On 6 May 2026, the second tranche of the Corporate and Accounting Laws (Amendment) Act 2025 (CALA 2025) came into force. Among the changes with the most direct impact on corporate transactions is a significant tightening of the approval process for selective off-market share buy-backs. Where a single special resolution previously sufficed, companies must now satisfy a two-tier approval threshold — a “double hurdle” that gives minority and class shareholders stronger procedural protection against being sidelined in buy-back transactions.

For directors, company secretaries, shareholders, and advisers involved in private equity exits, management buy-outs, or founder share repurchases, understanding the new framework is now essential. This article explains what the old regime required, what CALA 2025 changed, when the new rules apply, and what practical steps companies should take to ensure their buy-back transactions are properly documented and approved.

Background: What Is a Selective Share Buy-Back?

Under Part IIA of the Companies Act (Cap. 50), a Singapore company may buy back its own issued shares. The approval requirements differ depending on the type of buy-back.

An equal access offer is made to all shareholders of the same class on identical terms — each shareholder is offered the same price per share and the same proportional opportunity to sell. Because it treats all shareholders equally, it requires approval by an ordinary resolution (simple majority).

A selective off-market purchase is directed at specific named shareholders only, rather than all shareholders equally. The company buys back shares from particular individuals — perhaps a departing founder, an exiting investor, or selected employees — without making the same offer available to all. Because this selectively benefits some shareholders over others, it has always attracted higher approval thresholds and more scrutiny.

The Old Regime: Single Special Resolution

Before CALA 2025, a selective off-market share purchase required approval by a single special resolution — that is, a resolution passed by 75% or more of the votes cast by members entitled to vote, excluding those whose shares were being bought back. Provided that threshold was met at a general meeting or extraordinary general meeting, the buy-back could proceed.

This single-resolution requirement was straightforward and easily satisfied in most private companies, where a small group of shareholders could align on a buy-back transaction and push it through with a clear majority.

The New CALA 2025 Regime: The Double Hurdle

With effect from 6 May 2026, selective off-market share purchases now require approval at two separate levels:

Tier 1 — General shareholder approval. A special resolution (75%) from all shareholders entitled to vote, excluding those whose shares are being purchased. This mirrors the previous single-resolution requirement and represents a confirmation from the general body of shareholders that the buy-back is in the company’s interests.

Tier 2 — Class-level approval. A separate special resolution (75%) from shareholders holding the same class of shares as the shares being purchased, again excluding the selling shareholders. This is the entirely new requirement introduced by CALA 2025.

Both resolutions must be passed for the selective buy-back to proceed. Failure at either level — whether the general vote or the class-level vote — means the transaction cannot proceed unless and until it is re-presented to shareholders with different terms or broader support.

The Rationale: Protecting Class Shareholders

The Tier 2 requirement addresses a specific vulnerability in the old regime. In a company with multiple share classes — for example, ordinary shares and preference shares, or Class A and Class B ordinary shares — a general shareholder vote could theoretically be dominated by the majority class, allowing shareholders of one class to override the interests of another when it is their shares being selectively bought back.

By requiring a separate class-level vote, CALA 2025 ensures that the shareholders most directly affected by the selective buy-back — those holding the same class of shares being repurchased — have their own voice and cannot be outvoted by shareholders of a different class. This aligns with Singapore’s broader corporate law reform direction of strengthening minority and class shareholder protections without requiring shareholders to resort to litigation.

You can read about the full range of CALA 2025 changes that commenced on 6 May 2026 in our earlier detailed guide.

When Do Selective Buy-Backs Arise?

Understanding which transactions trigger the new double-hurdle requirement is essential. The most common situations are:

Private equity and investor exits. When a PE fund or angel investor exits a Singapore company before an IPO or trade sale, the company (or remaining shareholders) may wish to buy back the exiting investor’s shares directly rather than arranging a third-party sale. This is a selective off-market buy-back. If the investor holds a distinct class of preference shares, the Tier 2 class-level vote from remaining preference shareholders becomes critical.

Founder share repurchases. When a founder departs from a business and the remaining founders or the company wishes to buy back the departing founder’s shares, a selective buy-back is the typical mechanism. If the departing founder holds Class B shares with enhanced voting rights, the Tier 2 vote from remaining Class B holders must be separately conducted.

Employee share plan unwinds. Where shares were issued to employees under an equity incentive scheme and a departing employee’s shares must be repurchased under a right of first refusal, drag-along, or buy-back provision, the selective buy-back rules apply. Our guide on employee incentive schemes in Singapore provides background on how these arrangements are structured.

Management buy-outs. In an MBO where continuing management buys out departing shareholders, the selective nature of the transaction brings it squarely within the new regime.

Practical Implications: What Companies Must Do Differently

Two Separate Resolutions, Separately Recorded

The new regime requires two distinct special resolutions, and the documentation for each must be separate and clearly distinguishable. Both resolutions can be passed at the same general meeting, but the meeting notice, agenda, and voting records must treat them as separate matters. The chair of the meeting should conduct each resolution vote separately, and the minute-book entries must record the two votes independently.

Companies and company secretaries that relied on a single buy-back resolution template under the old regime must update those templates. A resolution that only addresses the Tier 1 general shareholder approval — without the Tier 2 class-level approval — will not satisfy the CALA 2025 requirements.

Drafting the Class-Level Resolution

The Tier 2 class-level resolution must clearly identify: the specific class of shares being purchased; the shareholders within that class who are excluded from voting (i.e., the selling shareholders); the proposed buy-back price, terms, and number of shares; and the connection between the class-level approval and the overall transaction.

Your company secretary should review and update standard buy-back resolution templates to ensure they comply with the new requirements before any selective buy-back is contemplated.

The Explanatory Statement

For selective off-market purchases, the Companies Act requires the company to send shareholders an explanatory statement before the meeting. Under the new regime, this statement must address both the Tier 1 and Tier 2 approvals: why the buy-back is in the interests of all shareholders; who the selling shareholders are; the effect of the buy-back on remaining shareholders’ proportionate holdings; and why the class-level vote is being conducted separately and what outcome is required. Shareholders voting on the Tier 2 resolution need sufficient information to make an informed decision about whether the transaction serves the interests of their class.

Our article on board resolutions in Singapore covers the procedural framework for resolutions and shareholder meetings more generally.

Reviewing Existing Shareholder Agreements

Companies that have existing shareholder agreements, investment agreements, or term sheets that include selective buy-back provisions should review those documents in light of CALA 2025. Provisions drafted before 6 May 2026 that refer to approval by “special resolution” may now need to be interpreted as requiring both a Tier 1 and Tier 2 special resolution. Depending on how the agreement is worded, this may require the consent of all parties to the agreement to formally update.

Any buy-back transaction that was in progress before 6 May 2026 and was not completed by that date should be assessed to determine whether the new requirements apply.

If you need legal advice on how CALA 2025 affects your specific shareholder arrangements, specialist corporate counsel can advise on the implications for your documentation and whether any contractual amendments are needed.

For the latest Singapore business news and corporate governance updates, there are useful resources available for directors and advisers staying current with corporate law changes.

Beyond governance, sound investment planning also requires understanding how buy-back mechanisms affect ownership structure and company value.

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