could you talk more about "delayed visibility", what is the mechanism? In the jurisdiction of Singapore.
In Singapore, the concept of "delayed visibility" regarding shareholding primarily arises from the use of nominee accounts. These accounts are often employed by major shareholders, including institutional investors and high-net-worth individuals, to hold shares on behalf of another party. This arrangement can serve various strategic purposes, particularly in terms of privacy and regulatory compliance.
Understanding Nominee Accounts in Singapore
A nominee account is a type of custodial arrangement where a nominee (such as a bank, trust company, or brokerage) holds shares on behalf of the beneficial owner. The nominee is the registered shareholder, but the beneficial owner retains the rights to the shares, including voting and dividend entitlements.
In Singapore, the use of nominee accounts is governed by the Companies Act and the Corporate Registers (Miscellaneous Amendments) Act 2022. These regulations require companies to maintain a Register of Nominee Shareholders and to disclose certain information to the Accounting and Corporate Regulatory Authority (ACRA), though the identity of the beneficial owner (the nominator) is not publicly disclosed .
Mechanism of Delayed Visibility
The mechanism of delayed visibility operates through the following processes:
Nominee Shareholding: When shares are held in a nominee account, the nominee is the registered shareholder. This means that the beneficial owner's identity is not immediately apparent to the public or to other stakeholders.
Disclosure Requirements: Under Singapore law, companies are required to maintain a register of nominee shareholders and to update it within seven days of being informed of any changes. However, this register is not accessible to the public; it is only available to ACRA and other public agencies for enforcement purposes .
Beneficial Ownership: While the nominee holds the shares, the beneficial owner retains all economic rights associated with the shares. This arrangement allows the beneficial owner to maintain privacy regarding their ownership stake.
Strategic Transfers: A major shareholder may transfer shares from a nominee account to a direct account to signal confidence in the company, participate in corporate actions, or comply with regulatory requirements. Conversely, transferring shares back to a nominee account can restore privacy.
Strategic Purposes of Using Nominee Accounts
The use of nominee accounts for delayed visibility can serve several strategic purposes:
Privacy: Beneficial owners can maintain confidentiality regarding their ownership stake, which can be particularly important for high-net-worth individuals or institutional investors.
Regulatory Compliance: Nominee arrangements can help in managing compliance with regulatory requirements, such as disclosure thresholds for substantial shareholdings.
Corporate Actions: Holding shares in a nominee account can facilitate participation in corporate actions, such as rights issues or takeovers, by allowing for more flexible management of shareholdings.
Estate Planning: Nominee accounts can be used as part of estate planning strategies to manage the transfer of assets.
Considerations and Compliance
While nominee arrangements offer benefits in terms of privacy and flexibility, they also come with responsibilities:
Disclosure Obligations: Nominee shareholders must inform the company of their status and provide details of the beneficial owner within specified timeframes .
Regulatory Scrutiny: ACRA and other public agencies have the authority to inspect the register of nominee shareholders to ensure compliance with the law.
Penalties for Non-Compliance: Failure to comply with disclosure requirements can result in fines for the company and its officers.
In summary, the use of nominee accounts in Singapore allows for delayed visibility of shareholding, providing privacy and strategic flexibility for beneficial owners. However, this arrangement is subject to regulatory oversight and requires adherence to disclosure obligations to ensure compliance with Singapore's corporate governance standards.
