Business Trusts (Amendment) Bill 2022 first read in Parliament

September 2022

Business Trusts (Amendment) Bill 2022

The Business Trusts (Amendment) Bill 2022 (Amendment Bill) was moved for first reading in Parliament in September 2022. The key proposed amendments to the Business Trusts Act 2004 (BTA), can be categorized as follows:

1.       Aligning the BTA with the Companies Act 1967

The BTA was enacted in 2004, and since that time, changes have been made to the Companies Act 1967 (Companies Act). To facilitate a more efficient and transparent framework for businesses and investors, it is proposed the BTA is amended to align with the CA in various areas. These are:

(a)    Disclosure and BT administration. The amendments include:

-          CEOs must disclose interests in transactions

-          Unlisted BTs to obtain and maintain information on beneficial ownership of their units

-          adoption of electronic transmission of notices and documents to unitholders to be simplified

(b)    Rights of Unitholders and General Meetings. The amendments include:

-      statutory derivative actions have been expanded to include arbitration in addition to court proceedings

-      a court may order a buy-out of a BT in addition to winding up the BT

-      thresholds for the minimum share of unitholders required to demand a poll lowered from 10% to 5%;

-      deadlines for annual general meetings and filing of annual returns have been simplified;

(c)     Auditors and Financial Statements. The amendments include:

-      replacing the requirement for a separate directors’ report with a directors’ statement in the financial statements

-      removing duplication of legislation relating to independence of auditors in the BTA and the Accountants Act 2004 by deleting the relevant provisions from the BTA

-      requiring compliance with accounting standards formulated by the Accounting Standards Council

-      requiring an auditor of a listed BT to seek MAS’ consent if the auditor wishes to resign from its position

(d)    Governance and Compulsory Acquisition Right. The amendments include:

-      prohibiting improper use of position by an officer or agent of the trustee-manager

-      clarifying that individuals in addition to corporations may exercise the right to compulsorily acquire units held by dissenting unitholders in a takeover

-      providing for the possibility of joint offers

2.       Strengthening Governance Safeguards for Business Trusts

The percentage of voting rights required to remove a trustee-manager will be reduced to a simple majority (from the current not less than three fourths) of a voting rights. This aligns with the existing REIT regime, and facilitates the ability of investors to hold trustee-managers accountable.

The BTA was enacted in 2004, and since that time, changes have been made to the Companies Act 1967 (Companies Act). To facilitate a more efficient and transparent framework for businesses and investors, it is proposed the BTA is amended to align with the CA in various areas. These are:

(e)    Disclosure and BT administration. The amendments include:

-          CEOs must disclose interests in transactions

3.       Streamlining Regulatory Requirements

Other amendments include clarificatory amendments, including amendments to align with the Securities and Futures Act 2001 and the Companies Act  and amendments to reduce administrative requirements. These amendments include: 

(a)    passing resolutions by written means

(b)    delegation of MAS Managing Director’s powers to approve exemptions under the BTA to the relevant MAS group or department head

(c)     deregistration of a Business Trust upon MAS’ receipt of the notification of completion of winding up from the TM without the need for a separate application for voluntary deregistration

(d) a trust that has received approval-in-principle to be listed on an approved exchange to be considered a BT for the purposes of the BTA, even if each of the unitholders is a related corporation of the trustee