BUSINESS REGISTRATION (AMENDMENT) BILL

Order for Second Reading read.

The Deputy Prime Minister and Minister for Finance (Mr Lee Hsien Loong): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the Business Registration Act provides the basic framework of governance for sole proprietorships and partnerships in Singapore. The Business Registration Act was last amended in April 2000.

Sir, I have highlighted in the Second Reading of the Companies (Amendment) Bill that the Registry of Companies and Businesses ("RCB") is working on an electronic filing system called BizFile. As in the case of the Companies (Amendment) Bill, this Bill seeks to introduce legislative changes that would facilitate the implementation of BizFile for businesses in Singapore. This Bill also seeks to streamline certain procedures and provisions in the Business Registration Act.

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

Removal of the Need for Physical Signatures, Certificates of Registration, Statutory Declarations and Affidavits

As in the case of companies, BizFile would simplify the process for business owners to register their businesses and update their records with RCB. The user need not submit any hardcopy forms, declarations and affidavits.

Clause 6 amends section 9 to dispense with the need to issue hardcopy certificates of registration as evidence of registration. The hardcopy certificate would be replaced by an electronic notification. Section 9 would also be amended to remove the requirement for the business owner to display a hardcopy certificate of registration. Any member of public who wishes to check the registration status of a business can do so online, at no charge. However, if a business requires hardcopy certificates of registration for other purposes, such as for submission to overseas regulators, it can still obtain hardcopy certificates from RCB upon the payment of a fee.

Removal of Pre-Registration Checks for Similar Names

Sir, in the Second Reading of the Companies (Amendment) Bill, I have explained the rationale for removing the requirement for the Registrar to do pre-incorporation checks for similar names. I have also explained how the proposed removal would benefit the business community and how there would be sufficient safeguards to protect the interest of incumbent companies and businesses. Clause 8 of the Business Registration (Amendment) Bill aligns the provision in section 11 with the corresponding provision in the Companies (Amendment) Bill. Under the new section 11, the Registrar will no longer do pre-registration checks for similar names.

Mr Speaker, Sir, the proposed amendments in this Bill are expected to benefit business owners in terms of lower costs, more efficient service and greater convenience. It would also align RCB's practices with its counterparts in the US, UK and Australia, and allow RCB to provide better service to its customers.

Sir, I beg to move.

Question proposed.

Mr Leong Horn Kee: Mr Speaker, Sir, I wish to speak in support of this Bill. As the Deputy Prime Minister has explained, the Bill will facilitate the implementation of electronic filing for companies via BizFile and simplify some procedures for business registration.

I particularly support the intent and trend adopted by the Government to make business registration easier, cheaper and faster. This is the basic purpose of BizFile.

Sir, in line with this approach, I would like to raise two suggestions to the Deputy Prime Minister.

The first suggestion is with regard to the registered address of a business. At present, the requirement is that businesses must be registered in a business address. A company is not allowed to register a residential address as the registered business address. We know that many Singaporeans have formed companies with the intent to eventually start a business. Pending the start of the business, these companies are dormant. The need to be registered in a business address means that companies often have to be registered with business addresses of law firms and audit companies. Though small, often there is a fee to be paid. For the firms whose addresses are being used as the business address, this requirement adds to unnecessary administrative and correspondence work. Hence, I would like to suggest that the Government consider allowing residential addresses to be used as registered and correspondence addresses of firms.

In addition, the present residential addresses are not permitted to be used for conducting businesses, except for certain approved purposes, such as IT-based start-ups. So as to foster the growth of a more entrepreneurial climate and a more business-friendly environment, I would like to ask the Deputy Prime Minister to consider liberalising the restriction on the use of residential addresses for the conduct of business. Of course, the allowed businesses should not create a disamenity to the residential neighbourhood. Singapore does not have many houses with garages, so we cannot boast that many bright ideas from Singaporeans germinate from garages. But many Singaporeans live in HDB flats. Therefore, we should be proud to say that many of our great businesses sprouted from the living rooms of HDB flats.

My second suggestion, Sir, is with regard to liquidation of companies. We can now claim that it is very easy to form a company in Singapore, especially with the advent of BizFile. I am not sure whether we can say the same for the liquidation of companies. As I have said earlier, many Singaporeans form companies in preparation to start a business. However, several of these businesses remain dormant and may never see the daylight of a day of business. Finally, they have to be closed.

Sir, I would like to suggest that the relevant bodies study the procedures and requirements in the liquidation or closing of companies. I am told that, typically, liquidation of a company costs between $5,000-$15,000. For a small or dormant company, this would be a large sum. I concede that regulations on liquidation of companies should require more careful handling so as to protect creditors. I would like to request that the procedures should be simplified and made cheaper, if possible. One suggestion is to use BizFile for electronic filing of closing of dormant companies.

Sir, I support the Bill.

Mr Lee Hsien Loong: Mr Speaker, Sir, Mr Leong raised two points. First, using home addresses for businesses to register their addresses. We have, as Mr Leong pointed out, a Technopreneur Home Office (THO) Scheme. The Technopreneur Home Office Scheme was started in 1999 to allow a businessman who qualifies under the Scheme to register his residential address as his business address, and the idea was to promote technopreneurship by reducing start-up cost. There is a good reason for separating commercial activities from residential areas. We need to ensure that the use of residences to conduct businesses will not disturb neighbours and affect the living environment. Therefore, only certain types of business activities, for example, those that are not noisy and do not cause pollution, are allowed.

Mr Leong mentioned dormant companies. With the new BizFile arrangement with the Registry of Companies and Businesses, one can set up a company within a few minutes. So the need to set up a dormant company well in advance, before a person actually starts business, will be substantially reduced. I think that problem will be solved.

As for which business we should allow to operate within a residential premise, this is something which we will have to study. If we are satisfied that the business does not cause problems to the neighbours, I think we can consider allowing it. It may or may not be a technopreneurship type of business. But I would urge Mr Leong to consider the point of view of neighbours of people who do business at home. Because if they have a business where there are lots of customers coming and going, or where there is noise, smoke or smell - as an MP, I am sure Mr Leong would have met many such cases - then he has to answer to the neighbours as well as the person who wants to do the business. A balance will have to be struck.

Mr Leong also asked about simplifying process of liquidation. Here, I agree with Mr Leong that we need to strike a balance between having safeguards to protect creditors and employees and, on the other hand, not imposing unnecessary business cost. To encourage people to start businesses, we must not make it too onerous and costly for those who have failed and have to exit. In recent years, the Government has reviewed the bankruptcy law to make it easier for people who have failed in their business ventures to come back and try again. As part of the review of our Company Law, the Company Law Review Committee (CLRC) is also looking at ways to streamline our insolvency legislation and lower the costs to companies that are going through judicial management and liquidation. The CLRC has also recommended that we study and learn from the developments in the major jurisdictions. For example, the UK has recently started its review on its insolvency regime. The UK's review was prompted by the need to promote an enterprise culture and to encourage entrepreneurs who have failed honestly to try again. At the same time, the law will continue to provide sufficient safeguards for the protection of creditors and employees. So, this is something which the CLRC will have in mind as it comes out with its recommendations.

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. - [Mr Lee Hsien Loong].

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