When an aerospace OEM or another large multinational offers to bring a Singapore SME into a Partnerships for Capability Transformation (PACT) arrangement, the commercial upside is usually obvious: co-funded capability transfer, capital investment, training, and a foot in the door with a much bigger customer. Less obvious to many SME boards is that a PACT partnership agreement is a contract like any other, and in some respects a more sensitive one, since it usually comes bundled with joint intellectual property, grant-funded personnel costs, and reporting obligations to a government agency on top of the commercial terms.
PACT has been run jointly by the Economic Development Board (EDB) and Enterprise Singapore since 2010, and more than 2,500 firms have benefited from it since. It was enhanced in 2024 to cover a wider set of partnership modalities, including internationalisation and corporate venturing, alongside the original supplier development and co-innovation tracks, and EDB has continued to publicise aerospace-sector partnerships under the scheme through 2026, including collaborations between original equipment manufacturers and local precision engineering and MRO suppliers. Under PACT, the lead or anchor MNC submits the partnership proposal to EDB or Enterprise Singapore, with funds disbursed by milestone rather than as a single upfront sum.
Most of what has been written about PACT for an SME audience covers eligibility and how to get onto a proposal in the first place. This article is written for the director and company secretary who already have a partnership on the table, and now need to work through what has to happen internally, at board level and in the statutory records, before anyone signs. That includes board approvals, how IP terms should be reflected in the company’s own records, how grant-funded personnel costs need documenting to survive an audit, and what the company secretary specifically needs to track once the agreement is live.
What a PACT Agreement Actually Commits Your Company To
Before drafting any board paper, it helps to be precise about what the SME is agreeing to. PACT support is delivered through five partnership modalities, each shaping both the commercial deal and the governance paperwork behind it.
| Modality | What it typically involves | Indicative SME support rate* |
|---|---|---|
| Supplier Development | Building the SME’s processes and quality systems up to the anchor MNC’s technical standards | Up to 70% / 50% |
| Co-Innovation | Joint development of new products or solutions, sharing cost, expertise and risk | Up to 70% / 50% |
| Capability Training | Structured transfer of technical or managerial know-how to the SME’s own staff | Up to 70% / 50% |
| Internationalisation | Using Singapore as a base to scale a locally developed solution regionally | Up to 70% / 50% |
| Corporate Venturing | Venture building, startup investment or pilot partnerships with the anchor MNC | Up to 70% / 50% |
*Up to 70% of qualifying software, materials, professional services and manpower costs, and 50% for hardware and equipment, though actual rates depend on the letter of offer and applicable SME test. Every modality involves the SME committing manpower, sharing technical information, and usually agreeing to some form of joint or licensed IP with the anchor MNC, none of which should be signed off informally.
Board Approvals Needed Before Signing
A PACT partnership agreement is, from a governance standpoint, a material contract, and should go through the same authorisation discipline as any other under the Companies Act 1967. For many SMEs that discipline is thinner than it should be, precisely because the deal arrives introduced by a large, credible counterparty. Our guide on board resolutions in Singapore sets out the mechanics in full; the points below are specific to a PACT agreement.
Confirm Who Has Authority to Sign
Check the constitution and any shareholders’ agreement for restrictions on material contracts, joint venture or IP-sharing arrangements, or contracts above a certain value, before assuming the managing director can simply sign. Where a shareholders’ agreement gives a shareholder or class of shareholder a veto or consent right over such arrangements, that consent needs to be obtained and recorded separately from the board resolution.
What the Board Resolution Should Cover
A properly drafted resolution authorising a PACT partnership agreement should, at minimum, record the following:
- The identity of the anchor MNC and the partnership modality being entered into (supplier development, co-innovation, capability training, internationalisation or corporate venturing).
- A summary of the qualifying costs the SME is committing to, and confirmation the board has reviewed the funding rate and its own share of unfunded cost.
- Express authorisation of the individual(s) to execute the agreement and related documents, such as a confidentiality deed or milestone reporting schedule.
- Confirmation of how IP arising from the partnership will be owned, licensed, or shared, cross-referenced to the relevant clause.
- Disclosure of any director’s interest in the anchor MNC or its group, and whether that director abstained from voting under Section 156 of the Companies Act 1967.
- Authorisation for the company secretary to update the statutory registers and maintain the milestone reporting file.
Skipping the resolution, or passing a vague one that simply says “the board approves the MNC partnership,” creates the kind of documentation gap that surfaces later if Enterprise Singapore or EDB queries a milestone claim, or a dispute arises over IP ownership.
Intellectual Property: Getting the Paper Trail Right
Almost every PACT modality involves some transfer or joint development of know-how: a manufacturing process improved to an OEM’s specification, a jointly developed software module, or training content the SME can later reuse. The commercial terms typically sit in the agreement itself, but two internal governance steps are frequently missed.
