14. Section 76 of the Companies Act is repealed and the following sections substituted therefor:“Company financing dealings in its shares, etc |
76.—(1) Except as otherwise expressly provided by this Act, a company shall not —(a) | whether directly or indirectly, give any financial assistance for the purpose of, or in connection with —(i) | the acquisition by any person, whether before or at the same time as, the giving of financial assistance, of —(A) | shares or units of shares in the company; or | (B) | shares or units of shares in a holding company of the company; or |
| (ii) | the proposed acquisition by any person of —(A) | shares or units of shares in the company; or | (B) | shares or units of shares in a holding company of the company; or |
|
| (b) | whether directly or indirectly, in any way —(i) | acquire shares or units of shares in the company; or | (ii) | purport to acquire shares or units of shares in a holding company of the company; or |
| (c) | whether directly or indirectly, in any way, lend money on the security of —(i) | shares or units of shares in the company; or | (ii) | shares or units of shares in a holding company of the company. |
|
(2) A reference in this section to the giving of financial assistance includes a reference to the giving of financial assistance by means of the making of a loan, the giving of a guarantee, the provision of security, the release of an obligation or the release of a debt or otherwise. |
(3) For the purposes of this section, a company shall be taken to have given financial assistance for the purpose of an acquisition or proposed acquisition referred to in subsection (1)(a) (referred to in this subsection as the “relevant purpose”) if —(a) | the company gave the financial assistance for purposes that included the relevant purpose; and | (b) | the relevant purpose was a substantial purpose of the giving of the financial assistance. |
|
(4) For the purposes of this section, a company shall be taken to have given financial assistance in connection with an acquisition or proposed acquisition referred to in subsection (1)(a) if, when the financial assistance was given to a person, the company was aware that the financial assistance would financially assist —(a) | the acquisition by a person of shares or units of shares in the company; or | (b) | where shares in the company had already been acquired — the payment by a person of any unpaid amount of the subscription payable for the shares or of any premium payable in respect of the shares, or the payment of any calls on the shares. |
|
(5) If a company contravenes subsection (1), the company shall not be guilty of an offence, notwithstanding section 407, but each officer of the company who is in default shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $20,000 or to imprisonment for a term not exceeding 3 years or to both. |
(6) Where a person is convicted of an offence under subsection (5) and the court by which he is convicted is satisfied that the company or another person has suffered loss or damage as a result of the contravention that constituted the offence, that court may, in addition to imposing a penalty under that subsection, order the convicted person to pay compensation to the company or other person, as the case may be, of such amount as the court specifies, and any such order may be enforced as if it were a judgment of the court. |
(7) The power of a court under section 391 to relieve a person to whom that section applies, wholly or partly and on such terms as the court thinks fit, from a liability referred to in that section extends to relieving a person against whom an order may be made under subsection (6) from the liability to have such an order made against him. |
(8) Nothing in subsection (1) prohibits —(a) | the payment of a dividend by a company in good faith and in the ordinary course of commercial dealing; | (b) | a payment made by a company pursuant to a reduction of capital in accordance with section 73; | (c) | the discharge by a company of a liability of the company that was incurred in good faith as a result of a transaction entered into on ordinary commercial terms; | (d) | anything done in pursuance of an order of court made under section 210; | (e) | anything done under an arrangement made in pursuance of section 306; | (f) | anything done under an arrangement made between a company and its creditors which is binding on the creditors by virtue of section 309; | (g) | where a corporation is a borrowing corporation by reason that it is or will be under a liability to repay moneys received or to be received by it —(i) | the giving, in good faith and in the ordinary course of commercial dealing, by a company that is a subsidiary of the borrowing corporation, of a guarantee in relation to the repayment of those moneys, whether or not the guarantee is secured by any charge over the property of that company; or | (ii) | the provision, in good faith and in the ordinary course of commercial dealing, by a company that is a subsidiary of the borrowing corporation, of security in relation to the repayment of those moneys; |
| (h) | the purchase by a company of shares in the company pursuant to an order of a court; | (i) | the creation or acquisition, in good faith and in the ordinary course of commercial dealing, by a company of a lien on shares in the company (other than fully-paid shares) for any amount payable to the company in respect of the shares; or | (j) | the entering into, in good faith and in the ordinary course of commercial dealing, of an agreement by a company with a subscriber for shares in the company permitting the subscriber to make payments for the shares (including payments in respect of any premium) by instalments, |
but nothing in this subsection — |
(k) | shall be construed as implying that a particular act of a company would, but for this subsection, be prohibited by subsection (1); or | (l) | shall be construed as limiting the operation of any rule of law permitting the giving of financial assistance by a company, the acquisition of shares or units of shares by a company or the lending of money by a company on the security of shares. |
|
