SINGAPORE Law and Practice Contributed by: Renu Menon, May Ng, Blossom Hing, SC and Ong Ken Loon, Drew & Napier LLC
gapore (or within 37 days if executed outside Singa- pore) and a filing fee of SGD60 per charge registration) and notices of assignment/charge to be served on the relevant parties. Failure to stamp security within the statutory deadline results in penalties, and failure to register a charge with ACRA within the statutory deadline renders the charge void against the chargor’s liquidator and other creditors. Additionally, security interests over certain assets (eg, aircrafts, ships, intellectual property rights or land) will need to be registered at specialist registries and addi- tional fees will apply. Similarly, the timeframe for registration of security in respect of certain classes of assets at specialist reg- istries may vary. For example, registration of a mort- gage with the SLA may take several weeks/months if complex and involving multiple units. In the interim, a lender may protect its interest by the lodgment of a caveat with the SLA. 5.2 Floating Charges and/or Similar Security Interests Security interests may be created over all present and future assets of a company by way of a floating charge in a debenture. Such debenture would typically pro- vide for conversion or crystallisation of such floating charge into a fixed charge upon the occurrence of certain events including insolvency related events or other events of default, or upon the lender’s option. 5.3 Downstream, Upstream and Cross- Stream Guarantees There are generally no restrictions on Singapore enti- ties providing downstream, upstream, and cross- stream guarantees, assuming the provision of such guarantee is supported by commercial benefit to the guaranteeing entity and the directors are not acting in breach of their fiduciary duty to the company in authorising the granting of such guarantee. 5.4 Restrictions on the Target Section 76 of the Companies Act provides, inter alia, that a public company or a company whose hold- ing company or ultimate holding company is a public company, shall not, whether directly or indirectly, give any financial assistance for the purpose of, or in con-
nection with, the acquisition by any person (whether before or at the same time as the giving of financial assistance) or proposed acquisition by any person of shares in the company or in a holding company or ultimate holding company (as the case may be) of the company. The prohibition does not extend to sister subsidiary companies. The Companies Act further provides that financial assistance for the acquisition of the target’s shares may be provided by, among others, the giving of a guarantee or the provision of security. There are, however, whitewash procedures that would enable the target to effect a whitewash through, inter alia, board approval, if doing so does not materially prejudice the interests of the target or its sharehold- ers or the target’s ability to pay its creditors, or the passing of shareholders’ and directors’ resolutions and lodgement of solvency statements and papers with ACRA without the need for public notification and objection period or court order. Where the target is unable to effect a short-form whitewash, parties must consider that the need for public notification and objection period for a long-form whitewash will mean that a timeframe of six to eight weeks (assuming no objections) may be required. 5.5 Other Restrictions Entities in Singapore must be mindful of the prohibi- tion under Section 163 of the Companies Act relat- ing to the guarantee of loans, quasi-loans or credit transactions to companies related to their directors. Such prohibition does not apply to exempt private companies (ie, private companies owned wholly by individual shareholders not exceeding 20, or a gov- ernment-owned private company gazetted as such). Exceptions to this prohibition include where the com- panies involved are in a subsidiary/holding company relationship or are subsidiaries of the same holding company. An exception was introduced with effect from 2016 to allow for prior approval by the company in a general meeting to permit such transactions. Securities which were previously prohibited under Section 163 of the Companies Act may now be granted subject to prior shareholder approval being obtained.
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