SINGAPORE — Sweeping changes to the Companies Act were passed in Parliament yesterday, in the largest overhaul of laws governing the conduct of businesses in Singapore since the Act was enacted in 1967.

The changes aim to liberalise the regulatory regime and introduce more flexibility to the business environment. Among the more than 200 amendments made is the exemption of small companies from having to get their accounts audited — a move that could reduce compliance costs for at least 25,000 small firms.

The one-share-one-vote restriction will also be lifted for public companies, giving them greater flexibility in raising capital and providing investors a wider range of investment opportunities, said Senior Minister of State (Finance) Josephine Teo. This amendment will benefit about 800 non-listed public firms, she added.

A new multiple-proxies regime will also give Central Provident Fund investors the same rights as direct investors to vote at shareholder meetings.

Holland-Bukit Timah GRC Member of Parliament (MP) Liang Eng Hwa and Sembawang GRC MP Ong Teng Koon raised concerns including whether firms would abuse audit exemptions and if removing the one-share-one-vote restriction — essentially allowing firms to sell shares without the accompanying voting rights — would entrench the power of companies.

Said Mr Liang: “We need to safeguard against businesses of a bigger group deliberately creating small companies just to enjoy audit exemptions.”

Mr Ong pointed out public feedback on concerns over how the Finance Ministry could ensure proper accounts are kept by small firms.

In response, Mrs Teo noted that while audits could be useful, they cost time and money. “It is also not strictly necessary for ACRA (Accounting and Corporate Regulatory Authority) to impose an annual requirement for small companies that do not have wide public interest,” she said.

She added that the amended Act still requires all firms to keep proper accounts, even if there is no mandatory audit, while the Inland Revenue Authority of Singapore selectively checks the tax returns of small companies.

On lifting the one-share-one-vote restriction, Mr Ong noted that this is a contentious issue in many jurisdictions. Detractors of such a move have argued that there should not be “second-class shareholders”, he added. Still, he pointed out that Singapore has to be pragmatic about this, as firms would go to places that allow them greater access to public markets for capital.

Mrs Teo said this change was essential in view of global developments and demands of increasingly sophisticated investors. “The Bill will require public companies to ... clearly demarcate the different classes of shares, so shareholders know the rights attached to any particular class of shares,” she said.

The Singapore Exchange and Monetary Authority of Singapore are reviewing whether listed firms should be permitted to issue shares with different voting rights. Pending the conclusion of the review, listed companies will not be allowed to do so.