Companies (Amendment) Bill

Bill No. 33/1992

Read the first time on 31st July 1992.
An Act to amend the Companies Act (Chapter 50 of the 1990 Revised Edition).
Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:
Short title and commencement
1.  This Act may be cited as the Companies (Amendment) Act 1992 and shall come into operation on such date as the Minister may, by notification in the Gazette, appoint.
Amendment of section 4
2.  Section 4(1) of the Companies Act is amended by inserting, immediately before the words “a promissory” in paragraph (b) of the definition of “debenture”, the words “subject to the regulations,”.
Amendment of section 5
3.  Section 5 of the Companies Act is amended by inserting, immediately after subsection (4), the following subsection:
(5)  For the purposes of this Act, the Depository, as defined in section 130A, shall be deemed not to be a holding company.”.
Amendment of section 12
4.  Section 12 of the Companies Act is amended —
(a)by inserting, immediately after subsection (2), the following subsection:
(2A)  Subsection (2) shall not apply to such exempt private company that is wholly owned by the Government as the Minister may, by notification in the Gazette, specify where he considers that it would not be in the public interest for —
(a)any document relating to any such company maintained by the Registrar in whatever form to be inspected by any member of the public; and
(b)any certificate or copy of or extract from any document relating to any such company to be given or certified to any member of the public.”;
(b)by inserting, immediately after the word “microfilm” in the second line of subsection (3), the words “or electronic medium”;
(c)by deleting the word “person” in the first line of subsection (6) and substituting the word “party”; and
(d)by deleting subsection (7) and substituting the following subsection:
(7)  The Registrar may, if in his opinion it is no longer necessary or desirable to retain any document which has been microfilmed or converted to electronic form, destroy or give it to the National Archives and Records Centre.”.
Amendment of section 12A
5.  Section 12A(1) of the Companies Act is amended —
(a)by deleting the words “Electronic filing service” in the marginal note and substituting the words “Filing service”;
(b)by deleting the words “(to be called an Electronic Filing Service)” in the second line;
(c)by inserting, immediately after the word “employees” in the sixth line, the words “nor any authorised agents”;
(d)by deleting the words “Electronic Filing Service” wherever they appear and substituting in each case the word “service”; and
(e)by inserting, immediately after the word “employees” in the twelfth line, the words “or any authorised agents”.
New section 16A
6.  The Companies Act is amended by inserting, immediately after section 16, the following section:
Supply of magnetic tapes — exclusion of liability for errors or omissions
16A.  Where the Registrar furnishes information, whether in bulk or otherwise, to any person by way of magnetic tapes or by any electronic means, neither the Government nor any of the employees in the Registry nor any authorised agents involved in the furnishing of such information shall be liable for any loss or damage suffered by that person by reason of errors or omissions of whatever nature appearing therein or however caused if made in good faith and in the ordinary course of the discharge of the duties of those employees or authorised agents.”.
Amendment of section 27
7.  Section 27 of the Companies Act is amended —
(a)by deleting subsection (12) and substituting the following subsection:
(12)  If the Registrar is satisfied as to the bona fides of the application and that the proposed company, company or foreign company could be registered —
(a)without contravention of subsection (1) in the case of a company (whether originally or upon change of name); and
(b)without contravention of section 378 in the case of a foreign company (whether originally or upon change of name),
he shall reserve the proposed name for a period of two months from the date of the lodging of the application.”;
(b)by deleting the words “or foreign company” in the second line of subsection (14); and
(c)by deleting the words “, company or foreign company” in the third line of subsection (14) and substituting the words “or company”.
New section 42A
8.  The Companies Act is amended by inserting, immediately after section 42, the following section:
Company or foreign company with a charitable purpose which contravenes the Charities Act or regulations made thereunder may be wound up or struck off the register
42A.—(1)  This section shall apply to a company or a foreign company —
(a)that is registered under the Charities Act (Cap. 37); or
(b)that has as its sole object or one of its principal objects a charitable purpose connected with persons, events or objects outside Singapore.
