On 6 May 2026, the Corporate and Accounting Laws (Amendment) Act 2025 (CALA 2025) commenced. Among its most significant — and least-publicised — changes is a new two-tier approval requirement for selective share buy-backs. If your company is considering buying back shares from specific shareholders, the rules have changed and the approval bar is now considerably higher.
This article explains the new double-hurdle, when it applies, and what directors and company secretaries must do to ensure their next selective buy-back is procedurally valid.
What Is a Selective Share Buy-Back?
Singapore law permits companies to buy back their own shares in three ways: on the open market, through an equal access scheme (pro-rata offer to all shareholders), or by way of selective off-market purchase (buying from specific shareholders on terms agreed with those sellers).
It is the third method — selective off-market purchase — that is governed by the new double-hurdle. A selective buy-back is typically used in the following situations:
- A private equity investor or financial investor seeking to exit partially or fully
- Management buy-out transactions where management repurchases shares from outgoing shareholders
- A founder repurchasing shares previously sold to an investor, often to clean up the cap table before a fundraising round
- Unwinding an employee share ownership plan (ESOP) or other equity incentive arrangement
- Simplifying a complex shareholding structure ahead of a restructuring or IPO
In each case, the company is not offering to buy from everyone equally — it is buying from a defined set of shareholders. This creates a potential for minority shareholder prejudice if the terms favour the sellers, or if the buy-back is used to dilute or marginalise remaining shareholders. The new double-hurdle addresses this risk directly.
The Old Regime: A Single Resolution
Before CALA 2025, a selective off-market share buy-back under the Companies Act (Cap. 50) required approval by ordinary resolution of the company, with the seller and any associates excluded from voting. This single-tier approval was straightforward to administer: you drafted one shareholders’ resolution, excluded the right people from voting, and proceeded.
While this provided some protection, critics pointed out that a simple majority of non-sellers could approve a buy-back that was adverse to the interests of shareholders holding the same class of shares as the seller — particularly in companies with multiple share classes or where a majority shareholder who is not a seller could approve a buy-back of a minority’s shares on unfavourable terms.
The New Regime: A Mandatory Double-Hurdle
From 6 May 2026, a selective off-market share buy-back requires approval at two separate tiers, both set at a 75% supermajority threshold. The sellers and their associates are excluded from voting at both tiers.
Tier 1: 75% Approval from All Shareholders (Excluding Sellers)
The company must obtain approval from shareholders holding at least 75% of the total votes cast by shareholders who are eligible to vote (i.e., excluding the sellers and their associates). This is a company-wide supermajority vote.
Tier 2: 75% Approval from Same-Class Shareholders (Excluding Sellers)
In addition to Tier 1, the company must separately obtain approval from shareholders who hold shares of the same class as the shares being bought back, again at a 75% supermajority of eligible votes (excluding the sellers and their associates).
Both tiers must be satisfied for the selective buy-back to be valid. Obtaining Tier 1 approval without Tier 2 is not sufficient — and failure to comply with both tiers may render the buy-back procedurally invalid, exposing the company and its directors to legal risk.
Why These Changes Were Made
The new double-hurdle is designed to give shareholders of the same class a meaningful independent veto over a selective buy-back that affects their class. Previously, a dominant shareholder holding a different class of shares could, in theory, provide the majority required under the single-tier regime — even though the affected class of shares had no separate say.
By requiring separate class-level approval at a 75% supermajority, CALA 2025 ensures that the affected shareholders have a genuine opportunity to block a buy-back they consider prejudicial, regardless of what the broader shareholder base decides. This aligns Singapore’s approach more closely with the protections available in other major Commonwealth jurisdictions and strengthens the position of minority shareholders in multi-class-share companies.
These changes form part of the broader corporate governance reforms introduced by CALA 2025. You can read about the other CALA 2025 changes affecting directors and audit in our CALA 2025 overview article.
