The Accounting and Corporate Regulatory Authority (ACRA) of Singapore is set to introduce new regulations that will have significant implications for corporate service providers and company directors1. These changes, which are expected to be tabled in Parliament in early 2024, aim to strengthen Singapore’s anti-money laundering regime.
ACRA’s New Proposals
ACRA’s new proposals include enhancing the penalties on errant corporate service providers and putting restrictions on directorships. Specifically, the authority is considering limiting the number of nominee directorships one can hold.
This move comes in response to concerns about the role played by registered filing agents in recent money laundering cases.
Since 2021, ACRA has imposed 24 sanctions against registered filing agents, with eight of these cases resulting in the cancellation or suspension of the agents’ registrations.
The new regulations aim to further tighten control over these service providers.
In addition, ACRA is also studying restrictions on directorships to ensure nominee directors are fit and proper for their roles. Currently, there are no limits to the number of companies that a director can be involved in1. However, this could change under the new proposals.
In light of these impending changes, Directors and Officers (D&O) insurance has become increasingly relevant. D&O insurance is designed to protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization.
It can also cover the legal fees and other costs the organization may incur as a result of such a suit.
Given the enhanced penalties and restrictions proposed by ACRA, directors and officers may face increased personal risk. In such cases, D&O insurance can provide much-needed protection. For instance, if a director is sued for exceeding the limit on directorships once the new regulations take effect, their D&O insurance policy could potentially cover their legal defense fees.
Moreover, D&O insurance can also provide coverage for claims where the company refuses to or is financially unable to pay for indemnification (Side A coverage).
This could be particularly useful if a company faces financial difficulties or goes bankrupt.
Conclusion
ACRA’s new proposals represent a significant step towards strengthening corporate governance and anti-money laundering measures in Singapore. As these changes unfold, it’s crucial for corporate service providers and company directors to understand their implications and take necessary precautions. One such precaution could be securing comprehensive D&O insurance coverage, which can provide critical protection against personal losses and legal costs.
I hope this article helps you understand more about D&O insurance. If you have any questions or want someone to review your current policy you can contact me here.
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