Singapore passes new law to manage investments on national security grounds
12 January 2024
12 January 2024
The Singapore Significant Investments Review Bill ("SIRB") was passed into law on 9 January 2024. The commencement date for the Singapore Significant Investments Review Act 2023 has yet to be published. Once commenced, relevant transactions will be caught under this regime.
The SIRB is a new investment management regime aimed at safeguarding Singapore's national security interests. It does so by regulating significant investments in, and control of, critical entities, by both local and foreign investors.
The SIRB has also introduced over-arching call-in powers against actors who have acted against the national security interests of Singapore.
A dedicated office will be set up within the Ministry of Trade and Industry ("MTI") to administer the SIRB regime.
The term "national security" has not been defined in the SIRB. In response to parliamentary questions, Mr. Gan Kim Yong, Minister for Trade and Industry (the "Minister") has said that this was deliberate in order to retain flexibility and so as not expose Singapore's "vulnerabilities". This broad approach towards "national security" isn't uncommon globally with regard to other foreign investment regimes including in the United States, Europe and China.
Only entities that are deemed critical to Singapore's national security interests will be designated under this regime ("Designated Entities") and regulated accordingly. Whilst Designated Entities have not been identified in the SIRB, we understand that entities that are being considered for designation under this category have already been contacted.
Over and above those involving Designated Entities, the Minister has broad cross-sector powers to review transactions involving entities that have acted against the national security interests of Singapore. The right of review applies for a two year period after the relevant transaction.
The SIRB thresholds are set out below. If the thresholds are met, either a notification or approval must be sought from the Minister.
Given the above, the responsibility to notify or seek approval rests not only on prospective controllers but also existing controllers and the Designated Entity itself.
- direct the assumption of control of a Designated Entity's affairs, business and property;
- immediately take or cease any action; and/or
- appoint a person to advise a Designated Entity in the proper conduct of its business or undertaking.
The screening of investments on national security grounds is an increasingly common trend across the globe, with the Minister citing that at least 37 countries have introduced such regulatory frameworks. The SIRB introduces an interesting dynamic in Singapore, particularly with regard to the call-in powers referenced above.
This new regime introduces additional notification/approval requirements for transactions involving Designated Entities, alongside merger control and other regulatory filings in Singapore.
Authors: Michelle Phang, Partner; Angie Ng, Partner; Glenn Tan, Senior Associate