BUSINESS REGISTRATION (AMENDMENT) BILL

Order for Second Reading read. 4.35 pm

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, this Bill seeks to amend the Business Registration Act to update the Act, streamline registration procedures, enhance certain penalties, harmonize the Act with the Companies Act and enhance the computerisation of services offered by the Registry of Companies and Businesses.

The Business Registration Act provides the basic framework of governance for unincorporated businesses, focusing primarily on registration, restrictions, offences, and penalties. Apart from two previous consequential amendments, this Bill is the first proposed amendment to the Act since its enactment in 1973. The crux of the Bill is to update our legislation and fine-tune administrative housekeeping matters.

Sir, I shall now go on to highlight the main amendments proposed in the Bill.

Extension of the validity period of Certificates of Registration

Clause 5 of the Bill proposes the amendment of section 9 to extend the validity period of certificates of registration from 1 year to 3 years. This means that a certificate of registration issued upon registration shall be valid for a period of 3 years and shall thereafter be renewable for a period of 3 years in respect of each renewal. Figures from the Registry of Companies and Businesses show that 92% of businesses are still in operation after 1 year and require renewals, whereas only 59% of businesses are still in operation after 3 years. Presently, much time and resources are spent following up on annual cases of non-renewal of certificates. Adopting a 3-year renewal policy will relieve the business community of the unnecessary administrative burden of yearly renewal, and reduce business costs.

Empowering the Registrar to accept cashless modes of payment or renewal of businesses

Clause 5 amends section 9 to allow the Registrar to make cashless modes of payment (eg, GIRO and other electronic means) a condition for renewals, if deemed necessary. The same amendment grants the Registrar the discretion to accept cash in exceptional circumstances. The amendment is in line with the national effort to promote electronic mode of payment, which will help to reduce the administrative cost to both the public and the Government.

Granting the Registrar the power to refuse or cancel registration

Clause 20 introduces new sections 31A and 31B that empower the Registrar to refuse or cancel the registration of businesses in instances where it is shown that registration would be for unlawful purposes, purposes prejudicial to public peace, welfare or good order in Singapore or where it is contrary to national security or the national interest. This will bring the Act in line with amendments made to the Companies Act in 1984.

Shifting the burden of proof from the Registrar to the defendant in cases where the defendant is alleged to be carrying on business under the name displayed at his premises

To facilitate prosecution, clause 14 introduces new section 23A that shifts the burden of proof from the Registrar to the defendant in cases where the defendant is alleged to be carrying on business under the name displayed at his premises. In such instances, the defendant will be required to disprove that he is "carrying on business", based on evidence such as having a sign outside the business premises, rather than the Registrar having to prove that the defendant is doing business. Similar provisions on the reversal of the burden of proof are found in the Misuse of Drugs Act and the Immigration Act.

Fixed time frame for appeals

Clause 20 introduces new sections 31B(3) and 31C such that any person wishing to appeal to the Minister against a decision of the Registrar to refuse or cancel the registration of a business must appeal within 30 days. This will bring the Act in line with the Companies Act relating to the time-frame for appeals to Minister.

Other amendments

As the penalties in the Act have not been increased since 1974, opportunity is being taken to revise them now. In addition to these changes, other administrative amendments are proposed to update the Act and provide for the filing, making of payment and other transactions through electronic means. The rest of the amendments are of a drafting nature.

Conclusion

Before tabling this Bill, we had sought the views of lawyers, accountants and interested parties such as the Institute of Certified Public Accountants of Singapore (ICPAS), the Association of Small and Medium Enterprises (ASME) and the Law Society.

In proposing these changes, we have taken into consideration the impact these changes would have on the public. The amendments will help reduce business costs, streamline the business registration procedures and allow for electronic modes of payment. We hope that these changes will provide a more efficient way of registering businesses and a more conducive regulatory environment for businesses.

Sir, I beg to move.

Question proposed.

Assoc. Prof. Toh See Kiat: Mr Speaker, Sir, I would like to start by commending the Minister for this effort to constantly review the business registration processes to keep up with the times, and I am pleased especially with the effort to make it friendly for electronic filing and electronic payment purposes. Electronic filing, of course, eventually we hope, will be one of the ways that we can actually file our company reports, annual accounts and all that. But that is another matter.

