By EMILYN YAP

A steering committee is exploring revisions to the Companies Act to keep Singapore's corporate regulations relevant in rapidly changing times, Finance Minister Tharman Shanmugaratnam said yesterday.

Potential changes to the Act include the creation of a list of directors' duties; removing restrictions for companies to provide financial assistance for certain share acquisitions; and replacing the exempt private company concept with a new 'small company' definition.

'The steering committee has a lot of ground to cover and it will be issuing a public consultation paper on its recommendations,' Mr Tharman said at the Singapore Institute of Directors (SID) dinner last night.

Singapore's Companies Act last underwent a holistic review in 1999. In the past few years, other jurisdictions such as the UK have been reviewing their company law frameworks.

Against such a backdrop, Mr Tharman said it is timely to review Singapore's corporate regulatory framework to maintain its relevance. 'The new Act should convey the intent of corporate legislation and the rules in clear, concise and unambiguous language,' he said.

The steering committee - convened by the Finance Ministry and chaired by Attorney-General Walter Woon - is studying the codification of directors' duties.

Today, Section 157 of the Companies Act holds the statutory statement of a director's duties, but the statement is not exhaustive. In contrast, the UK has listed in its Act seven director's duties, such as the need to avoid conflict of interest.

But there are pros and cons to the British approach, Mr Tharman said. While it helps directors better understand the law on their fiduciary duties, it may not be flexible enough to accommodate changing practices in the corporate world.

'Instead of codifying all the director's duties in the Companies Act, the steering committee is also exploring the option of providing greater clarity to directors via practice directions or guidance notes,' he said.

Separately, Section 76 of the Companies Act today prohibits a company from providing financial assistance to a third party to acquire its own shares or those of its holding company. 'Section 76 is known to be rather complex,' said Mr Tharman, and the steering committee is studying the liberalisation of such restrictions.

Former Member of Parliament Lew Syn Pau was charged some years ago for allegedly breaching this section of the Companies Act but was eventually cleared of the charges. The case moved from the Subordinate Courts to the High Court because it involved a 'question of law of unusual difficulty'.

The steering committee is also considering the introduction of a new 'small company' definition in the Companies Act to replace the exempt private company (EPC) concept.

Companies with an EPC status can enjoy benefits such as exemption from filing accounts with the Accounting and Corporate Regulatory Authority (ACRA) if they are solvent. However, today's definition of an EPC sometimes includes even large private companies in terms of assets or operations.

Mr Tharman said the steering committee will weigh the pros and cons of the various potential changes. The key is to consider 'how we can avoid 'hard- coding' too many regulatory rules in the body of the Companies Act, and instead enable procedures to be modified as the environment changes, through changes to subsidiary legislation'.

SID marked its 10th anniversary with last night's dinner, and gave tokens of appreciation to 16 organisations - including The Business Times - to acknowledge their support.

This article was first published in The Business Times.