(2)  A company or foreign company to which this section applies that is convicted of an offence under the Charities Act or any regulations made thereunder shall be deemed to be a company or foreign company, as the case may be, that is being used for purposes prejudicial to public welfare and may be liable, in the case of a company, to be wound up by the Court under section 254(1)(m) or, in the case of a foreign company, to have its name struck off the register by the Registrar under section 377(8).
(3)  In this section, “charitable purpose” means any charitable purpose or object or any other religious, public or social purpose or object, whether or not charitable under the law of Singapore.”.
Amendment of section 43
9.  Section 43(2A) of the Companies Act is amended by deleting the words “Division and Division 5 of this Part” in the first line and substituting the word “section”.
Amendment of section 50
10.  Section 50(2)(d) of the Companies Act is amended by deleting the words “and of all material contracts referred to in the prospectus or, in the case of such a contract not reduced in writing, a memorandum giving full particulars thereof verified as prescribed”.
Amendment of section 64
11.  Section 64(1) of the Companies Act is amended by inserting, immediately after the word “share” at the end thereof, the words “unless it is a management share issued by a newspaper company under section 9 of the Newspaper and Printing Presses Act (Cap. 206)”.
Amendment of section 106B
12.  Section 106B(1) of the Companies Act is amended by deleting paragraph (b).
Amendment of section 106C
13.  Section 106C of the Companies Act is amended by inserting, immediately after paragraph (c), the following paragraph:
(ca)a person whose ordinary business it is to buy or sell shares or debentures;”.
Amendment of section 106F
14.  Section 106F of the Companies Act is amended by deleting subsection (2) and substituting the following subsection:
(2)  For the purposes of this section —
(a)shares are uniform in all respects with shares previously issued notwithstanding that they do not carry the same rights to dividends as the latter during the 12 months immediately following the issue; and
(b)a statement of material facts referred to in subsection (1) shall be deemed to be a prospectus for the purposes of sections 55 and 56.”.
Amendment of section 106I
15.  Section 106I of the Companies Act is amended —
(a)by deleting subsection (1) and substituting the following subsection:
(1)  Where an issuer intends to invoke an exemption under this Division other than an exemption under sections 106B(1), 106E and 106F, he shall lodge with the Registrar a report of his intention to issue the shares or debentures, in such form as may be prescribed at or before the time of invoking the exemption.”;
(b)by deleting the word “sold” in subsection (2) and substituting the word “issued”; and
(c)by deleting the word “sale” wherever it appears in subsections (3) and (5) and substituting in each case the word “issue”.
New Division 7A
16.  Part IV of the Companies Act is amended by inserting, immediately after Division 7, the following Division:
Division 7A — The Central Depository System —
a book-entry or scripless system for the transfer
of listed securities
Interpretation
130A.  In this Division, unless the contrary intention appears —
“account holder” means a person who has an account directly with the Depository and not through a depository agent;
“bare trustee” means a trustee who has no beneficial interest in the subject-matter of the trust;
“book-entry securities”, in relation to a Depository, means listed securities —
(a)the documents evidencing title to which are deposited by a depositor with a Depository and are registered in the name of the Depository or its nominee; and
(b)which are transferred by way of book-entry in the Depository Register and not by way of an instrument of transfer;
“Depository” means the Central Depository (Pte) Limited established by the Stock Exchange, or any other corporation approved by the Minister as a depository company or corporation for the purposes of this Act, which as a bare trustee operates the Central Depository System for the holding and transfer of book-entry securities;
“Depository Register” means a register maintained by the Depository in respect of book-entry securities;
“depositor” means an account holder or a depository agent but does not include a sub-account holder;
“depository agent” means a member company of the Stock Exchange, a trust company (registered under the Trust Companies Act (Cap. 336)), a banking corporation or merchant bank (approved by the Monetary Authority of Singapore under the Monetary Authority of Singapore Act (Cap. 186)) or any other person or body approved by the Depository who or which —
(a)performs services as a depository agent for sub-account holders in accordance with the terms of a depository agent agreement entered into between the Depository and the depository agent;
