Make it a legal requirement for listed entities to notify investors of interests or changes in interests
    To ensure that investors are kept informed of any changes in holdings of directors and substantial shareholders on a timely basis, listed entities are required to announce the information as soon as possible and no later than the end of the following business day.

  • Extend reporting obligations of the CEO who is not a director
    The notification requirements applicable to directors are extended to the CEO who is not director. Even if the CEO is not a director, he is a key decision maker in respect of operating and financial policies of the listed entity. Hence, information on his dealings in the entity’s securities is relevant to investors.

  • Extend the DOI requirements to include interests in foreign corporations with a primary listing on the SGX
    The legal obligations for directors and substantial shareholders to report their interests or changes in interests, which previously apply only to Singaporeincorporated listed companies, are extended to foreign-incorporated corporations with a primary listing on the SGX. This levels the playing field between local and foreign listed companies and enhances investors’ protection.

  • Impose notification requirements on shareholders of trustee-managers of business trusts and responsible persons of REITs
    For business trusts and REITs where business and assets are externally managed by the manager, investors are likely to be concerned with the identity of the persons controlling the manager. Under the new regime, a shareholder of the manager of a business trust or REIT is required to give notification when his shareholdings in the manager reaches, crosses or falls below the strategic levels of 15%, 30%, 50% and 75%. Any acquisition or disposal of interest in the securities of the business trust or REIT by the manager must also be disclosed.

  • Stiffer penalties for flagrant breaches
    The MAS introduced stiffer penalty of up to $250,000 and/or imprisonment not exceeding two years for material contraventions which are committed intentionally or recklessly. Civil penalties may also be imposed for such flagrant breaches of the law. This enables the MAS to take enforcement action proportionate to the seriousness of the offence.

  • Introduced electronic notification forms
    In light of feedback received from listed entities, the MAS has developed electronic notification forms for use by directors, CEOs and substantial shareholders and unitholders. The SGXNet announcement template has also been re-designed to allow the listed entity to attach the notification form directly for immediate dissemination. This removes the need for manual entries by the listed entity, and increases the efficiency of the reporting process. The requirement to use prescribed notification forms also standardizes the information disclosed to the market.

Details are available at the MAS website. (

2. MAS restricted loan tenure for residential properties

The MAS restricted the tenure of loans granted by financial institutions for the purchase of residential properties in October 2012.

Loans tenure capped at 35 years

The new MAS rules impose an absolute limit of 35 years on the tenure of all loans for residential property. The outstanding loan may be either a loan from HDB, or a financial institution regulated by the MAS. The new MAS rules apply to loans to both individual and nonindividual borrowers, as well as refinancing loans from 6 October 2012.

Where a borrower applies for a refinancing facility in respect of any balance outstanding under a residential property loan, the sum of the tenure of the refinancing facility and the number of years since the first residential property loan granted to the borrower for the purchase of that residential property was first disbursed, cannot exceed 35 years.

Tighter loan-to-value (LTV) limits for loans exceeding 30 years tenure

The MAS lower the LTV ratio for new residential property loans to borrowers who are individuals, if the tenure exceeds 30 years, or the loan period extends beyond the retirement age of 65 years. For these loans, the LTV limits are:

  • 40% for a borrower with one or more outstanding residential property loans
  • 60% for a borrower with no outstanding residential property loan

The MAS also lower the LTV ratio for residential property loans to non-individual borrowers from 50% to 40%.

The new MAS rules apply to new loans granted to individuals and non-individual borrowers by financial institutions regulated by MAS for the purchase of residential property if the date when the option to purchase was granted, or where there is no option to purchase, the date of the sale and purchase agreement is on or after 6 October 2012. For re-financing facilities, the rules apply where the application date of such facilities is on or after 6 October 2012.

Details are available at the MAS website. (

3. MOM calling for public feedback on Employment Act review

The MOM invites members of the public to give feedback on areas being considered in the review of the Employment Act (EA) to ensure the EA remains relevant and responsive to the needs of the changing workforce. The review will be conducted in two phases. MOM is seeking feedback on the areas being considered under Phase 1 of the EA review as outlined below.