(9) Nothing in subsection (1) prohibits —(a) | the making of a loan, the giving of a guarantee or the provision of security by a company in the ordinary course of its business where the activities of that company are regulated by any written law relating to banking, finance companies or insurance or are subject to supervision by the Monetary Authority of Singapore and where —(i) | that business includes the lending of money, or the giving of guarantees or the provision of security in connection with loans made by other persons; and | (ii) | the loan that is made by the company, or, where the guarantee is given or the security is provided in respect of a loan, that loan, is made on ordinary commercial terms as to the rate of interest, the terms of repayment of principal and payment of interest, the security to be provided and otherwise; or |
| (b) | the giving by a company of financial assistance for the purpose of, or in connection with, the acquisition or proposed acquisition of fully-paid shares or units of fully-paid shares in the company or in a holding company of the company to be held by or for the benefit of employees of the company or of a corporation that is related to the company, including any director holding a salaried employment or office in the company or in the corporation. |
|
(10) Nothing in subsection (1) prohibits the giving by a company of financial assistance for the purpose of, or in connection with, an acquisition or proposed acquisition by a person of shares or units of shares in the company or in a holding company of the company if —(a) | the company, by special resolution, resolves to give financial assistance for the purpose of or in connection with, that acquisition; | (b) | where —(i) | the company is a subsidiary of a listed corporation; or | (ii) | the company is not a subsidiary of a listed corporation but is a subsidiary whose ultimate holding company is incorporated in Singapore, |
the listed corporation or the ultimate holding company, as the case may be, has, by special resolution, approved the giving of the financial assistance; |
| (c) | the notice specifying the intention to propose the resolution referred to in paragraph (a) as a special resolution sets out —(i) | particulars of the financial assistance proposed to be given and the reasons for the proposal to give that assistance; and | (ii) | the effect that the giving of the financial assistance would have on the financial position of the company and, where the company is included in a group of corporations consisting of a holding company and a subsidiary or subsidiaries, the effect that the giving of the financial assistance would have on the financial position of the group of corporations, |
and is accompanied by a copy of a statement made in accordance with a resolution of the directors, setting out the names of any directors who voted against the resolution and the reasons why they so voted, and signed by not less than two directors, stating whether, in the opinion of the directors who voted in favour of the resolution, after taking into account the financial position of the company (including future liabilities and contingent liabilities of the company), the giving of the financial assistance would be likely to prejudice materially the interests of the creditors or members of the company or any class of those creditors or members; |
| (d) | the notice specifying the intention to propose the resolution referred to in paragraph (b) as a special resolution is accompanied by a copy of the notice, and a copy of the statement, referred to in paragraph (c); | (e) | not later than the day next following the day when the notice referred to in paragraph (c) is dispatched to members of the company there is lodged with the Registrar a copy of that notice and a copy of the statement that accompanied that notice; | (f) | the notice referred to in paragraph (c) and a copy of the statement referred to in that paragraph are sent to —(i) | all members of the company; | (ii) | all trustees for debenture holders of the company; and | (iii) | if there are no trustees for, or for a particular class of, debenture holders of the company — all debenture holders, or all debenture holders of that class, as the case may be, of the company whose names are, at the time when the notice is dispatched, known to the company; |
| (g) | the notice referred to in paragraph (d) and the accompanying documents are sent to —(i) | all members of the listed corporation or of the ultimate holding company; | (ii) | all trustees for debenture holders of the listed corporation or of the ultimate holding company; and | (iii) | if there are no trustees for, or for a particular class of, debenture holders of the listed corporation or of the ultimate holding company — all debenture holders or debenture holders of that class, as the case may be, of the listed corporation or of the ultimate holding company whose names are, at the time when the notice is dispatched, known to the listed corporation or the ultimate holding company; |
| (h) | within 21 days after the general meeting of the company at which the resolution referred to in paragraph (a) is passed or, in a case to which paragraph (b) applies, the general meeting of the listed corporation or ultimate holding company at which the resolution referred to in that paragraph is passed, whichever is the later, a notice —(i) | setting out the terms of the resolution referred to in paragraph (a); and | (ii) | stating that any of the persons referred to in subsection (12) may, within the period referred to in that subsection, make an application to the Court opposing the giving of the financial assistance, |
is published in a daily newspaper circulating generally in Singapore; |
| (i) | no application opposing the giving of the financial assistance is made within the period referred to in subsection (12) or, if such an application or applications has or have been made, the application or each of the applications has been withdrawn or the Court has approved the giving of the financial assistance; and | (j) | the financial assistance is given in accordance with the terms of the resolution referred to in paragraph (a) and not earlier than —(i) | in a case to which sub-paragraph (ii) does not apply — the expiration of the period referred to in subsection (12); or | (ii) | if an application or applications has or have been made to the Court within that period —(A) | where the application or each of the applications has been withdrawn — the withdrawal of the application or of the last of the applications to be withdrawn; or | (B) | in any other case — the decision of the Court on the application or applications. |