(b)deposits book-entry securities with the Depository on behalf of the sub-account holders; and
(c)establishes an account in its name with the Depository;
“derivative instruments”, in relation to debentures, stocks and shares, includes warrants, transferable subscription rights, options, convertibles and such other instruments as the Minister may, by order, prescribe;
“documents evidencing title” means —
(a)in the case of stocks, shares, debentures or any derivative instruments related thereto of a Singapore incorporated company or debentures or any derivative instruments related thereto, of the Government — the stock certificates, share certificates, debenture certificates, contract notes or certificates representing the derivative instrument, as the case may be; and
(b)in the case of stocks, shares, debentures or any derivative instruments related thereto of a foreign company or debentures or any derivative instruments related thereto of a foreign government or of an international body — such documents or other evidence of title thereto, as the Depository may require;
“international body” means the Asian Development Bank, the International Bank for Reconstruction and Development, the International Monetary Fund, the European Bank for Reconstruction and Development and such other international bodies as the Minister may, by order, prescribe;
“instrument” includes a deed or any other instrument in writing;
“listed securities” means securities of a corporation that are listed on the Stock Exchange and have not been delisted or had its quotation removed;
“rules”, in relation to a Depository, includes rules made pursuant to its articles of association;
“securities”, in relation to the Depository, means debentures, stocks or shares, issued or proposed to be issued by a government, a body corporate or unincorporate, or international body or any right in respect of any such debentures, stocks or shares or any derivative instrument each of which is listed on the Stock Exchange and which has been designated by the Stock Exchange as eligible for deposit with the Depository and for clearance and book-entry settlement of transactions on the Stock Exchange;
“Stock Exchange” means the Stock Exchange of Singapore Limited;
“sub-account holder” means a holder of an account maintained with a depository agent.
Application
130B.  This Division shall apply only to book-entry securities that are listed on the Stock Exchange.
Establishment of Central Depository System
130C.  There is hereby established a computerised Central Depository System whereby, in accordance with the rules of the Depository —
(a)documents evidencing title in respect of listed securities (with, in the case of shares or registered debentures, proper instruments of transfer duly executed) are deposited with the Depository and are registered in the name of the Depository or its nominee;
(b)accounts are maintained by the Depository in the names of the depositors so as to reflect the title of the depositors to the book-entry securities; and
(c)transfers of the book-entry securities are effected electronically, and not by any other means, by the Depository making an appropriate entry in the Depository Register of the book-entry securities that have been transferred.
Depository not a member of a corporation and depositors deemed to be members
130D.—(1)  Notwithstanding anything in this Act, where the Depository is named in the register of members of a corporation —
(a)the Depository shall be deemed not to be a member of the corporation; and
(b)the persons named as the depositors in a Depository Register shall, for such period as the book-entry securities are entered against their names in the Depository Register, be deemed to be —
(i)members of the corporation in respect of the number of book-entry securities (relating to shares or the derivative instruments connected therewith) entered against their respective names in the Depository Register as at any particular date certified by the Depository; or
(ii)holders of the number of the corporation’s book-entry securities (relating to debentures or the derivative instruments connected therewith) entered against their names in the Depository Register as at any particular date certified by the Depository.
(2)  Nothing in this Division shall be construed as affecting —
(a)the obligation of a company to keep a register of its members under section 190 and allow inspection of the register under section 192;
(b)the right of a depositor to withdraw his documents evidencing title in respect of listed securities from the Depository at any time in accordance with the rules of the Depository and to register them in his or any other name; or
(c)the enjoyment of any right, power or privilege conferred by, or the imposition of any liability, duty or obligation under this Act, any rule of law or under any instrument or under the articles of association of a corporation upon a depositor, as a member of a corporation except to the extent provided for in this Division or prescribed by regulations made thereunder.
