Revised regulations will improve business trust governance and unitholder rights.
Singapore has introduced significant amendments to its business trust laws, aimed at boosting transparency and governance. The new regulations require business trusts to disclose information about their beneficial owners, and make it easier for unitholders to vote on the removal of trustee-managers. These changes, passed in Parliament on 3 October, are designed to align the rules governing business trusts with those of the Companies Act, ensuring a more efficient regulatory environment.
Minister of State for Trade and Industry, Alvin Tan, explained that these amendments are crucial for strengthening the governance framework of registered business trusts. By reducing compliance costs and streamlining regulatory requirements, the changes will enhance both efficiency and transparency in the sector.
Business trusts, which blend the characteristics of a company and a trust, were originally governed by the Companies Act in 2004. However, recent changes to the Companies Act necessitated a revision of the trust regulations. The new rules also align business trust governance with those for Real Estate Investment Trusts (Reits) and other provisions under the Securities and Futures Act.
The amendments focus on three key areas: improving transparency and governance, empowering unitholders, and easing regulatory burdens. A major shift is the requirement for unlisted business trusts to maintain and share beneficial owner details with the Monetary Authority of Singapore (MAS) and other agencies when requested, helping mitigate illicit activities.
Additionally, auditors of listed business trusts will now need to seek MAS approval before resigning during their term. The threshold for unitholders to remove a trustee-manager has also been reduced from 75% to 50%, in line with Reit regulations, addressing potential conflicts of interest between managers and unitholders.
Other adjustments include aligning deadlines for annual general meetings (AGMs) and financial year-end returns. In the debate on the bill, MP Jamus Lim expressed concerns about business trusts, especially those tied to real estate, leveraging more than Reits. Minister Tan clarified that while Reits are investment funds with specific restrictions, business trusts have a broader scope for holding various asset types.
Tan also reassured that MAS will continue to refine the regulatory framework to meet evolving market needs and ensure the regime remains robust.