|
|
|
(11) Where, on application to the Court by a company, the Court is satisfied that the provisions of subsection (10) have been substantially complied with in relation to a proposed giving by the company of financial assistance of a kind mentioned in that subsection, the Court may, by order, declare that the provisions of that subsection have been complied with in relation to the proposed giving by the company of financial assistance. |
(12) Where a special resolution referred to in subsection (10)(a) is passed by a company, an application to the Court opposing the giving of the financial assistance to which the special resolution relates may be made, within the period of 21 days after the publication of the notice referred to in subsection (10)(h), —(a) | by a member of the company; | (b) | by a trustee for debenture holders of the company; | (c) | by a debenture holder of the company; | (d) | by a creditor of the company; | (e) | if subsection (10)(b) applies by —(i) | a member of the listed corporation or ultimate holding company that passed a special resolution referred to in that subsection; | (ii) | a trustee for debenture holders of that listed corporation or ultimate holding company; | (iii) | a debenture holder of that listed corporation or ultimate holding company; or | (iv) | a creditor of that listed corporation or ultimate holding company; or |
| (f) | by the Registrar. |
|
(13) Where an application or applications opposing the giving of financial assistance by a company in accordance with a special resolution passed by the company is or are made to the Court under subsection (12), the Court —(a) | shall, in determining what order or orders to make in relation to the application or applications, have regard to the rights and interests of the members of the company or of any class of them as well as to the rights and interests of the creditors of the company or of any class of them; and | (b) | shall not make an order approving the giving of the financial assistance unless the Court is satisfied that —(i) | the company has disclosed to the members of the company all material matters relating to the proposed financial assistance; and | (ii) | the proposed financial assistance would not, after taking into account the financial position of the company (including any future or contingent liabilities), be likely to prejudice materially the interests of the creditors or members of the company or of any class of those creditors or members, |
and may do all or any of the following: |
| (c) | if it thinks fit, make an order for the purchase by the company of the interests of dissentient members of the company and for the reduction accordingly of the capital of the company; | (d) | if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase (otherwise than by the company or by a subsidiary of the company) of the interests of dissentient members; | (e) | give such ancillary or consequential directions and make such ancillary or consequential orders as it thinks expedient; | (f) | make an order disapproving the giving of the financial assistance or, subject to paragraph (b), an order approving the giving of the financial assistance. |
|
(14) Where the Court makes an order under this section in relation to the giving of financial assistance by a company, the company shall, within 14 days after the order is made, lodge with the Registrar an office copy of the order. |
(15) The passing of a special resolution by a company for the giving of financial assistance by the company for the purpose of, or in connection with, an acquisition or proposed acquisition of shares or units of shares in the company, and the approval by the Court of the giving of the financial assistance, do not relieve a director of the company of any duty to the company under section 157 or otherwise, and whether of a fiduciary nature or not, in connection with the giving of the financial assistance. |
(16) A reference in this section to an acquisition or proposed acquisition of shares or units of shares is a reference to any acquisition or proposed acquisition whether by way of purchase, subscription or otherwise. |
(17) This section does not apply in relation to the doing of any act or thing pursuant to a contract entered into before the commencement of the Companies (Amendment) Act 1987 if the doing of that act or thing would have been lawful if this Act had not been enacted. |
|
Consequences of company financing dealings in its shares, etc. |
76A.—(1) The following contracts or transactions made or entered into in contravention of section 76 shall be void:(a) | a contract or transaction by which a company acquires or purports to acquire its own shares or units of its own shares, or shares or units of shares in its holding company; and | (b) | a contract or transaction by which a company lends money on the security of its own shares or units of its own shares, or on the security of shares or units of shares in its holding company. |
(2) Subject to subsection (1), a contract or transaction made or entered into in contravention of section 76, or a contract or transaction related to such contract or transaction, shall be voidable at the option of the company. The company may, subject to the following provisions of this section, avoid any contract or transaction to which this subsection applies by giving notice in writing to the other party or parties to the contract or transaction. |
(3) The Court may, on the application of a member of a company, a holder of debentures of a company, a trustee for the holders of debentures of a company or a director of a company, by order, authorise the member, holder of debentures, trustee or director to give a notice or notices under subsection (2) in the name of the company. |
