X-border insolvency and abolishment of ring-fencing
Similar to how Singapore adopted the Model law on International Commercial Arbitration due to globalisation and commercial realities, the need to adopt the Model Law on cross border insolvency arose out of similar circumstances.
Just as how Singapore made it easy for anyone in the world to start a business in Singapore, it is imperative to make it easier to restructure businesses in Singapore. In this regard, a harmonisation of relevant rules and a universalist approach to insolvency should be employed.
Madam, I note that the adoption of the Model Law is not a full-scale one. Article 25 was amended by substituting “shall cooperate” to the maximum extent possible with foreign courts or foreign representatives to “may cooperate” instead. Can the Minister clarify why this amendment was made?
Also in relation to cross-border insolvency is the abolishment of the ring-fencing mechanism which has been criticised by practitioners local and abroad as being contrary to the internationally-accepted standards of a fair and equitable cross-border insolvency regime.
In this regard, the abolishment should assist in Singapore’s ambition to become a debt restructuring hub.
Local creditors should also not be overly worried that this amendment gives them no protection. In this regard, I note that a long list of financial institutions could still receive some protection. Further, some creditors may rely on Articles 6, 21 and 22 of the Model Law to ensure that their interests are protected under certain circumstances.
Transfer of Registration
I support the amendment to allow foreign companies to transfer their registration of incorporation to Singapore. This move allows Singapore to remain competitive, facilitate the relocation of companies to Singapore, and to keep pace with other jurisdictions that have embraced this re-domiciliation mechanism.
However, can the Minister clarify if re-domiciled companies could represent to counterparties and the public that they are Singapore-incorporated companies upon issuance of the Notice of Transfer, or could they only make such representations after ACRA is satisfied with the submission of documents evidencing de-registration in its prior place of incorporation.
Next, I note that we will introduce how a Financial Year is to be calculated. This is a required addition in view of the fact that lodging of a company’s annual returns is to be done within a prescribed period after the end of its Financial Year, instead of its AGM under the Act.
The proposed Section 198(2) provides that the first financial year must not be longer than 18 months, unless ACRA approves on the application of the Company. Can the Minister clarify under what conditions will a Company’s application be approved?
Retention of books and papers after striking off
On the retention of books and papers after a company has been struck off, may I clarify why the period is 5 years when a person may, within 6 years (after the name of the company has been struck off), apply to the Court to restore the struck off company to the Register?
Duties of Companies with respect to the issuance of certificates
Lastly, on foreign entities hoping to register in Singapore. While I note that the Ministry is retaining the 60-day period for newly-registered companies to prepare all share or debenture certificates, there should also be an option for an extra 30 days – in cases where companies have more elaborate tools of debt which require in-depth legal support in their countries of origin.
This option will enhance the attractiveness of our regulatory regime for companies planning to register a new entity in Singapore. Will the Ministry consider this?
Madam, I stand in full support of this Bill which would serve well to assist Singapore’s drive to become an international hub for debt restructuring.