When a Singapore company wants to repurchase its own shares, the law has always drawn a distinction between two types of buybacks: a general share buyback — offered equally to all shareholders — and a selective share buyback, where the company buys back shares from specific shareholders only. The Corporate and Accounting Laws (Amendment) Act 2025 (CALA 2025), which commenced on 6 May 2026, has fundamentally changed the approval requirements for selective share buybacks, introducing a mandatory two-tier approval process that company secretaries, directors, and shareholders need to understand.

This article explains what selective share buybacks are, why Singapore has introduced the new double-tier approval requirement, how the old and new regimes differ, and what company secretaries need to do in practice to ensure that any future selective buyback transaction is validly approved.

What Is a Selective Share Buyback?

A share buyback occurs when a company uses its own funds to repurchase shares from existing shareholders, reducing the total number of shares in issue. Under the Companies Act 1967, Singapore companies may buy back shares provided they comply with the statutory requirements in Part 4A of the Act.

A general share buyback is one where the company acquires shares through the open market or makes an offer to all shareholders on the same terms, proportional to their holdings. This is the most common type and is often used by listed companies to return capital to shareholders.

A selective share buyback — technically known as a “selective off-market share purchase” — is one where the company acquires shares from one or more specific shareholders, rather than from all shareholders proportionally. The price paid and terms offered may differ between shareholders. Common situations where selective buybacks arise include:

  • A private equity or venture capital investor exiting its investment in the company
  • A management buyout or founder buy-in, where certain shares are repurchased to adjust the ownership structure
  • Unwinding an employee share plan or buying back unvested shares from a departing employee
  • Shareholder restructuring, where the company acquires shares from one group to facilitate a new investor coming in
  • Resolving a shareholder dispute by buying out a minority shareholder

Because the terms of a selective buyback can be negotiated privately with specific shareholders — potentially at a premium to market — the process creates obvious risks: the majority could use it to squeeze out minorities, or to favour certain shareholders over others. This is precisely why the law has always required stricter approval for selective buybacks than for general ones. The CALA 2025 has now significantly tightened those requirements further.

The Old Regime: Single Special Resolution

Prior to 6 May 2026, a selective off-market share purchase required a special resolution passed by at least 75% of shareholders entitled to vote — typically at a general meeting — with the shareholders whose shares are being bought back excluded from voting. This was a relatively well-understood process: the company would circulate an explanatory circular to shareholders, call a general meeting, table the resolution, and if 75% of the remaining shareholders approved, the buyback could proceed.

While this single-tier approval process offered a meaningful check on selective buybacks, it had a limitation: it did not specifically protect the interests of shareholders of the same class as the shares being bought back. In a company with multiple share classes, a majority of total shareholders (drawn from across all classes) could approve a selective buyback of one class of shares without the specific approval of shareholders in that class.

The New CALA 2025 Regime: Double-Tier Approval (From 6 May 2026)

Under the new regime introduced by CALA 2025, a selective off-market share purchase requires two separate approvals, both of which must be obtained. Neither alone is sufficient.

Tier 1: Special Resolution of All Shareholders

The first approval tier requires a special resolution passed by at least 75% of all shareholders who are entitled to vote and who are not among those whose shares are being bought back. This is broadly the same as the former requirement under the old regime — a 75% majority of uninvolved shareholders approving the transaction.

Tier 2: Separate Class Vote of Affected Class

The second approval tier — which is entirely new under CALA 2025 — requires a separate 75% approval from shareholders who hold shares of the same class as the shares being bought back, again excluding those shareholders whose shares are being repurchased.

In practice, this means that even if Tier 1 is satisfied by a large majority of all shareholders, the buyback cannot proceed unless the shareholders of the specific affected class have also separately approved it by a 75% majority. This is a class-level protection that goes beyond the overall shareholder vote.

Both approvals must be obtained — at the same meeting or at separate meetings — and must specifically authorise the selective purchase on the terms proposed.

Why Did Singapore Introduce the Double-Tier Requirement?

The double-tier approval requirement strengthens the protection of minority shareholders in what can otherwise be an opaque and potentially unfair process. The concern is this: in a company with multiple classes of shares, or where one class of shareholders holds a smaller proportion of total votes, a selective buyback targeting that class could be pushed through by a large majority of shareholders who are not affected — essentially allowing the majority to vote on terms that disadvantage a specific group.

By requiring the affected class to give its own separate 75% approval, CALA 2025 ensures that the shareholders most directly affected by the buyback terms have a genuine and distinct say in the matter. This aligns Singapore with best practice corporate governance standards and strengthens the framework for resolving share-related disputes, particularly in private companies where share buybacks are often used in shareholder exits and restructuring.