Duty to certify names of depositors to corporation in certain circumstances
130E.  The Depository shall be under a duty to certify the names of persons on the Depository Register to a corporation in accordance with the rules of the Depository upon a written request being made to it by the corporation —
(a)where the corporation —
(i)intends to make any distribution, declare a dividend, pay interest on any debenture, or make a rights or bonus issue or a stock split; or
(ii)is in liquidation or is an offeree corporation in a take-over;
(b)where the identities of the members of the corporation who are entitled to exercise their rights as members (whether in relation to meetings of the corporation, to documents, including notices of meetings, to voting, to inspection of records of the corporation or otherwise) need to be ascertained;
(c)where there is a need for the corporation to comply with the provisions of this Act, any other written law, any instrument or its articles of association; or
(d)in the circumstances or at the times prescribed by regulations.
Maintenance of accounts
130F.  The Depository shall maintain accounts of book-entry securities on behalf of depositors in accordance with the rules of the Depository.
Transfers effected by Depository under book-entry clearing system
130G.—(1)  Subject to this Division, a transfer of book-entry securities between depositors shall be effected, notwithstanding anything in this Act or any other written law or rule of law or in any instrument or in a corporation’s articles of association to the contrary, by the Depository making an appropriate entry in its Depository Register.
(2)  A transfer of securities by the Depository by way of book-entry to a depositor under this Division shall be valid and shall not be challenged in any Court on the ground that the transfer is not accompanied by a proper instrument of transfer or that otherwise the transfer is not made in writing.
(3)  This section shall apply to a transfer of book-entry securities whether effected before or after the commencement of the Companies (Amendment) Act 1992.
Depository to be discharged from liability if acting on instructions
130H.—(1)  Subject to the regulations, the Depository, if acting in good faith, shall not be liable for conversion or for any breach of trust or duty where the Depository has, in respect of book-entries in accounts maintained by it, made entries regarding the book-entry securities, or transferred or delivered the securities, according to the instructions of a depositor notwithstanding that the depositor had no right to dispose of or take any other action in respect of the securities.
(2)  The Depository or a depository agent, if acting in good faith, shall be fully discharged of its obligations to the account holder or sub-account holder by the transfer or delivery of book-entry securities upon the instructions of the account holder or sub-account holder, as the case may be.
(3)  The Depository, if acting in good faith, shall be fully discharged of its obligations to a depository agent by the transfer or delivery of book-entry securities upon the instructions of the depository agent.
Confirmation of transaction
130I.  The Depository shall, in accordance with the rules made by the Depository, issue to each account holder and to each sub-account holder through his depository agent, following upon any transaction affecting book-entry securities maintained for such account holder by the Depository and maintained for such sub-account holder by his depository agent under this Division, a confirmation note which shall specify the amount and description of the book-entry securities and any other relevant transaction information.
Depositor not entitled to apply to Court to rectify Depository Register
130J.—(1)  Notwithstanding anything in this Act, no person shall in any circumstances be entitled to apply to the Court for rectification of the Depository Register but where the Court is satisfied that —
(a)a depositor did not consent to a transfer of the book-entry securities; or
(b)a depositor should not have been registered in the Depository Register as having title to the book-entry securities,
it may award damages to the first-mentioned depositor or to any person who would have been entitled to have been registered in the Depository Register as having title to the book-entry securities, as the case may be, on such terms as the Court thinks to be equitable.
(2)  Where provisions exist in the memorandum or articles of association of a corporation that entitle a corporation to refuse registration of a transfer of book-entry securities, it may in relation to any transfer to which it objects, notify the Depository in writing of its refusal before the transfer takes place and furnish the Depository with the facts upon which such refusal is considered to be justified.
(3)  Where the Depository has had prior notice of the corporation’s refusal under subsection (2) (but not otherwise), it shall refuse to effect the transfer and to enter the name of the transferee in the Depository Register and thereupon convey the facts upon which such refusal is considered to be justified to the transferee.
(4)  Section 128 shall not apply to any refusal to register a transfer under subsections (2) and (3).
Trustee, executor or administrator of deceased depositor named as depositor
130K.—(1)  Any trustee, executor or administrator of the estate of a deceased depositor whose name was entered in the Depository Register as owner or as having an interest in book-entry securities may open an account with the Depository and have his name entered in the Depository Register so as to reflect the interest of the trustee, executor or administrator in the book-entry securities.