(4) Where —(a) | a company makes or performs a contract, or engages in a transaction; | (b) | the contract is made or performed, or the transaction is engaged in, in contravention of section 76 or the contract or transaction is related to a contract that was made or performed, or to a transaction that was engaged in, in contravention of that section; and | (c) | the Court is satisfied, on the application of the company or of any other person, that the company or that other person has suffered, or is likely to suffer, loss or damage as a result of —(i) | the making or performance of the contract or the engaging in of the transaction; | (ii) | the making or performance of a related contract or the engaging in of a related transaction; | (iii) | the contract or transaction being void by reason of subsection (1) or avoided under subsection (2); or | (iv) | a related contract or transaction being void by reason of subsection (1) or avoided under subsection (2), |
|
the Court may make such order or orders as it thinks just and equitable (including, without limiting the generality of the foregoing, all or any of the orders mentioned in subsection (5)) against any party to the contract or transaction or to the related contract or transaction, or against the company or against any person who aided, abetted, counselled or procured, or was, by act or omission, in any way, directly or indirectly, knowingly concerned in or party to the contravention. |
|
(5) The orders that may be made under subsection (4) include —(a) | an order directing a person to refund money or return property to the company or to another person; | (b) | an order directing a person to pay to the company or to another person a specified amount of the loss or damage suffered by the company or other person; and | (c) | an order directing a person to indemnify the company or another person against any loss or damage that the company or other person may suffer as a result of the contract or transaction or as a result of the contract or transaction being or having become void. |
|
(6) If a certificate signed by not less than two directors, or by a director and a secretary, of a company stating that the requirements of section 76(10)(a) to (j), inclusive, have been complied with in relation to the proposed giving by the company of financial assistance for the purposes of an acquisition or proposed acquisition by a person of shares or units in the company or in a holding company of the company is given to a person —(a) | the person to whom the certificate is given is not under any liability to have an order made against him under subsection (4) by reason of any contract made or performed, or any transaction engaged in, by him in reliance on the certificate; and | (b) | any such contract or transaction is not invalid, and is not voidable under subsection (2), by reason that the contract is made or performed, or the transaction is engaged in, in contravention of section 76 or is related to a contract that was made or performed, or to a transaction that was engaged in, in contravention of that section. |
|
(7) Subsection (6) does not apply in relation to a person to whom a certificate is given under that subsection in relation to a contract or transaction if the Court, on application by the company concerned or any other person who has suffered, or is likely to suffer, loss or damage as a result of the making or performance of the contract or the engaging in of the transaction, or the making or performance of a related contract or the engaging in of a related transaction, by order, declares that it is satisfied that the person to whom the certificate was given became aware before the contract was made or the transaction was engaged in that the requirements of section 76(10) had not been complied with in relation to the financial assistance to which the certificate related. |
(8) For the purposes of subsection (7), a person shall, in the absence of proof to the contrary, be deemed to have been aware at a particular time of any matter of which an employee or agent of the person having duties or acting on behalf of the person in relation to the relevant contract or transaction was aware at the time. |
(9) In any proceeding, a document purporting to be a certificate given under subsection (6) shall, in the absence of proof to the contrary, be deemed to be such a certificate and to have been duly given. |
(10) A person who has possession of a certificate given under subsection (6) shall, in the absence of proof to the contrary, be deemed to be the person to whom the certificate was given. |
(11) If a person signs a certificate stating that the requirements of section 76(10) have been complied with in relation to the proposed giving by a company of financial assistance and any of those requirements had not been complied with in respect of the proposed giving of that assistance at the time when the certificate was signed by that person, the person shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding one year or to both. |
(12) It is a defence to a prosecution for an offence under subsection (11) if the defendant proves that at the time when he signed the certificate he believed on reasonable grounds that all the requirements of section 76(10) had been complied with in respect of the proposed giving of financial assistance to which the certificate relates. |
(13) The power of a Court under section 391 to relieve a person to whom that section applies, wholly or partly and on such terms as the Court thinks fit, from a liability referred to in that section extends to relieving a person against whom an order may be made under subsection (4) from the liability to have such an order made against him. |
(14) If a company makes a contract or engages in a transaction under which it gives financial assistance as mentioned in section 76(1)(a) or lends money as mentioned in section 76(1)(c), any contract or transaction made or engaged in as a result of or by means of, or in relation to, that financial assistance or money shall be deemed for the purposes of this section to be related to the first-mentioned contract or transaction. |
(15) Any rights or liabilities of a person under this section (including rights or liabilities under an order made by the Court under this section) are in addition to and not in derogation of any rights or liabilities of that person apart from this section but, where there would be any inconsistency between the rights and liabilities of a person under this section or under an order made by the Court under this section and the rights and liabilities of that person apart from this section, the provisions of this section or of the order made by the Court shall prevail.”. |
|
|
|