SINGAPORE Law and Practice Contributed by: Doos Choi, Pierre Dzakpasu, Janelene Chen and Pieter de Ridder, Mayer Brown
share certificate(s); b) pre-signed but undated instrument(s) of transfer; c) pre-signed but undated letters of resignation from each of the directors of the subsidiary whose shares are being charged; d) letters of authorisation from each of the directors of the subsidiary to date the letters of resignation upon an enforcement sale. The constitution or articles of association of the subsidiary whose shares are being charged is also usually amended to remove any transfer restrictions that may hamper a lender’s enforce - ment of the security. To the extent that the shares are listed in Sin - gapore (ie, book-entry or scripless securities), security can be taken by way of a statutory assignment or statutory charge in the prescribed form and registered with the Central Depository (Pte) Limited in Singapore, or by way of com - mon law security. When taking security over listed shares, it is important to ensure that the relevant disclosure and reporting requirements are complied with. Where security is being taken over shares of a Singapore company, or where a Singapore com - pany is providing security over shares it owns in a foreign company, stamp duty of up to SGD500 is payable to the Inland Revenue Authority of Singapore. 5.2 Floating Charges and/or Similar Security Interests Floating charges are recognised under Singa - pore law. Whether private credit lenders will insist on fixed versus floating charges will depend on the situ - ation. As for commercial bank loans, it is gener - ally recognised that a business will need suffi - cient flexibility to operate. Therefore, a nuanced
approach is usually adopted depending on the type of asset. For example, floating charges will be taken over operating accounts but fixed charges will be taken over specific “control” accounts that have been established to underpin the lending structure. Floating charges can be expected for trading stock. Fixed charges will be taken over real estate and shares, etc. 5.3 Downstream, Upstream and Cross- Stream Guarantees Subject to the following, it is generally permis - sible for Singapore companies to give down - stream, upstream and cross-stream guarantees in accordance with: • any restrictions under that company’s consti - tution or articles of association; • the general requirement for corporate benefit; and • financial assistance rules (see 5.4 Restric- tions on the Target ). 5.4 Restrictions on the Target Under the CA, private companies are not pro - hibited from providing financial assistance for the acquisition of shares in that private com - pany or the holding company or ultimate hold - ing company of that private company. “Financial assistance” is not defined in the CA, but the CA provides that the term includes the making of a loan, the giving of a guarantee or the provision of security. On the other hand, public companies, which are defined under the CA as companies that are not private companies (“private companies” being defined as those whose constitution restricts the right to transfer their shares and limits to not more than 50 the number of their members) are
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