Singapore legislation
Clause 22
Clause 22
Membership of holding company
(1)
A corporation cannot be a member of a VCC which is its holding company, and any allotment or transfer of shares in a VCC to its subsidiary is void.
(2)
Subsection (1), insofar as it provides that any transfer of shares in contravention of it is void, does not apply to a disposition of book‑entry securities, but the Court, on being satisfied that a disposition of book‑entry securities would in the absence of this subsection be void may, on the application of the Registrar or any other person, order the transfer of the shares acquired in contravention of subsection (1).
(3)
Subsection (1) does not apply where the subsidiary is concerned as personal representative, or as trustee, unless the VCC or a subsidiary of the VCC is beneficially interested under the trust and is not so interested only by way of security for the purposes of a transaction entered into by it in the ordinary course of a business (including the lending of money).
(4)
This section does not prevent a subsidiary from continuing to be a member of a VCC that is its holding company if, at the time when it becomes a subsidiary of the VCC, it already holds shares in that VCC, but —
subject to subsection (3), the subsidiary has no right to vote at meetings of the VCC or any class of members of the VCC; and
subject to subsections (5) and (6), the subsidiary must, within the period of 12 months or such longer period as the Court may allow after becoming the subsidiary of the VCC, dispose of all of its shares in the VCC.
(5)
To avoid doubt, subsection (4)(b) ceases to apply if, during the period in that provision, the subsidiary ceases to be a subsidiary of the VCC.
(6)
Any shares in the VCC that are not disposed of in accordance with subsection (4)(b) may, subject to subsections (12) and (13) and sections 23 and 24, be held or continued to be held by the subsidiary.
(7)
Subject to subsection (3), subsections (1), (4), (6), (9) and (11) apply in relation to a nominee for a corporation which is a subsidiary, as if references in those subsections to such a corporation included references to a nominee for it.
(8)
This section does not prevent the allotment of shares in a holding company that is a VCC to a subsidiary which already lawfully holds shares in the VCC, if the allotment is made by way of capitalisation of reserves of the VCC and is made to all members of the VCC on a basis which is in direct proportion to the number of shares held by each member in the VCC.
(9)
This section does not prevent the transfer of shares in a holding company that is a VCC to a subsidiary by way of a distribution in specie, amalgamation or scheme of arrangement but —
subject to subsection (3), the subsidiary has no right to vote at meetings of the VCC or any class of members of the VCC; and
subject to subsections (10) and (11), the subsidiary must, within the period of 12 months or such longer period as the Court may allow after the transfer to the subsidiary of the shares in the VCC, dispose of all of the shares in the VCC.
(10)
To avoid doubt, subsection (9)(b) ceases to apply if, during the period mentioned in that subsection, the subsidiary ceases to be a subsidiary of the holding company.
(11)
Any shares in the VCC that are not disposed of in accordance with subsection (9)(b) may, subject to subsections (12) and (13) and sections 23 and 24, be held or continued to be held by the subsidiary.
(12)
The VCC must, within 14 days after any change in the number of shares in the VCC which are held by any of its subsidiaries under subsection (6) or (11), lodge with the Registrar a notice in the prescribed form of this change.
(13)
With respect to any share mentioned in subsection (6) or (11) —
where the VCC has shares of only one class, the total number of shares held by all its subsidiaries under subsection (6) or (11), must not at any time exceed 10% of the total number of shares of the VCC at that time;
where the share capital of the VCC is divided into shares of different classes, the total number of the shares of any class held by all its subsidiaries under subsection (6) or (11), must not at any time exceed 10% of the total number of the shares in that class of the VCC at that time;
where paragraph (a) or (b) is contravened, the VCC must dispose of or cancel the excess shares, or procure the disposal of the excess shares by its subsidiary, in accordance with section 24 before the end of the period of 6 months beginning with the day on which that contravention occurs, or such further period as the Registrar may allow;
where the subsidiary is a wholly‑owned subsidiary of the VCC, no dividend may be paid, and no other distribution (whether in cash or otherwise) of the VCC’s assets (including any distribution of assets to members on a winding up of the VCC or any of its sub‑funds (if applicable)) may be made, to the subsidiary in respect of the shares mentioned in subsection (6) or (11); and
where the subsidiary is not a wholly-owned subsidiary of the VCC, a dividend may be paid and other distribution (whether in cash or otherwise) of the VCC’s assets (including any distribution of assets to members on a winding up of the VCC or any of its sub‑funds (if applicable)) may be made, to the subsidiary in respect of the shares mentioned in subsection (6) or (11).
(14)
In subsection (13)(c), “excess shares” means such number of the shares, held by any subsidiary under subsection (6) or (11) at the time in question, as resulted in the limit mentioned in subsection (13)(a) or (b) being exceeded.
(15)
Where, but for this section, a subsidiary would have been entitled to subscribe for shares in the VCC, the VCC may, on behalf of the subsidiary, sell the shares for which the subsidiary would otherwise have been entitled to subscribe.
(16)
For the purposes of this section, a VCC must inform the Registrar of the occurrence of any of the following events by lodging a notice in the prescribed form within 14 days after the date of occurrence:
where a shareholder of a VCC becomes a subsidiary of the VCC;
where shares of the VCC are held by a subsidiary of the VCC and there is a change in the number of shares held by the subsidiary.