Phase Areas of review
Phase 1 (2Q 2012 – 1Q 2013)
  • Extending coverage of the EA
  • Improving employment standards and benefits for employees
  • Reducing rigidity and augmenting flexibility for employers
Phase 2 (from 4Q 2013) More complicated issues that require further study including, but not limited to:
  • Enhancing protection for employees in non-traditional work arrangements, such as contract work, selfemployment and outsourcing
  • Better mechanisms to facilitate employment dispute resolution between employers and employees

Extending coverage of the EA

  • To cover more employees, particularly on provisions relating to hours of work, rest days and annual leave: Since the EA was last reviewed, the median gross monthly salaries have increased by about 25%. To keep pace with salary increases, it is therefore proposed that the salary threshold for non-workmen be similarly adjusted, and review the need to adjust salary threshold for workmen.
  • To extend more protection to professionals, managers & executives (PMEs): Currently, PMEs earning a basic monthly salary of up to $4,500 are only accorded basic salary protection and access to the Labor Court for salary claims. They are not covered by other provisions of the EA (e.g., notice period requirements and conditions pertaining to termination of service, public holiday and sick leave entitlements, and protection against unfair dismissal). It is therefore proposed that appropriate additional protection under the EA be extended to PMEs.

Improving employment standards and benefits for employees

  • To better safeguard employees’ salaries against unauthorized deduction: The EA currently provides a list of authorized deductions that employers may make from a worker’s salary. Although the amount of all deductions with respect to any one salary period is capped at 50% of an employee’s salary, errant employers may make excessive or illegal deductions especially with respect to deductions for food and accommodation, amenities and services, as well as recovery of dubious advances and loans that cause financial hardship to employees. To better safeguard the interests of vulnerable workers, it is proposed that additional limits be put in place against salary deductions.
  • To minimize disputes and raise awareness of employee’s salary entitlement, it is proposed that employers be required to maintain detailed employment records, and to provide written pay-slips to their employees upon request.
  • To review non-entitlement period for retrenchment benefits: The EA stipulates that an employee having less than three years’ service with the same employer is not entitled to retrenchment benefits. In view of shorter employment tenures, it is proposed that this non-entitlement period be shortened to align with prevailing industry practices.

Reducing rigidity and augmenting flexibility for employers

  • The EA review introduce a qualifying period for dismissal with notice provision for PMEs, and give employers the flexibility to provide timeoff-in-lieu for work done on public holidays by PMEs.
  • Review whether employers are required to provide paid sick leave and bear medical examination expenses with respect to cosmetic consultations and procedures.

More details are available at the MOM website.(

4. Ten-fold increase in number of joint MOM and CPF Board inspections from November 2012

The MOM and the CPF Board are stepping up their efforts to bring about compliance with the CPF Act and Employment Act (EA), so that employees, particularly more vulnerable groups like low-wage workers, enjoy their basic employment rights under the law. Areas of focus include payment of CPF contributions, on-time payment of salary, provision of paid annual and medical leave, and adherence to working-hour requirements, amongst others.

Greater attention will be placed on industries such as food & beverage, retail, and security and cleaning where non-compliance with the CPF Act and the EA tend to be higher. The number of enforcement inspections will be increased from around 500 to 5,000 each year – a significant tenfold increase. Those who do not act responsibly may face fines up to $10,000 and/or imprisonment of up to seven years.

More details are available at the CPF Board website.(

5. Recent and future regulatory changes

As part of the government’s continuing efforts to bring Singapore’s corporate regulations in line with the international standards, the regulatory enforcement has been enhanced, and new legislation continues to increase. We summarized below the recent and future regulatory changes that will have an effect on an entity’s operation, financial reporting and disclosures:

Regulatory requirements Effective dates
Overview of Budget 2012 tax changes
Revised Code on Take-Overs and Mergers
9 April 2012
Changes to Work Injury Compensation Act
1 June 2012
National Wages Council's Guidelines for 2012/2013
Period from 1 July 2012 to 30 June 2013
Increase in CPF contribution rates for older workers
1 September 2012
Amendments to the Employment of Foreign Manpower Act (EFMA)
9 November 2012
MAS new disclosure of interests regulatory regime
19 November 2012
Revised Code of Corporate Governance – except for Principle 2, and its Guidelines on Board composition
Effective from financial year commencing on or after 1 November 2012
Revised Code of Corporate Governance – Principle 2, its Guidelines 2.1, and 2.3–2.8 on Board composition
Changes to be made at the AGM following the end of the relevant financial year commencing on or after 1 November 2012
Revised Code of Corporate Governance – Guideline 2.2 on Board composition
Changes to be made at the AGM following the end of the financial year commencing from 1 May 2016 onwards

Regulatory changes that are in the pipeline are:

Proposed regulatory changes Proposed effective dates
MOF completed review of the Companies Act
Amendment Bill is expected to be tabled in Parliament by end 2013.
SGX consultation paper on proposed rule changes on general meetings to increase shareholder engagement and enhance corporate governance practice
SGX proposed introduction of Mainboard listing rules for mineral, oil and gas companies