On 10 March 2017, an urgent bill was passed, with all three readings done in a single Parliament sitting on the same day. A joint press release (the Press Release) was released on the same day by the Ministry of National Development, Ministry of Finance and the Monetary Authority of Singapore, announcing "measures relating to residential property" on this particular bill, the Stamp Duties (Amendment) Bill (the Bill). The changes in the Bill are effective from 11 March 2017 (the Effective Date).

One of the primary changes announced in the Bill, was the imposition of a new type of stamp duty, coined the "Additional Conveyance Duties" (ACD) on a transfer of equity interest in an entity holding residential property. The Press Release states that the intent of the legislative changes "is not to impact the ordinary buying and selling of shares in such entities by retail investors, where the entities are listed on the Singapore Stock Exchange".

However, the actual wording of the amendments in the Bill, in particular to section 22(1) of the Stamp Duties Act (Cap. 312) (the Act), in fact indicate that all transfers of shares in Singapore companies, whether private or listed, and whether holding residential property or not, are impacted by the changes in that:

  1. Under the amended section 22(1), the time of stamping of all share transfers, whether or not the target company holds residential properties directly or indirectly, have shifted forward, from the execution of the instrument of transfer at completion (with a 14-day grace period), to the execution of the agreement for the transfer, where there is such an agreement (with a 14-day grace period); and
  2. Prior to the Effective Date, transfers of shares traded on the Singapore Stock Exchange were not subject to stamp duty, as there was no instrument of transfer executed—the shares are all deposited with and registered in the name of the Central Depository under the scripless system. Now however, with the timing of stamping being shifted to the execution of an agreement under section 22(1), it would appear from the wording of the legislation that stamp duty applies to any agreements signed for the transfer of shares in a Singapore listed company, for example, in privatisation exercises.

There is currently no legislated special exemption or exclusion in the Act for shares registered on the Central Depository, except in very specific circumstances, such as in a Companies Act amalgamation, and in a conversion of a firm or private company into a limited liability partnership. In addition, the Press Release characterises the measures as relating to residential property, and does not explain that the amendment of section 22(1) impacts all companies regardless of whether they are connected with residential property. Therefore, there is a danger that other companies may not be aware of the impact on them, and this is particularly true of listed companies which may not be concerned with residential property. It is not clear, despite what is stated in the Press Release, whether this is the intended effect of the amendment to section 22(1).

Clients who have existing or proposed sales, purchases, or transfers of shares in a Singapore company, whether privately held or listed, are urged to approach their legal counsel to verify if, and what, the stamp duty implications for such transfers are.

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