One of the more technical introductions in the first tranche of the Corporate and Accounting Laws (Amendment) Act 2025, which commenced on 6 May 2026, is a new statutory mechanism for selective off-market acquisition of shares. In plain terms: a Singapore company can now buy back shares from one or more identified shareholders, off-market, with the consent of disinterested shareholders, without having to extend the same offer to every shareholder.

For founder buy-outs, exiting investors, and employee share scheme clean-ups, this is the most useful new tool the Companies Act has acquired in years. This article explains what the mechanism is, how it differs from the existing buyback options, the approval thresholds and documentation, treasury share consequences, and the use cases where it earns its keep.

What does “selective off-market acquisition” mean?

“Selective off-market acquisition” is a specific term used in the CALA Act amendments to the Companies Act 1967 (the existing buyback regime sits in Sections 76B to 76G, with treasury share rules in Sections 76H–76K). Before the CALA Act, a Singapore private company that wanted to buy back shares had two principal routes:

  • An equal access scheme — an offer made to all shareholders of the same class on the same terms; or
  • A contingent purchase contract — a forward contract authorised in advance to buy back shares at the company’s option, typically used in employee share schemes.

What was missing was a clean route to buy out a single, identified shareholder — for example, a co-founder leaving the business, a private equity investor exiting, or an employee whose share scheme allocation needed to be repurchased on departure — without offering the same buyback to everyone.

The new selective off-market acquisition mechanism fills that gap. The company identifies the seller(s), agrees the price and terms, obtains the required disinterested-shareholder approval, and effects the buyback bilaterally. The other shareholders do not receive a parallel offer.

How is this different from a market repurchase?

A market repurchase (relevant for SGX-listed companies) is conducted on-exchange, anonymously, at prevailing market prices. A selective off-market acquisition is conducted off-exchange, with named counterparties, at a negotiated price. The two regimes serve completely different commercial purposes — listed companies running a buyback programme will typically use the market-repurchase route; private companies wanting to clean up specific holdings will use the new selective off-market mechanism.

For listed companies the new mechanism is also available, but its use is overlaid by SGX Listing Rules, the Singapore Code on Take-overs and Mergers (administered by the Securities Industry Council), and the disclosure regime under the Securities and Futures Act 2001 — meaning that, in practice, listed-company use is significantly more constrained.

Approval thresholds and disinterested-shareholder voting

The selective off-market acquisition requires a special resolution of the disinterested shareholders. Two points to note:

1. Special resolution majority

“Special resolution” under Section 184 of the Companies Act 1967 means a resolution passed by at least 75% of the votes cast at a duly convened general meeting. The CALA Act preserves this threshold for selective off-market acquisitions to maintain a meaningful supermajority hurdle.

2. Disinterested shareholders only

The shareholder(s) selling the shares back to the company are not entitled to vote on the resolution. Nor are their associates (defined widely to include controlled companies, family members, and other persons acting in concert). The resolution must therefore be passed by 75% of the votes cast by the remaining, disinterested shareholders. In a closely held company with two co-founders selling out, this can mean the resolution is passed by a single 25% holder, depending on the cap-table — so the disinterested test does not necessarily mean a “majority of independents”.

The documentation pack

The mechanic is documentation-heavy. A typical pack will include:

  1. Notice of general meeting proposing the special resolution, with full particulars of the proposed acquisition (number and class of shares, price, identity of the selling shareholders, source of funds for the buyback, timeline).
  2. Statutory declaration of solvency by the directors under Section 76F, confirming that the company will be able to pay its debts as they fall due in the 12 months following the buyback. Directors face personal liability if this declaration is not made in good faith.
  3. Auditor’s report (where applicable) supporting the solvency declaration.
  4. Share buyback agreement between the company and the selling shareholder, conditional on shareholder approval.
  5. Updated Register of Members reflecting the cancellation or treasury-share treatment of the bought-back shares.
  6. ACRA filings via BizFile — Notice of Cancellation of Shares (or Notice of Treasury Shares Held), filed within the prescribed period after completion.
  7. Stamp duty — the buyback is a transfer of shares to the company, attracting stamp duty on the consideration at the standard 0.2% rate (subject to specific reliefs).

Treasury share consequences and the 10% holding cap

The CALA Act does not change the treasury share rules in Sections 76H to 76K. After a selective off-market acquisition, the company has two options:

  • Cancel the bought-back shares — they cease to exist, and the issued share capital is reduced. This is the simpler route and is appropriate where the company has no plan to re-issue the shares.
  • Hold the bought-back shares as treasury shares — they continue to exist but are held by the company itself, do not carry voting or dividend rights, and can be disposed of, cancelled, or used in employee share schemes at a later date.

The 10% holding cap continues to apply: a company cannot hold more than 10% of any class of issued shares as treasury shares. If a buyback would push the company over that cap, the excess must be cancelled or disposed of within six months. For more on the underlying rules, see our Treasury Shares in Singapore guide.

