Speech by Mr Louis Ng Kok Kwang, MP for Nee Soon GRC, at the Second Reading of the Business Trusts (Amendment) Bill (Bill No. 22/2022)
Sir, this Bill will align provisions for business trusts with the Companies Act and strengthen governance for business trusts.
Business trusts are a common structure for tapping on capital on the SGX. The proposed amendments to strengthen governance of business trusts are welcomed.
I have clarifications on two areas.
Response to public consultation
Let me start by thanking MAS for conducting a public consultation before bringing this Bill to Parliament. Public consultations not only show that the government is keen to listen, but they also help our government agencies guard against blind spots they may have during the policymaking process.
I also thank MAS for publishing a response paper to this public consultation. This gives respondents the assurance that their feedback is heard loud and clear.
Loan to director for defending proceedings or regulatory action
My first set of clarifications has to do with loans to directors for defending against proceedings.
First, can Minister clarify why loans to directors for defending against regulatory actions are treated differently from loans for defending civil or criminal proceedings?
Conditions outlined in the new Section 27B of the Business Trusts Act and in Section 163A of the Companies Act appear to apply when the loans are for defending civil or criminal proceedings but not when the loans are for defending against regulatory actions. The reason for this distinction is unclear.
Second, can Minister clarify whether loans for defending criminal or civil proceedings need to be repaid if charges are withdrawn and the director is issued a stern warning or a discharge not amounting to an acquittal?
The Bill makes clear that repayment must be made in certain other situations, such as when the director is convicted in the proceedings, but it does not state as much for this situation.
Third, it is common for a defendant in criminal proceedings to be convicted on some charges but acquitted on others. Similarly, in civil proceedings, a defendant may succeed on certain heads of claim but not others.
Can Minister clarify how repayment should be treated in such cases? Will the director be required to repay only part of the loan?
Alternatively, will the need for repayment be determined by whether the director has succeeded overall in the criminal or civil proceedings?
If this is the case, how will overall success be determined? Is this determined by the number of charges or claims, or the severity of the charges or claims that the director succeeds on?
Requirements to maintain and disclose information on controllers
My second set of clarifications has to do with a trustee-managers’ duties to maintain information.
The new Section 52K requires the trustee-manager of a business trust to take “reasonable steps” to identify registrable controllers of a business trust. The scope of such duties is potentially very large.
Can Minister provide illustrations to guide trustee-managers on what would constitute reasonable steps in the discharge of their duties?
Also, can Minister clarify whether the new Section 52N applies to someone who knows or ought to know that someone else may be a registrable controller?
If not, can Minister explain why the new Section 52K, which enforces a similar requirement to disclose information, does not apply to such a person? It would be helpful to understand why the two sections, similar in their scope, do not apply the burden to the same groups of people.
Sir, notwithstanding these clarifications, I stand in support of the Bill.
Watch the speech here.