ACRA, MOF and MAS issue consultation paper on legislative amendments to enable conduct of general meetings by electronic means

16 February 2023

On 9 February 2023, the Accounting and Corporate Regulatory Authority (“ACRA”), the Ministry of Finance (“MOF”) and the Monetary Authority of Singapore (“MAS”) issued a consultation paper seeking feedback on proposed legislative amendments to the Companies Act 1967 (“CA”), the Variable Capital Companies Act 2018 (“VCCA”) and the Business Trusts Act 2004 (“BTA”), to enable the conduct of general meetings by electronic means. The public consultation closes on 20 February 2023.

The public is invited to provide feedback on proposed amendments under the draft Companies, Business Trusts and Other Bodies (Miscellaneous Amendments) Bill 2023 (“Draft Bill”), which will introduce enabling provisions to allow companies, variable capital companies (“VCCs”) and business trusts (“BTs”) the option to conduct fully virtual or hybrid general meetings.

Background

ACRA and MAS had earlier indicated plans to propose legislative amendments to allow the conduct of general meetings by electronic means, when it was announced that the Covid-19 (Temporary Measures) (Alternative Arrangements for Meetings) Orders (“Meetings Orders”) will be revoked with effect from 1 July 2023.

Summary of proposed amendments

The CA is proposed to be amended to allow companies to have the option to conduct fully virtual or hybrid meetings. BTs combine elements of a company and a trust and the BTA provisions are largely based on provisions under the CA. VCCs are also subject to requirements, similar to companies under the CA, to hold meetings under the VCCA. As such, similar changes are proposed to be made to the BTA and the VCCA to enable BTs and VCCs to have the same option to conduct fully virtual or hybrid general meetings.

The Draft Bill is set out in Annex A to the consultation paper. The documents explaining the key clauses in the Draft Bill on virtual general meetings of companies, BTs and VCCs can be found in Annexes B and C.

Proposed amendments to CA

New section 173J to enable fully virtual or hybrid general meetings

The Draft Bill proposes a new section 173J of the CA (“section 173J”) which provides for the following:

• Clarifies that companies can hold fully virtual or hybrid general meetings: The proposed section 173J(2) enables a company to hold general meetings, statutory meetings and class meetings (“general meetings”) (a) at a physical place; (b) at a physical place and using virtual meeting technology (provided for in section 173J(2)(b)); or (c) using virtual meeting technology only (provided for in section 173J(2)(c)).

“Virtual meeting technology” is defined to mean “any technology that allows a person to participate in a meeting without being physically present at the place of meeting”.

• Clarifies references in the CA that are applicable to a general meeting: The proposed section 173J(4) clarifies how references in the CA that are applicable to a general meeting may be applied in the context of a general meeting held using virtual meeting technology.

The references in the CA include (a) attendance; (b) presence; (c) voting; (d) entitlement or right to vote; (e) voting on a show of hands; (f) entitlement or right to be heard; (g) right to speak on a resolution; (h) right to speak at a meeting; (i) discussion; (j) reading out a representation or declaration; (k) reading out an auditor’s report; (l) making a document available for inspection; (m) production of a register and keeping it open and accessible; (n) keeping a list open and accessible; (o) laying a statement, financial statement, consolidated financial statement, balance sheet, auditor’s report or other document; and (p) a statement, financial statement, consolidated financial statement, balance sheet, auditor’s report or other document being laid or caused to be laid.

• Allows companies to amend their constitution to exclude or modify the application of the new procedural framework applicable to meetings held, whether wholly or partly, using virtual meeting technology: The proposed section 173J(5) enables a company to, on or after 1 July 2023, amend its constitution to exclude the application of sections 173J(2)(b) and/or 173J(2)(c) or exclude or modify the application of any of the statutory provisions in section 173J(4) governing the conduct of fully virtual or hybrid meetings which would otherwise automatically apply in respect of such meetings .

Objectives of proposed section 173J

Section 173J, which is intended to come into operation on 1 July 2023, aims to achieve the following objectives:

• Clarity: The proposed amendments will expressly clarify that companies can hold fully virtual or hybrid general meetings and provide companies flexibility in holding such meetings without having to first amend their constitution, while ensuring that members’ rights are upheld. This will give greater clarity, and therefore certainty, as to whether companies may hold such meetings.

• Facilitating compliance: When the Covid-19 pandemic began in 2020, temporary legislative amendments were made to allow virtual general meetings to be held in view of the ambiguity in the CA. Facilitating the use of digital media and technology would help companies comply more effectively with the law in today’s operating environment.

