Significant Investments Review Bill: What It Means for Business and Investments in Singapore

By Ramiro Rodriguez and Lucy Megarry

A draft of the new Significant Investments Review Bill was introduced to Parliament on 6 November 2023. The bill is now due for a second reading in January 2024. If enacted, the bill will commence the first industrywide regime restricting investments in Singapore.

The bill applies to all local and foreign, incorporated and unincorporated entities in Singapore that meet the following criteria:

a.  Are incorporated, formed or established in Singapore; and
b.  Carry out any activity in Singapore; or
c.  Provide any goods or services to any person in Singapore.

The bill contains the following key features:

1. 1. The creation of a category of “designated entities”
      • A new category of designated entities refers to entities deemed critical for the interest of Singapore’s national security.
      • These designated entities will have additional regulations, such as giving notice or seeking approval from the Minister for Trade for various business actions and will be subject to controls by the Ministry of Trade. Penalties range from voided transactions, disposal of equity, removal of unapproved officers to three years imprisonment or fines of up to S$1 million.
      • Entities will be notified if they fall into this category and have an appeal opportunity in writing within 14 days and a second appeal right to an Independent Reviewing Tribunal.
      • A list of designated entities will be regularly publicised in the Gazette.
   2. Review of ownership and control transactions of entities who have acted against national security interests
      • The Minister for Trade will have additional powers to review and unwind corporate transactions deemed contradictory to national security interest.
      • This power is executed over all entities regardless of whether they are designated.
      • The power to oversee transactions is actionable for a period of two years after a transaction is made against national security interest.
   3. The creation of the Office of Significant Investments Review

What This Means in Practice

• • All investors in Singapore should assess their businesses to determine if they may qualify as a designated entity.
  • Entities likely to be/classified as a designated entity must be aware of and adhere to increased regulations and controls to avoid penalty.
  • Potential investors should assess whether an investee may constitute a designated entity and be aware of the additional requirements they now bear before proceeding into business.
  • Entities should have increased awareness of any actions that may be considered critical to or against national security interest.
  • Businesses who have acted against national security interest will be monitored for 2 years after the transaction.

Comment
The bill constitutes a proactive step in national security protection and will enhance security of the economy applying to local and foreign entities alike. However, it remains to be seen how tightly these regulations will be bound. Investors may have concerns about the future of free trade in Singapore given the present lack of a “designated entity” definition critical to national security interest or examples of actions that may contradict national security interest. While further clarity and certainty is necessary to understand how restrictive this bill will be in practice, we are confident that Singapore will remain an attractive, business-friendly location for trade and its open and practical approach to investments will prevail.

For More Information
If you have any questions or would like more information on the issues discussed in this article, please contact Duane Morris & Selvam Director Ramiro Rodriguez.

About Duane Morris & Selvam LLP
Duane Morris & Selvam LLP is a joint law venture between international firm Duane Morris LLP and Singapore-based firm Selvam LLC. Duane Morris & Selvam runs a unique Latin American-Asian practice out of Singapore, with a team of international lawyers qualified in multiple jurisdictions including Singapore, the U.S., the U.K., Canada, Mexico and Colombia, with substantial experience in international transactions and disputes. Duane Morris & Selvam also has cooperative relationships with some of the best Latin American and Asian law firms.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.