Practical Implications for Companies
Review Your Share Structure Before Proceeding
Before initiating a selective buy-back, directors should map out the company’s share classes, identify which class is being bought back, and model the voting outcomes at both tiers. If the sellers hold a significant proportion of the same-class shares, the remaining same-class shareholders may be few — and their approval at the 75% threshold may be harder to obtain than it appears.
Two Separate Resolutions Are Now Required
The company secretary must prepare two separate resolutions for the general meeting: one for the all-shareholders vote (Tier 1) and one for the same-class shareholders vote (Tier 2). These must be voted on separately, with separate exclusions applied for each. A single omnibus resolution covering both is unlikely to satisfy the statutory requirements.
Proper board resolutions authorising the buy-back and convening the general meeting will also be required before the shareholder vote.
Explanatory Circular Requirements
A selective buy-back notice under the Companies Act must be accompanied by an explanatory statement giving full particulars of the buy-back, including the financial impact on the company, the reasons for the selective (rather than equal access) approach, and the interests of directors in the transaction. The statement must be sent to all shareholders before the meeting.
Impact on Timeframes and Deal Structuring
The additional Tier 2 class vote introduces complexity into the timeline of any selective buy-back. Private equity exits and founder repurchases will need to account for the additional notice period and voting mechanics. Deal lawyers and company secretaries should factor this into transaction timetables from the outset.
What Happens to Shares After a Buy-Back?
Once purchased, the company may choose to hold the repurchased shares as treasury shares (subject to the 10% cap on total issued shares) or cancel them, which reduces the company’s share capital accordingly. The choice between holding as treasury shares and cancellation has different accounting, tax, and dilution implications and should be discussed with the company’s auditors and advisers before the buy-back is completed.
Checklist: Selective Share Buy-Back Under CALA 2025
Before proceeding with a selective off-market share buy-back after 6 May 2026, directors and company secretaries should work through the following checklist:
- Confirm the buy-back is selective — i.e., from specific shareholders rather than equally from all shareholders.
- Identify the class of shares being bought back and list the eligible voters at Tier 2 (same-class shareholders, excluding sellers).
- Map the voting outcomes at both Tier 1 and Tier 2 to assess whether 75% approval is achievable at each level.
- Prepare two separate resolutions for Tier 1 and Tier 2, with appropriate exclusions for the sellers and their associates.
- Draft the explanatory statement with full particulars of the buy-back, reasons, financial impact, and director interests.
- Issue proper notice to all shareholders of the general meeting at which both resolutions will be voted on.
- Hold the meeting and record separate vote outcomes for each tier.
- Notify ACRA of the share buy-back within the required timeframe via Bizfile.
- Update the statutory registers — register of members, share capital, and treasury shares (if applicable).
Your company secretary is responsible for coordinating many of these steps. Ensure they are briefed on the CALA 2025 requirements before any selective buy-back is initiated.
You can also refer to our Singapore company compliance calendar for key ACRA filing deadlines related to share capital changes.
Our Recommendation
If your company has a selective share buy-back in contemplation — whether as part of a PE exit, a founder repurchase, or an ESOP unwind — now is the time to reassess the process in light of CALA 2025. The two-tier approval requirement is mandatory and non-waivable. Proceeding on the old single-tier basis could render the buy-back invalid.
We recommend engaging your company secretary and legal advisers at the earliest stage of planning, and well before any announcement to sellers, so that the correct notice and resolution mechanics can be put in place. If you need legal advice on the share buy-back process, we can point you in the right direction.
For the latest Singapore business news and corporate governance updates, there are useful resources for directors and business owners keeping abreast of regulatory developments.
Beyond corporate compliance, sound investment decisions and financial planning are equally important considerations for business owners navigating corporate restructuring and shareholder changes.
To speak with the team at Raffles Corporate Services, you can email [email protected] or call, SMS, or WhatsApp +65 8501 7133. We are happy to assist with any queries.
— The Editorial Team, Raffles Corporate Services
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