Singapore Plans Investment Rules to Shield Critical Entities

Singapore Plans Investment Rules to Shield Critical Entities

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(Bloomberg) — Singapore plans to screen investments more closely in sectors critical to its national interests, as part of a new regime to boost security without undermining the Asian financial hub’s reputation for ease of doing business. 

The proposed Significant Investments Review Bill seeks to allow the government to review ownership or control transactions in the ‘critical entities,’ the Ministry of Trade and Industry said in a statement on Friday. 

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Singapore already relies on a range of laws to monitor and manage entities in sectors such as telecommunications, banking and utilities. The new bill, if passed, will be implemented in 2024 and seeks to widen the scope to any entity that is incorporated, operates or provides goods or services in Singapore.

Australia, China, Japan, the UK and the US have similar investment regimes to safeguard strategic sectors, including artificial intelligence, production of semiconductors, cybersecurity, aerospace, or energy. While Singapore didn’t specify the sectors, Minister for Trade and Industry Gan Kim Yong said he expects “only a handful of critical entities to be designated under this bill.”

Such designated entities will be subject to controls, including approval for change in ownership, appointment of key officers, and official nod for even winding up or dissolution, the MTI said.

“It is critical for Singapore to remain open and connected to the world, and as such we must continually strengthen our position as a trusted hub for businesses to invest with confidence,” Gan said.

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Here are some key details of the proposed bill:

  • Buyers into designated entities are required to notify after becoming a 5% controller
    • Must seek approval before becoming a 12%, 25%, or 50% controller, an indirect controller, or acquiring as a going concern (parts of) the business or undertaking
  • Sellers are required to seek approval when ceasing to be a 50% or 75% controller
  • Transactions that occur without the necessary approvals will be rendered void
    • Materially affected parties can apply for validation notices
  • Office of Significant Investments Review will be set up under MTI
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—With assistance from Low De Wei.

(Updates with context in the the fourth paragraph.)

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