Sir, I would like to just refer to three points very quickly. First, on clause 2. Clause 2 is an amendment to section 2 of the Business Registration Act. Here, in section 2, we essentially have a section that deals with who is registrable and who is not registrable. I would like to seek the Minister's clarification about certain types of businesses that are now operating from home like tutors. Under the T 21 plan that we have, we are allowing homes to be used for businesses. In the old days, under the First Schedule of the Business Registration Act, there were a lot of businesses that were exempted from registration because they happened to be home-run businesses. And I do hope that the Minister would clarify whether the home operations now that are allowed under the T 21 plan would be operations that need to be registered under this Business Registration Act.

My second point relates to clause 3. A clarification needed is whether this amendment would cover companies incorporated under the Companies Act (Cap. 50) and whether these companies can use acronyms and short form names without registering these acronyms and names. For example, "International Business Machines Pte Ltd" could trade as "IBM" without any registration. Or whether "X Malaysia Rubber Traders Pte Ltd" could trade as "XX Rubber" without further registration. This assumes, of course, that the earlier incorporation is all validly done. And how about words that are added on to a company's name? For example, the registered company name is "ABC International Tours Pte Ltd" and they trade as "ABC International Tourists Centre".

[Mr Deputy Speaker in the Chair]

4.44 pm

Assoc. Prof. Toh See Kiat: Sir, the third point would really relate to the whole process of business registration in Singapore, and I just like to urge the Minister to continue reviewing this process. The Ministry of Finance has done well and the Registry of Companies and Businesses has done well to shorten, for example, some of the processing time for registration, the red tape and all that goes along with registering a business in Singapore. Despite its responsiveness in recent years, I do know and I am told that it is still nonetheless not competitive, in the sense that if I register a company or a business right now in Silicon Valley, California - and indeed I am told that this is being done - at the same time that I register the company in Singapore, my Silicon Valley company would be formed first, and I think this is something which we must correct.

Ultimately, we also need to look at further rules that sometimes are accretions to the Act, meaning that they are added on to the Act without really much thought. And this would be certain requirement, for example, for a local resident manager in an Internet world where the people could be operating a business from across the world. It would be very difficult for them to find a local resident manager. Invariably, they may actually appoint a local who has nothing to do with the business to represent them in Singapore. And I think these rules have to be constantly reviewed to make us responsive in a knowledge-based economy.

Dr Richard Hu Tsu Tau: I thank Prof. Toh See Kiat for his general support of the amendments. He has three points which I will respond to.

Firstly, he wants clarification as to whether people operating from home offices or who are doing home tuitioning would be exempted like those operations in the First Schedule. I have to tell him that they are not exempted. Those who are exempted under the present First Schedule are people like taxi-drivers, craftsmen or farmers of low-skilled activity. And the home office is a provision which is to allow people to operate from home where normally they operate from the office and generally of a higher skill level. Therefore, such people who operate from the home still have to apply for registration.

Similarly, it will apply for home tutors. They are also not exempted, although we believe a number of home tutors have not registered on the assumption that they are exempted. They are indeed not exempted.

Prof. Toh also wants to know, under clause 3, whether companies can use acronyms or other short forms for trading under the Act. I would like to clarify that the amendment in question is simply a drafting change to get rid of superfluous words such as "without any addition". Removing these words will not change the intent of the Act. So the meaning of the provision in section 4 remains unchanged. If companies want to operate under a different name, it will still be required to register. For example, IBM, a foreign company, which operates under its own corporate name wishes to use an acronym for some other purpose, then under that name, they will have to apply for registration.

Finally, he compares the speed of business registration at Silicon Valley to Singapore. I would like to assure him that we will do everything possible to shorten the registration period. But even under the existing rules, for business firms, the turnaround time is usually no more than 24 hours, except for a few cases where the questions arise whether the directors involved have records which need to be tracked. For corporations, it normally takes about five working days for the company name to be approved and another five days for the company to be incorporated. This is longer than in the Silicon Valley where we understand that it could take three to five days to register a company, although some businesses have been turned around within 24 to 48 hours. I think our record is not bad. Although the periods are longer than Silicon Valley, they are quite acceptable in normal circumstances. But we will try our best to improve it.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau].

Bill considered in Committee; reported without amendment; read a Third time and passed.