(2)  Book-entry securities entered in the Depository Register and held by a trustee in respect of a particular trust shall, at the request of the trustee, be marked in the Depository Register in such a way as to identify them as being held in respect of the trust.
(3)  Subject to this section, no notice of any trust expressed, implied or constructive shall be entered on the Depository Register and no liabilities shall be affected by anything done in pursuance of subsection (1) or (2) or pursuant to the law of any other place which corresponds to this section and the Depository and the issuer of the book-entry securities shall not be affected with notice of any trust by anything so done.
Double transfers of securities
130L.  Where a transfer of book-entry securities has been effected by the Depository on the instructions of an account holder or a sub-account holder through a depository agent, any purported second or subsequent transfer of the same book-entry securities by the same account holder or sub-account holder shall be void and the transferee of the book-entry securities shall have a right of action in damages but only against that account holder or sub-account holder and not against the Depository or the depository agent, as the case may be.
Non-application of certain provisions in bankruptcy and company liquidation law
130M.  Where by virtue of the provisions of any written law in relation to bankruptcy or company liquidation it is provided that —
(a)any disposition of the property of a company after commencement of a winding up shall be void, unless the Court orders otherwise; or
(b)any disposition of the property of a person who is adjudged bankrupt after presentation of the petition for a bankruptcy order and before vesting of the bankrupt’s estate in a trustee shall be void unless done with the consent or ratification of the Court,
those provisions shall not apply to any disposition of book-entry securities; but where a Court is satisfied that a party to the disposition, being a party other than the Depository, had notice that a petition had been presented for the winding up or bankruptcy of the other party to the disposition, it may award damages against that party on such terms as it thinks equitable.
Mortgaging book-entry securities
130N.—(1)  Book-entry securities may be mortgaged, by way of legal or equitable mortgage, by an account holder or a sub-account holder, notwithstanding any written law or rule of law to the contrary.
(2)  An account holder or a sub-account holder, as the case may be, who decides to create an equitable mortgage over, his book-entry securities, as collateral security for a loan, credit facilities or margin financing shall request the Depository or a depository agent in writing to transfer the book-entry securities from his account to a book-entry securities suspense account under the name of the account holder or sub-account holder, as the case may be.
(3)  Upon receipt of the request, the Depository or the depository agent shall forthwith transfer the book-entry securities by way of an off-market transaction to that suspense account and confirm to the account holder or sub-account holder, as the case may be, that this has been done.
(4)  Where book-entry securities that are subject to an equitable mortgage are transferred to a book-entry securities suspense account under subsection (3), they shall remain in the name of the account holder or sub-account holder, as the case may be, unless there is an enforcement of the equitable mortgage by the equitable mortgagee.
(5)  If an account holder or a sub-account holder decides to create a legal mortgage over his book-entry securities, the provisions of this Division with regard to the transfer of book-entry securities shall apply and the mortgagee shall, if and only if he is an account holder or a depository agent, thereupon have his name entered in the Depository Register as evidencing his legal title to those securities but this shall be without prejudice to the mortgagor’s rights against the mortgagee including the right of the equity of redemption.
(6)  The Depository in effecting a transfer of book-entry securities under subsection (5) —
(a)pursuant to the legal mortgage, shall act only upon the written instructions of the account holder or the depository agent of the sub-account holder, as the case may be, and upon receiving those instructions shall transfer the book-entry securities to an account designated by the mortgagee; or
(b)pursuant to a right to redeem the legal mortgage, shall act only on the written instructions of the mortgagee.
(7)  Upon the release of a legal or equitable mortgage, the mortgagee shall instruct the Depository or the depository agent to transfer the book-entry securities to such account holder’s or a sub-account holder’s account, as is designated by the mortgagee.
(8)  Section 130H shall apply to relieve the Depository or the depository agent of any liability in respect of a transfer under this section.