Five use cases where the selective off-market route earns its keep

1. Founder buy-out

A co-founder is leaving and wants to be cashed out. The company has the cash on hand and the remaining founders agree to fund the buy-out from company reserves. Without the selective off-market mechanism, the company would have had to either offer the same exit to every shareholder (which they may not want) or arrange the exit as a private third-party share purchase by the remaining founders. The new mechanism allows the company itself to be the counterparty, which is often cleaner from a tax and stamp-duty standpoint.

2. Investor exit at the end of an investment horizon

A private-equity investor has reached the end of its hold period and wants liquidity. The remaining shareholders are not in a position to buy out the investor personally, but the company has accumulated retained earnings sufficient to repurchase the investor’s stake. The selective off-market route is the natural mechanism. The new mechanism dovetails with the drag-along rights negotiated at investment time but is conceptually distinct.

3. Employee share scheme clean-up

A company has run an employee share option plan (ESOP) for several years. Some scheme participants have left the company but retain their shares. The company wants to repurchase the legacy ESOP shares to keep the cap-table clean and free up the employee share pool. A selective off-market acquisition allows a single transaction with all departing-employee shareholders without disturbing other shareholders.

4. Removing a dissenting investor

A minority investor is blocking strategic decisions and the majority wants to facilitate a clean exit. Where the parties agree on price, the selective off-market route can be used. Where they do not agree, the buyback cannot be forced on the dissenter — for that, the company would need to use other mechanisms (drag-along rights, court-sanctioned schemes of arrangement, oppression-of-minorities remedies under Section 216, etc.).

5. Family office and trust restructuring

Where a Singapore Pte Ltd sits inside a family-office structure and the family decides to consolidate the trust holdings, the selective off-market mechanism can be used to redeem shares from one trust into the company, simplifying the cap-table. Care is needed with respect to the company’s Register of Registrable Controllers, which will need updating within 14 days. See also our family office setup guide.

Tax considerations and Section 76 capital reduction interaction

For the seller, a buyback by the company is a share disposal. For Singapore-resident individual sellers, there is no general capital gains tax (subject to the badges-of-trade test). For corporate sellers, Section 13W of the Income Tax Act 1947 may exempt the gain if the holding-period and shareholding-percentage conditions are met. Foreign sellers should consider their home-country position. For the company, any premium paid above the par value is debited to retained earnings; if retained earnings are insufficient, the buyback may need to be combined with a Section 78 capital reduction. See our 2026 Singapore Corporate Tax guide for the wider corporate tax framework.

Stamp duty applies on the share buyback at the standard 0.2% rate on the consideration or net asset value of the shares (whichever is higher), unless a relief applies.

Common pitfalls

  • Insufficient retained earnings. The buyback must be funded from distributable profits or a permitted alternative source (Section 76F). Where the company is loss-making or has limited reserves, the buyback may not be possible without a separate capital-reduction process under Section 78.
  • Solvency declaration risk. Directors who sign the solvency declaration without proper grounds expose themselves to personal liability. The declaration should be supported by board minutes documenting the analysis and, where appropriate, an auditor’s report.
  • Pre-emption right conflicts. Some constitutions or shareholders’ agreements give shareholders a pre-emption right on share transfers. The selective off-market mechanism should be reconciled with these provisions in advance — typically by an express waiver or a constitutional carve-out.
  • Treasury share cap miscalculation. Where the company already holds treasury shares, the new buyback must be sized to avoid breaching the 10% cap. If the buyback would push the company over, the excess shares must be cancelled or disposed of within six months.
  • RORC update missed. A buyback often changes the registrable controller picture — particularly where the seller was a registrable controller. The Register of Registrable Controllers must be updated and lodged with ACRA within 14 days.

Statutory references

Sections 76B to 76K of the Companies Act 1967 govern share buybacks and treasury shares. Section 78 governs capital reductions. Section 184 sets the 75% special-resolution threshold. The Stamp Duties Act 1929 governs stamp duty on the transfer of shares to the company. The Acts are at Singapore Statutes Online. ACRA’s BizFile filings and updated practice directions on share buybacks are at ACRA. Tax guidance is at IRAS.

Conclusion

The new selective off-market acquisition mechanism is a sensible piece of statutory housekeeping that fills a real gap in the Singapore buyback toolkit. For founder buy-outs, investor exits, and employee scheme clean-ups, it offers a cleaner and more tax-efficient route than the equal-access scheme it effectively replaces. The disinterested-shareholder voting rule preserves minority protection, and the existing solvency-declaration and treasury-share rules continue to do their work.

If you are contemplating a founder buy-out, an investor exit, or an employee share scheme clean-up under the new mechanism, our team at Raffles Corporate Services regularly handles share buyback work for owner-managed and foreign-owned Singapore companies and can prepare the special resolution, solvency declaration, and ACRA filings.

— The Editorial Team, Raffles Corporate Services