Model Constitutions of Singapore Companies

As has been widely reported, Singapore is in the midst of implementing the largest number of changes to the Companies Act since it was enacted in 1967. This latest review of the Act is to ensure that the country’s corporate regulatory framework is geared up towards the changing business realities, by reducing the regulatory burden and ease of compliance for companies. And all this is to be done in a transparent corporate environment, which generates investors confidence.

So, these changes – part of the Companies (Amendment) Act 2014 – are being implemented in two phases. First phase took place on July 1, 2015, and the latest one was January 3, 2016.

And one of the major amendments of phase two, along with the revamping of the BizFile into a more user-friendly and intuitive interface BizFile+, is the merging of Memorandum and Articles into “ Model Constitutions”.

Model Constitutions

Before, January 3, 2016, as per the Singapore Companies Act, every company incorporated in the country needed to have a Memorandum and Articles of Association (MAA). While the Memorandum specifies the activities in which the company may engage in, the articles of Association specifies the rules governing the internal management of the company. A standard MAA document provided by ACRA was the one used by most companies in Singapore. But the Amendment Act has merged and replaced Memorandum and Articles of Association (MAA) with the term “Model Constitutions”.

Now, Section 19(1) of the Companies Act requires the Constitution of the proposed company to be submitted to the ACRA. If it is a private company limited by shares, Section 18 of the Companies Act requires the company’s Constitution to (1) restrict the right to transfer its shares, and (2) limit its members to 50 at most.

Significantly, a company may either adopt the Model Constitution in force at a point in time, or else  adopt the Model Constitution in force from time to time.

• Adopting in force from time to time means the company would be taken to have adopted any changes to the provisions in the Model Constitution as made in the law over time, without having to go through any procedures to amend the Model Constitution that it has adopted.
• Whereas, adopting in force from at a point in time would mean that the Model Constitution adopted is fixed, unless the company subsequently makes amendments to it.

So what happens to Memorandum and Articles of Association on or after January 3, 2016?

Existing companies do not need to adopt the Model Constitutions, as their existing Memorandum and Articles of Association will be treated by ACRA as their constitution, from January 3, 2016.

So it must be noted that Model Constitutions doesn’t automatically apply to all existing companies. It’s up to the existing companies to decide whether they want to adopt a model constitution or not.

But for all companies incorporated on or after January 3, 2016, “Model Constitutions” is the norm. Thus, anyone wishing to incorporate a company in Singapore now, had three options as regards to adopting a model constitution:

• adopt as at the time of incorporation (at a point)
• adopt as may be varied (time to time)
• adopt a customised model constitution

Model constitution for various companies

Same as with the standard MAA document provided by ACRA, to help companies understand the concept of Model Constitutions, a private company limited by shares can follow the model constitution prescribed under section 36(1)(a) of the Act set out in the First Schedule.

For companies limited by guarantee, the model constitution is prescribed under section 36(1)(b) of the Act set out in the Second Schedule.

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