(9)  In this section —
“off-market transaction” means a transaction that is effected outside the Stock Exchange;
“margin financing” means the granting of credit for the purchase or carrying of securities;
“mortgage” includes a charge, or other security interest; and mortgagee shall be construed accordingly;
“security interest” means an interest in property, not being an interest arising from a trust, which secures the payment of a debt or the performance of an obligation.
Depository rules to be regarded as rules of a securities exchange that are subject to Securities Industry Act
130O.—(1)  Rules made by the Depository in relation to the operation of the Central Depository System, including any amendments made thereto from time to time, shall be regarded as having the same force and effect as if made by a securities exchange and shall likewise be subject to the provisions of the Securities Industry Act (Cap. 289).
(2)  Without prejudice to the generality of subsection (1), section 18 (authority to approve amendments to rules) and section 20(1) (power of Court to enforce rules) of the Securities Industry Act shall apply to rules made by the Depository under subsection (1) as they apply to rules made by a securities exchange.
Regulations
130P.  The Minister may make regulations for all matters or things which by this Division are required or permitted to be prescribed or which are necessary or expedient to give effect to this Division and, in particular, regulations may be made for or with respect to —
(a)rights and obligations of persons in relation to securities dealt with under the Central Depository System;
(b)procedures for the deposit and custody of securities and the transfer of title to book-entry securities and the regulation of persons concerned in that operation;
(c)procedures for the transfer of book-entry securities that occur by operation of law or by way of legal or equitable mortgage;
(d)keeping of depositors’ accounts by the Depository and sub-accounts by the depository agents;
(e)keeping of the Depository Register and of records generally;
(f)safeguards for depositors including the maintenance of insurance and the establishment and maintenance of compensation funds by the Depository for the purpose of settling claims by depositors;
(g)matters relating to link-ups between the Depository and other securities depositories (by whatever name called) established and maintained outside Singapore;
(h)the modification or exclusion of any provision of any written law, rule of law, any instrument or articles of association;
(i)the application, with such modifications as may be required, of the provisions of any written law, instrument or articles of association; and
(j)such supplementary, incidental, saving or transitional provisions as may be necessary or expedient.”.
Amendment of section 146
17.  Section 146 of the Companies Act is amended by inserting, immediately after subsection (4), the following subsection:
(5)  The restrictions in this section on a director or proposed director of a company incorporated under this Act in relation to a prospectus shall apply in the same manner and extent to a director or proposed director of a foreign company as if the references in subsections (1) and (4) to a company included references to a foreign company.”.
Repeal and re-enactment of section 154
18.  Section 154 of the Companies Act is repealed and the following section substituted therefor:
Disqualification to act as director on conviction of certain offences
154.—(1)  Where a person is convicted in Singapore of —
(a)any offence in connection with the formation or management of a corporation;
(b)any offence involving fraud or dishonesty punishable on conviction with imprisonment for 3 months or more; or
(c)an offence under section 157 or 339,
the Court may, in respect of an offence under paragraph (a) or (c) and shall, in respect of an offence under paragraph (b), make a disqualification order disqualifying that person from being a director or in any way, whether directly or indirectly, being concerned in or taking part in the management of a company for such period not exceeding 5 years, as is specified in the order, to take effect after his conviction, if he is sentenced to imprisonment, after his release from prison.
(2)  A person who acts in contravention of a disqualification order under this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 2 years or to both.
(3)  An application for leave may be made by a person against whom a disqualification order has been made upon that person giving the Minister not less than 14 days’ notice of his intention to apply for such leave.
(4)  On the hearing of any application under this section, the Minister may be represented at the hearing and may oppose the granting of the application.
(5)  Without prejudice to section 409, a District Court may make a disqualification order under this section.
(6)  The reference in subsection (1) to the management of a company shall include a reference to management of a foreign company registered under Division 2 of Part XI.”.
Amendment of section 201
19.  Section 201 of the Companies Act is amended —
(a)by deleting paragraph (a) of subsection (11); and
(b)by deleting subsection (13).