• Flexibility: The proposed statutory provisions will also give a company the flexibility of amending its constitution on or after 1 July 2023 to “opt-out” of the statutory framework enabling and regulating the conduct of fully virtual or hybrid general meetings. This may be effected by an amendment to the constitution to prohibit the holding of fully virtual and/or hybrid general meetings, or modify or exclude the application of the rules clarifying how references in the CA that are applicable to a general meeting may be applied in the context of a fully virtual and/or hybrid general meeting.

Regulations regulating use of virtual meeting technology for meetings

Section 411 of the CA (“section 411”) will also be amended to enable the Minister to make regulations for or with respect to regulating the use of virtual meeting technology for fully virtual or hybrid general meetings mentioned in section 173J(2)(b) or (c). The regulations that have been proposed under section 411 include:

• restricting or mandating the types of virtual meeting technology that may be used;

• restricting the means by which voting may be carried out, or mandating how voting may be carried out, using virtual meeting technology;

• imposing record keeping and auditing requirements in respect of the use of virtual meeting technology;

• imposing requirements relating to the verification or authentication of the identities of persons attending meetings using virtual meeting technology; and

• mandating the notices and documents (including physical notices and documents) to be sent to persons attending or eligible to attend a meeting using virtual meeting technology.

The amendments to section 411 are intended to address any future challenges with fully virtual or hybrid general meetings.

Feedback is sought on the following questions Whether the proposed definition of “virtual meeting technology” is appropriate. Whether the rules in subsection (4) of the new section 173J are appropriate, and whether there are any other references in the CA that should be covered under subsection (4). Whether the proposed areas where the Minister is empowered to make regulations for or with respect to regulating the use of virtual meeting technology for meetings under the CA are appropriate, and whether there are any other areas that should be covered by the Minister’s power to regulate the use of virtual meeting technology for general meetings.

Providing for effect of technological disruption, malfunction or outage

The Draft Bill also proposes to amend section 392 of the CA to introduce a new subsection (2A) which provides that a meeting to which the new sections 173J(2)(b) or 173J(2)(c) applies is not invalidated by reason of any technological disruption, malfunction or outage unless the General Division of the High Court (“Court”) is of the opinion that the technological disruption, malfunction or outage has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid.

The proposed amendment strikes a balance between providing members an avenue for redress where a technological disruption, malfunction or outage occurs at a fully virtual or hybrid general meeting, and providing companies with the flexibility to hold such meetings, as it will:

• allow a member of a company to apply to the Court to invalidate a fully virtual or hybrid general meeting held under the new section 173J on the basis of the occurrence of a technological disruption, malfunction or outage; and

• provide that the occurrence of a technological disruption, malfunction or outage does not per se invalidate the general meeting, unless the Court is of the view that there was substantial injustice caused by the technological disruption, malfunction or outage.

Proposed amendments to BTA and VCCA

Similar changes are proposed to be made to the BTA and the VCCA to enable BTs and VCCs to have the same option to conduct fully virtual or hybrid general meetings.

Feedback is sought on the following questions Whether it is appropriate to align the BTA and the VCCA with the CA by also amending the BTA and the VCCA to enable BTs and VCCs to have the option to conduct fully virtual or hybrid general meetings. Whether the proposed definition of “virtual meeting technology” is appropriate in the context of BTs and VCCs. Whether the rules clarifying how references in the BTA and the VCCA that are applicable to a general meeting may be applied in the context of a general meeting held using virtual meeting technology are appropriate, and whether there are any other references in the BTA and the VCCA that should be covered. Whether the proposed areas where the Minister is empowered to make regulations for or with respect to regulating the use of virtual meeting technology for meetings under the BTA and the VCCA are appropriate, and whether there are any other areas that should be covered by the Minister’s power to regulate the use of virtual meeting technology for general meetings.

Reference materials

The following materials are available on the ACRA website www.acra.gov.sg:

• Consultation Paper on Legislative Amendments to Enable Conduct of General Meetings by Electronic Means
•  Annex A - Draft Companies, Business Trusts and Other Bodies (Miscellaneous Amendments) Bill 2023
•  Annex B - Key clauses on virtual general meetings of companies in the draft Companies, Business Trusts and Other Bodies (Miscellaneous Amendments) Bill 2023
• Annex C - Key clauses on virtual general meetings of business trusts and variable capital companies in the draft Companies, Business Trusts and Other Bodies (Miscellaneous Amendments) Bill 2023

 The materials are also available on the relevant MOF and MAS webpages.