Debated in Parliament on 4 May 2020.
Miss Cheryl Chan Wei Ling asked the Minister for Law (a) what is the rationale for exempting listed developers with minor foreign shareholders from the Qualifying Certificate (QC) Scheme; (b) how can this ensure that developers do not acquire land bank plots that are designated for non-landed housing development; and (c) how will the QC Scheme ensure that the objective of proper management of Singapore's land is met while factors like additional buyer's stamp duty (ABSD), shareholder structures in developers' companies and their stock exchange listings evolve over time.
The objective of the Residential Property Act, or RPA, is to safeguard residential land for Singaporeans, and prevent foreign housing developers from hoarding or speculating in residential land. Under the Qualifying Certificate regime, or QC regime, which is administered under the RPA, foreign housing developers are required to complete their developments within five years of issuance of the QC and dispose of all residential units within two years of completion. The QC regime is not a market control mechanism.
A housing developer that is a Singapore company is not subject to the QC regime. A Singapore company is defined in the RPA as one that is incorporated in Singapore, and all its directors and members are Singapore citizens or Singapore companies. This strict definition meant that housing developers which are essentially Singaporean or have a substantial connection to Singapore were not considered as Singapore companies, if they are publicly listed and their shares are freely traded.
This is why we introduced the exemption framework under the QC regime earlier this year. It allows publicly listed housing developers with a substantial connection to Singapore to be treated as Singapore companies within the meaning of the RPA, when they acquire residential land for development. The exemption framework better aligns the QC regime with the objectives of the RPA.
Housing developers that wish to obtain exemptions from the QC regime on the basis of a substantial connection to Singapore, are assessed based on strict criteria, including whether they have a Singaporean chairperson and Board majority, a significantly Singaporean substantial shareholding interest, and their track record in Singapore.
Exempted developers must continue to meet the exemption criteria to retain their exemptions. They will also be subject to monitoring and other safeguards, including an annual declaration of material information, such as the members of their Board and substantial shareholding interest.
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