Amendment of section 209A
20.  Section 209A of the Companies Act is amended —
(a)by inserting, at the end of paragraph (a) of the definition of “consolidated accounts”, the word “or”; and
(b)by deleting paragraphs (b), (c) and (d) of the definition of “consolidated accounts” and substituting the following paragraph:
(b)the accounts or consolidated accounts prepared in compliance with the Ninth Schedule;”.
Amendment of section 216
21.  Section 216 of the Companies Act is amended —
(a)by deleting the marginal note and substituting the following marginal note:
Personal remedies in case of oppression.”; and
(b)by deleting paragraph (c) of subsection (2).
New sections 216A and 216B
22.  The Companies Act is amended by inserting, immediately after section 216, the following sections:
Derivative or representative actions
216A.—(1)  In this section and section 216B, “complainant” means —
(a)any member of a company;
(b)the Minister, in the case of a declared company under Part IX; or
(c)any other person who, in the view of the Court, is a proper person to make an application under this section.
(2)  Subject to subsection (3), a complainant may apply to a Court for leave to bring an action in the name and on behalf of the company or intervene in an action to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company.
(3)  No action may be brought and no intervention in an action may be made under subsection (2) unless the Court is satisfied that —
(a)the complainant has given reasonable notice to the directors of the company of his intention to apply to the Court under subsection (2) if the directors of the company do not bring, diligently prosecute or defend or discontinue the action;
(b)the complainant is acting in good faith; and
(c)it appears to be prima facie in the interests of the company that the action be brought, prosecuted, defended or discontinued.
(4)  In connection with an action brought or intervened in under subsection (2), the Court may at any time make such interim order as it thinks fit including, without limiting, the generality of the foregoing —
(a)an order authorising the complainant or any other person to control the conduct of the action;
(b)an order giving directions for the conduct of the action; and
(c)an order requiring the company to pay reasonable legal fees incurred by the complainant in connection with the action.
(5)  Where the action has been commenced or is to be brought in the subordinate courts, an application for leave under subsection (2) shall be made in a District Court.
Evidence of shareholder’s approval not decisive — Court approval to discontinue action under section 216A
216B.—(1)  An application made or an action brought or intervened in under section 216A shall not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or duty owed to the company has been or may be approved by the members of the company, but evidence of approval by the members may be taken into account by the Court in making an order under section 216A.
(2)  An application made or an action brought or intervened in under section 216A shall not be stayed, discontinued, settled or dismissed for want of prosecution without the approval of the Court given upon such terms as the Court thinks fit and, if the Court determines that the interests of any complainant may be substantially affected by such stay, discontinuance, settlement or dismissal, the Court may order any party to the application or action to give notice to the complainant.
(3)  A complainant is not required to give security for costs in any application made or action brought or intervened in under section 216A.
(4)  In an application made or an action brought or intervened in under section 216A, the Court may at any time order the company to pay to the complainant interim costs, including legal fees and disbursements, but the complainant is accountable for such interim costs upon final disposition of the application or action.”.
Amendment of section 328
23.  Section 328 of the Companies Act is amended —
(a)by deleting subsections (1) and (2) and substituting the following subsections:
(1)  Subject to the provisions of this Act, in a winding up there shall be paid in priority to all other unsecured debts —
(a)firstly, the costs and expenses of the winding up including the taxed costs of a petitioner payable under section 256, the remuneration of the liquidator and the costs of any audit carried out pursuant to section 317;
(b)secondly, subject to subsection (2), all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating conditions of employment of any employee;
(c)thirdly, subject to subsection (2), the amount due to an employee as a retrenchment benefit or ex gratia payment under any contract of employment or award or agreement that regulates conditions of employment whether such amount becomes payable before, on or after the commencement of the winding up;
(d)fourthly, all amounts due in respect of workmen’s compensation under the Workmen’s Compensation Act (Cap. 354) accrued before the commencement of the winding up;
(e)fifthly, all amounts due in respect of contributions payable during the 12 months next before the commencement of the winding up by the company as the employer of any person under any written law relating to employees’ superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the law relating to income tax;
(f)sixthly, all remuneration payable to any employee in respect of vacation leave, or in the case of his death to any other person in his right, accrued in respect of any period before the commencement of the winding up; and
(g)seventhly, the amount of all tax assessed under any written law before the commencement of the winding up or assessed at any time before the time fixed for the proving of debts has expired.
