SINGAPORE Law and Practice Contributed by: Dorothy Marie Ng, Monica Yip, Tay Peng Cheng and Tan Shao Tong, WongPartnership LLP
or ultimate holding company is a public com - pany is prohibited from directly or indirectly pro - viding financial assistance in connection with the acquisition of shares in the company or shares in the holding company or ultimate holding compa - ny, including the provision of real estate assets as security. With some exceptions, the CA also prohibits companies from giving security for loans, qua - si-loans or credit transactions made to another company if the directors of the first company hold 20% or more of the total number of equity shares in the latter company. The CA requires a director to “at all times act honestly and use reasonable diligence in the dis - charge of the duties of his office”. The directors of a company have to ensure there is a corpo - rate benefit in providing any security over its real estate assets, particularly if the real estate assets are provided in a group borrowing context. Any exercise of the directors’ power to grant security outside of the director’s fiduciary duties may be subject to challenge by the liquidator and other creditors. Title documents may contain restrictions with respect to giving security over real estate. 3.6 Formalities When a Borrower Is in Default Generally, security over real estate can be enforced upon default by a borrower through the following methods: • the appointment of a receiver; • obtaining possession of the real estate (eg, by court order or by consent) and subsequently exercising the power of sale; or • foreclosure.
Where the exercise of power of sale is in respect of real estate held under a lease issued by the JTC Corporation (JTC), the real estate can only be sold subject to the JTC’s prior consent and in accordance with the terms imposed. Some real estate held under a lease from a statutory board prohibits the security holder from exercis - ing its right of foreclosure if said security holder is owned by a foreign government. The time it takes to successfully enforce and realise on real estate security will vary depend - ing on the type of real estate security, the mode of enforcement, whether any consents of any authority or third party will be required and whether there are any issues or objections raised by borrowers or other creditors. In the case of registered land, the Land Titles Act 1993 confers priority according to the order in which security interests are registered. The COVID-19 (Temporary Measures) Act 2020 was promulgated in 2020 following the COVID-19 pandemic, and provided temporary relief against the enforcement of legal action for certain “scheduled contracts” entered into or renewed before 25 March 2020. However, such moratorium on enforcement action is no longer applicable. Foreclosure of mortgaged properties was not high in 2023 as safeguards on lending have been put in place to prevent borrowers from taking on too much debt. 3.7 Subordinating Existing Debt to Newly Created Debt The usual methods of subordination are structur - al subordination and contractual subordination (ie, turnover subordination and subordination of rights of payment in the event of the debt -
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