Importantly, these changes do not apply to general share buybacks — where the company acquires shares from all shareholders proportionally or through the open market. The new double-tier requirement applies specifically and only to selective off-market purchases. For a broader look at how shares are allotted and transferred in Singapore companies, a separate guide is available.

Company Secretary Implications: What You Need to Do

For company secretaries advising clients on share buyback transactions from 6 May 2026 onwards, the CALA 2025 changes require updates to standard procedures and precedent documents. Here is what you need to consider:

1. Identify the Type of Buyback

The starting point is always to determine whether the proposed buyback is a general buyback or a selective off-market purchase. If the company is acquiring shares from all shareholders proportionally, or through the open market, the new double-tier requirement does not apply. If the acquisition is from one or more specific shareholders only, the double-tier process is mandatory.

2. Draft Two Separate Resolutions

Company secretaries should ensure that two separate special resolutions are tabled: one for the overall shareholder vote (Tier 1) and one specifically for the class vote (Tier 2). These should not be combined into a single resolution. Each resolution must specifically authorise the selective purchase on the terms set out in the accompanying circular.

3. Prepare an Explanatory Circular

An explanatory circular must be sent to all shareholders in advance of the meeting. The circular should describe the terms of the proposed selective purchase, including the price, number of shares, identity of the selling shareholders, and the rationale for the transaction. This is required under both the old and new regimes, but the new class vote requirement means the circular must be clear about which class of shares is being bought back and why the class-specific approval is being sought separately.

4. Organise a Class Meeting if Needed

Depending on the share structure of the company, the class vote may need to be conducted as a separate class meeting (if the class shareholders are distinct from the general meeting quorum requirements) or may be incorporated as a separate resolution within the general meeting — with only the relevant class shareholders entitled to vote on the class-specific resolution. The company secretary should take advice on the most appropriate meeting structure for the specific transaction.

5. Update Buyback Procedures and Templates

Standard board resolution and general meeting resolution templates used for selective share buybacks need to be updated to reflect the two-tier requirement. Any client guides, precedent packs, or standard procedures referencing selective share buybacks should be reviewed against the CALA 2025 changes. If you need legal advice on the drafting of share buyback documentation under the new regime, it is advisable to seek this before embarking on any transaction.

6. ACRA Lodgement After Completion

After the selective buyback is completed, the company must lodge a return with ACRA notifying the change in its share capital. This includes updating the register of members to reflect the cancellation or treasury treatment of the repurchased shares, and filing the relevant form via the BizFile+ portal within the prescribed timeline. See the Singapore company compliance calendar for key ACRA filing deadlines.

Treasury Shares vs. Cancellation

When a company completes a share buyback — selective or otherwise — it must decide whether to cancel the repurchased shares or hold them as treasury shares. Treasury shares are shares that the company holds itself. They do not carry voting rights or rights to dividends while held in treasury, and a company cannot hold more than 10% of its total issued shares in treasury.

The decision between cancellation and treasury treatment has capital and flexibility implications. Cancelled shares permanently reduce the company’s share capital, while treasury shares may be re-issued or sold in the future. This is a board-level decision that should be made before the selective buyback transaction is approved, as it affects the terms described in the circular and resolutions. For a deeper look at treasury shares in Singapore companies, a detailed guide is available on this site.

The Broader CALA 2025 Context

The selective share buyback double-tier approval requirement is one of several significant changes that came into effect on 6 May 2026 under CALA 2025. The same commencement date also saw the introduction of the named audit partner requirement, the increase in director duty penalties to S$20,000, and new automatic disqualification provisions for money laundering convictions.

Company secretaries advising Singapore companies should ensure that all CALA 2025 changes are incorporated into their compliance frameworks. The full CALA 2025 overview is available for reference.

For the latest Singapore business and regulatory updates, there are helpful resources available for directors and business owners. Beyond compliance matters, sound financial planning and investment decisions are equally important for business owners thinking about capital returns and shareholder restructuring.

How Raffles Corporate Services Can Help

Whether you are a company secretary, director, or shareholder considering a share buyback or restructuring transaction, understanding the new CALA 2025 requirements is essential before proceeding. At Raffles Corporate Services, our corporate secretarial team can advise on the procedural requirements for both general and selective share buybacks, prepare the necessary meeting documentation and resolutions, and ensure that all ACRA filings are completed correctly after the transaction.

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