(2)  The amount payable under subsection (1)(b) and (c) shall not exceed an amount that is equivalent to 5 months’ salary whether for time or piecework in respect of services rendered by him to the company or $7,500, whichever is the lesser.
(2A)  (a)  For the purposes of subsection (1)(b) and (c) —
“employee” means a person who has entered into or works under a contract of service with an employer and includes a subcontractor of labour;
“wages or salary” shall be deemed to include —
(i)all arrears of money due to a subcontractor of labour;
(ii)any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination, as the case may be, whether such amount becomes payable before, on or after the commencement of the winding up; and
(iii)any amount payable to an employee, on termination of his employment, as a gratuity under any contract of employment, or under any award or agreement that regulates conditions of employment whether such amount becomes payable before, on or after the commencement of the winding up.

(b)For the purposes of subsection (1)(c) —

“ex gratia payment” means the amount payable to an employee on the winding up of a company or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer, profession, business, trade or work, and “the amount payable to an employee” for these purposes means the amount stipulated in any contract of employment, award or agreement, as the case may be;
“retrenchment benefit” means the amount payable to an employee on the winding up of a company, on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer, profession, business, trade or work, and “the amount payable to an employee” for these purposes means the amount stipulated in any contract of employment, award or agreement, as the case may be, or if no amount is stipulated therein, such amount as is stipulated by the Commissioner for Labour.”;

(b)by deleting the words “subsection (1)(b), (d) and (e)” in the third line of subsection (5) and substituting the words “subsection (1)(b), (c), (e) and (f)”;
(c)by deleting the words “paragraph (c)” in subsection (9)(a) and substituting the words “paragraph (d)”; and
(d)by deleting the words “paragraph (f)” in subsection (9)(b) and substituting the words “paragraph (g)”.
Amendment of section 363
24.  The Companies Act is amended by renumbering section 363 as subsection (1) of that section, and by inserting immediately thereafter the following subsection:
(2)  Subsection (1) shall not apply to an investment company which is approved under section 10A of the Income Tax Act (Cap. 134).”.
Amendment of section 371
25.  Section 371 of the Companies Act is amended by deleting the words “or the lodging with the Registrar of particulars of a change or alteration in a matter referred to in section 372(1)(c), (d) or (f)”.
Amendment of Ninth Schedule
26.  The Ninth Schedule to the Companies Act is amended —
(a)by deleting the full-stop at the end of sub-paragraph (b) of paragraph 1(1) and substituting a semicolon, and by inserting immediately thereafter the following sub-paragraph:
(c)“consolidated accounts”, in relation to a holding company, where it is impractical to prepare one set of consolidated accounts covering the group, or where it is otherwise preferred in the interest of the shareholders, shall also include —
(i)two or more sets of consolidated accounts together covering that group;
(ii)separate accounts for each corporation in that group; or
(iii)combination of one or more sets of consolidated accounts and one or more separate accounts together covering the group.”;
(b)by deleting the word “and” in paragraph 2(1)(b)(ii);
(c)by inserting, at the end of item (iii) of paragraph 2(1)(b), the word “and”, and by inserting immediately thereafter the following item:
(iv)other persons;”;
(d)by deleting the full-stop at the end of sub-paragraph (m) of paragraph 2(1) and substituting a semicolon, and by inserting immediately thereafter the following sub-paragraphs:
(n)any amount set aside in respect of any provision for the payment of income tax attributable to a period other than the financial year;
(o)any amount set aside to a provision (other than a provision specifically provided for in this Schedule);
(p)any amount withdrawn from any provision where the amount withdrawn was not applied for the purposes of the provision.”;
(e)by deleting sub-paragraphs (c), (f) and (g) of paragraph 3;
(f)by deleting the word “end” in paragraph 3(j) and substituting the word “beginning”; and
(g)by deleting sub-paragraph (5) of paragraph 4.