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Singapore: Significant Investments Review Bill passed in Parliament to enhance national security interests

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In brief

On 9 January 2024, the Parliament of Singapore passed the Significant Investments Review Bill (“Bill“).

This Bill strengthens the Singapore government’s regulatory toolkit for investments in local and foreign entities that are significant to Singapore’s national security interests and ensures greater regulatory flexibility in safeguarding Singapore’s evolving national security interests. At the same time, the Bill has been designed to align with international norms and preserve Singapore’s open and investment-friendly economy.

This Bill complements existing sectoral legislation with ownership and control safeguards for critical entities.

Under the Bill, entities deemed critical based on national security considerations may be designated and subject to approval requirements for changes in ownership, control and key personnel, and other related restrictions.

In more detail

National security interests

“National security interests” is intentionally undefined in the Bill to provide the Singapore government with flexibility to respond to unanticipated circumstances, as national security issues are bound to evolve over time. The Minister for Trade and Industry Gan Kim Yong (“Minister“) clarified in Parliament that this may cover areas critical to Singapore’s sovereignty and security, including its economic security and resilience and the continued delivery of essential services.

Entity-based designations

The Minister can designate the following types of entities:

  • Any entity incorporated, formed or established in Singapore
  • Any entity that carries out any activity in Singapore
  • Any entity that provides any goods and services to any person in Singapore, if the Minister considers that the designation is necessary in the interest of Singapore’s national security

An entity is defined under the Bill to mean any sole proprietorship, partnership, corporation or other body of persons, whether corporate or unincorporated, and includes a trust.

A designated entity that ceases to satisfy any of the criteria may have its designation cancelled. The Ministry of Trade and Industry (MTI) will continuously review and reassess the list of designated entities. This list of designated entities will eventually be published in the Government Gazette after the law comes into force.

Notification and approval requirements

A buyer into a designated entity must notify the Minister within seven days after becoming a 5% controller.

A buyer into a designated entity must seek the Minister’s approval prior to becoming a 12%, 25% or 50% controller or indirect controller.

A seller must seek the Minister’s approval when ceasing to be a 50% or 75% controller.

If the necessary approvals are not sought, the transactions may be rendered void, and a party may be directed to dispose of or transfer their stake in the designated entity.

A designated entity must also seek the Minister’s approval prior to the appointment of key personnel (e.g., CEO or director). If deemed necessary in the interest of national security, the Minister’s approval may also be required prior to the removal of any key personnel.

Other key provisions

To ensure the continued performance of a designated entity:

  • A designated entity may not be wound up voluntarily, terminated or be subject to judicial management without the Minister’s approval.
  • A party that wishes to enforce security, a judgment or a court order over a designated entity must give prior advance notice to the Minister.
  • The Minister has the power to direct the takeover of control of the affairs, businesses and property of a designated entity by another party.

Calling-in powers

The Minister has “calling-in” powers to take targeted actions at any entity, designated or not, that has acted against Singapore’s national interests, within a two-year period of any transaction.

In these cases, the Minister can issue a range of directions, such as directing the transacting party to dispose of its equity interest in the entity or directing the entity to restrict disclosure of confidential information to any person.

Stakeholder engagement

An Office of Significant Investments Review will be set up under the MTI to provide affected stakeholders with the necessary guidance and clarifications.

Key takeaways

The Bill is a forward-looking amendment seeking to safeguard Singapore’s evolving national security interests in an increasingly complex geopolitical environment. The Bill would have benefited from greater clarity on the definition of “national security”, but the challenge that the Singapore government faced was ensuring the Bill could be flexible and effective without spooking investors and Singapore’s international trading partners. In this regard, it has done so by deliberately leaving “national security” undefined and by ensuring the Bill’s provisions are largely similar to analogous overseas legislation and to existing local sectoral legislation, which Singapore’s key investors and international trading partners are already familiar with.

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Andy Leck is the head of the Intellectual Property and Technology (IPTech) Practice Group and a member of the Dispute Resolution Practice Group in Singapore. He is a core member of Baker McKenzie's regional IP practice and also leads the Myanmar IP Practice Group. Andy is recognised by reputable global industry and legal publications as a leader in his field. He was named on "The A-List: Singapore's Top 100 lawyers" by Asia Business Law Journal 2018. In addition, Chambers Asia Pacific notes that Andy is "a well-known IP practitioner who is highlighted for his record of handling major trade mark litigation, as well as commercial exploitation of IP rights in the media and technology sectors. He's been in the industry for a long time and has always been held in high regard. He is known to be very fair and is someone you would like to be in the trenches with you during negotiations." Furthermore, Asian Legal Business acknowledges Andy as a leading practitioner in his field and notes that he “always gives good, quick advice, [is] client-focused and has strong technical knowledge for his areas of practice.” Andy was appointed by the Intellectual Property Office of Singapore (IPOS) as an IP Adjudicator to hear disputes at IPOS for a two-year term from April 2021. He has been an appointed member of the Singapore Copyright Tribunal since May 2010 and a mediator with the WIPO Arbitration and Mediation Center. He is also appointed as a Notary Public & Commissioner for Oaths in Singapore. He previously served on the International Trademark Association’s Board of Directors and was a member of the executive committee.

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Ren Jun Lim is a principal with Baker McKenzie Wong & Leow. He represents local and international clients in both contentious and non-contentious intellectual property matters. He also advises on a full range of healthcare, as well as consumer goods-related legal and regulatory issues. Ren Jun co-leads Baker McKenzie Wong & Leow's Healthcare as well as Consumer Goods & Retail industry groups. He sits on the Law Society of Singapore IP Committee and on the Executive Committee of the Association of Information Security Professionals. He is also a member of the Vaccines Working Group, Singapore Association of Pharmaceutical Industries, a member of the International Trademark Association, as well as a member of the Regulatory Affairs Professionals Association. Ren Jun is ranked in the Silver tier for Individuals: Enforcement and Litigation and Individuals: Prosecution and Strategy, and a recommended lawyer for Individuals: Transactions by WTR 1000, 2020. He is also listed in Asia IP's Best 50 IP Expert, 2020, recognised as a Rising Star by Managing IP: IP Stars, 2019 and one of Singapore's 70 most influential lawyers aged 40 and under by Singapore Business Review, 2016. Ren Jun was acknowledged by WTR 1000 as a "trademark connoisseur who boasts supplementary knowledge of regulatory issues in the consumer products industry." He was also commended by clients for being "very responsive to enquiries and with a keen eye for detail, he is extremely hands-on. His meticulous and in-depth approach to strategising is key to the excellent outcomes we enjoy."

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Ken Chia is a member of the Firm’s IP Tech, International Commercial & Trade and Competition Practice Groups. He is regularly ranked as a leading TMT and competition lawyer by top legal directories, including Chambers Asia Pacific and Legal 500 Asia Pacific. Ken is an IAPP Certified International Privacy Professional (FIP, CIPP(A), CIPT, CIPM) and a fellow of the Chartered Institute of Arbitrators and the Singapore Institute of Arbitrators.

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