Reflect IP Terms in Board Minutes, Not Just the Contract
The board minutes (or the written resolution, if that is how approval was passed) should record, in the company’s own words, who owns background IP the SME brings into the partnership, who owns foreground IP created during it, and what licence, if any, survives the partnership term. This gives future directors and any incoming investor a clear internal record of the company’s IP position without re-reading the full commercial agreement, and where the terms are unusually favourable or unfavourable to the SME, it is useful evidence that the directors turned their minds to the issue, consistent with the duty to act in the company’s interests.
When the Constitution Needs a Second Look
Most standard constitutions are silent on IP licensing and do not need amendment purely because of a PACT deal. However, where the SME is licensing out core IP, or the anchor MNC is taking equity, an option, or a right of first refusal under a corporate venturing modality, check whether the constitution’s provisions on share allotment, transfer restrictions, or objects clause are wide enough to accommodate it. If not, a special resolution to amend the constitution may need to be tabled alongside the agreement, since this is a shareholder-level decision the board cannot fix alone. Getting legal advice on partnership agreement terms, particularly the IP and exit clauses, before the resolution is finalised is worth the modest extra time given how long these clauses tend to outlive the relationship.
Documenting Grant-Funded Personnel Costs for Audit and Clawback Protection
Manpower costs are eligible for the higher SME support rate under most PACT modalities, which also makes them one of the categories most exposed to a post-disbursement audit. Enterprise Singapore and EDB disburse PACT funding by milestone rather than upfront, and a milestone claim built on personnel costs must be as defensible as any other grant claim. Our companion piece on grant claims, audit and clawback risk covers the general documentation standard; for PACT, the personnel angle deserves particular attention because the individuals concerned are often existing staff redeployed onto the partnership rather than new hires, which makes it easier for claimed time to drift from time actually spent.
At minimum, keep timesheets or equivalent time-tracking records for every staff member whose cost is claimed, cross-referenced to the milestone or work package in the letter of offer. Keep the employment contract or variation letter where a role was created or changed for the partnership, payroll records evidencing the cost claimed, and any milestone report showing what was actually delivered. Where staff split time between the PACT project and other work, agree and document an apportionment basis in advance, not after a query is raised. A management decision formally assigning named individuals to the partnership, kept with the resolution approving the agreement, gives an auditor a clean trail from board authorisation through to timesheet.
The Company Secretary’s Role Through the Life of the Partnership
Once the agreement is signed, compliance shifts from one-off authorisation to ongoing record-keeping, where the company secretary’s role becomes central.
Record-Keeping and Statutory Register Alignment
The partnership agreement, the board resolution authorising it, and any variation should be filed together and referenced in the minute book like any other material contract, consistent with the secretary’s general duties covered in our guide to company secretary statutory duties under the Companies Act. Where the partnership creates a new officer role, a seconded manager, or a steering committee appointment, check whether it belongs in the Register of Registrable Controllers or Register of Nominee Directors kept under the ACRA-administered regime, and whether a BizFile notification is triggered, as set out in our guide on director appointments, resignations and removals.
Milestone Reporting Discipline
Because PACT funds are disbursed by milestone, the secretarial file should track each milestone date, the supporting documentation submitted, and the sign-off given before submission, ideally cross-referenced against the AGM and annual return calendar so milestone reporting never becomes the item missed during a busier period. A simple internal register, milestone, due date, documents submitted, sign-off, disbursement date, is often the single most useful document a secretary can maintain for a PACT partnership, and the first thing an auditor or the anchor MNC’s finance team will ask to see.
Conflict-of-Interest Disclosure Where a Director Sits on the Anchor MNC’s Side
It is not unusual for a PACT partnership to be introduced because a director, or someone connected to a director, already has a relationship with the anchor MNC, whether as a former employee, a consultant, or a board member of a related entity. Section 156 of the Companies Act 1967 requires that director to declare the interest before the resolution approving the partnership is passed, and the declaration should be recorded in the minutes with enough detail to be meaningful, not just a note that “a conflict was declared.” Our article on the fiduciary duties of a Singapore company director sets out the underlying obligation in full. As good practice, the interested director should also abstain from voting, and the secretary should keep a standing conflict-of-interest register refreshed at least annually, so a PACT-related interest is caught even if it is not the reason the item first reaches the board.
Bringing It Together
None of this is a reason to avoid a PACT partnership; the scheme has supported more than 2,500 firms since 2010 for good reason, and the aerospace sector case studies EDB has highlighted through 2026 show what a well-run MNC-SME partnership can achieve for a local supplier’s capability and order book. The point is that the commercial upside and the governance discipline need to move together. A board resolution that actually addresses IP ownership and conflicts, a personnel cost file that would survive an audit, and a company secretary who treats milestone reporting as part of the standing compliance calendar are what turn a promising partnership into one that still looks sound three years later, when the anchor MNC, the auditors, or a future investor asks to see the file. Businesses weighing a PACT partnership against other funding routes, or their broader business investment planning, may find it useful to track the wider Singapore business news landscape as support schemes evolve.
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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