From 6 May 2026, Singapore companies that wish to repurchase shares selectively — that is, from specific shareholders rather than from all shareholders on equal terms — must navigate a new two-tier approval process introduced by the Corporate and Accounting Laws (Amendment) Act 2025 (CALA 2025). This is one of the most significant changes to share buyback procedure under the Companies Act in recent years.

The new double-tier approval requirement strengthens minority shareholder protections and changes the procedural landscape for PE exits, management buyouts, founder share repurchases, and other situations where a company wishes to buy back shares from specific investors. Directors, company secretaries, and legal advisers working on these transactions need to understand the new rules before proceeding.

What Is a Selective Share Buyback?

A share buyback occurs when a company uses its own funds to repurchase shares from shareholders, reducing the total number of shares in issue. There are two broad categories under the Companies Act:

  • General share buybacks: The company makes an equal offer to all shareholders of the same class, or purchases shares through the open market. All shareholders have the same opportunity to participate on equal terms.
  • Selective off-market share buybacks: The company repurchases shares from specific named shareholders, not from all shareholders proportionately. The price and terms may differ from what other shareholders receive.

Selective buybacks are common in private company transactions: a PE investor or VC fund exiting via a share repurchase, a founder buying back shares from a departing co-founder, a management buyout structure, an employee share plan unwind, or a restructuring of the shareholder register. The CALA 2025 changes apply to these selective off-market transactions.

The Old Regime: Single Approval

Before CALA 2025 commenced on 6 May 2026, a selective off-market share buyback required a single approval — typically a special resolution passed by at least 75% of shareholders present and voting at a general meeting or by written means. The selling shareholders were excluded from voting on the resolution. While this provided some protection, it did not give shareholders in the same share class as the shares being repurchased any specific veto power.

The New CALA 2025 Regime: Double-Tier Approval

Under the amended Companies Act, selective off-market share buybacks now require two separate approvals, both of which must be obtained before the buyback proceeds:

Tier 1: Special Resolution of All Shareholders

A special resolution must be passed by at least 75% of the votes cast by all shareholders at a general meeting or by written means. The selling shareholders (and their associates) are excluded from voting. This requirement is similar to the old regime.

Tier 2: Separate Class Approval

In addition, the company must now obtain a separate approval from at least 75% of the shareholders who hold shares of the same class as the shares being bought back — again excluding the selling shareholders and their associates from voting.

This class vote is the key new element. It means that if a company is buying back, say, Series A preference shares from one investor, the other Series A preference shareholders (who are not selling) must separately approve the transaction by a 75% majority. They can, in theory, block the buyback even if the overall shareholder resolution passes.

When Does Tier 2 Not Apply?

The class vote is not required where the company is repurchasing the entire class of shares — that is, buying back all shares of that particular class. In this situation, there are no remaining shareholders of that class to hold the class vote, so the requirement falls away.

Why Parliament Made This Change

The rationale is straightforward: selective buybacks can potentially be used by controlling shareholders to squeeze out minority investors in a particular share class on terms that are unfavourable, without giving those minority investors a meaningful say. The double-tier approval requirement directly addresses this risk.

By requiring a separate class vote (excluding the sellers), the legislature has ensured that shareholders in the affected class — who may have different economic interests and rights compared to ordinary shareholders — have a specific right to block a selective buyback they consider unfair or contrary to their interests.

This aligns Singapore’s approach with the broader global trend of strengthening minority shareholder rights, particularly in the context of structured transactions involving preference shareholders in growth-stage and PE-backed companies.

Practical Implications for Company Secretaries

Company secretaries advising boards on selective buyback transactions should note the following procedural changes:

  1. Two separate resolutions are required. Draft a Tier 1 special resolution for all shareholders and a separate Tier 2 class resolution for the affected class. These cannot be combined into a single resolution.
  2. Two separate meetings (or written resolutions) may be required if the class shareholders are not all present at the general meeting or if the logistics of the class vote require separate convening.
  3. Update board and shareholder meeting procedures to include the class vote as a standing requirement for any selective buyback transaction.
  4. Review board resolution templates to reflect the new two-tier process and ensure the correct exclusions from voting are applied at both tiers.
  5. Update buyback procedures and client advisory checklists for any contemplated selective repurchase.
  6. ACRA lodgement: After a completed buyback, the company must lodge the required notices with ACRA via BizFile+ within the prescribed timeframe, updating the share capital and register of members accordingly.

Interaction with the Companies Act Share Buyback Framework

The Companies Act continues to impose other requirements on all share buybacks, which apply in addition to the new double-tier approval:

  • The company must have treasury shares or cancellation authority in its constitution or via shareholder approval.
  • The buyback must be funded from distributable profits or capital reductions — the company cannot use share capital reserved for creditors’ benefit.
  • The total of all shares held as treasury shares must not exceed 10% of the total issued shares of that class at any time.
  • Shares bought back that are not held as treasury shares must be cancelled immediately upon acquisition.

How This Fits into the Broader CALA 2025 Package

The selective buyback rule is one of several significant changes that took effect on 6 May 2026 under CALA 2025. Other provisions that commenced on the same date include heavier director duty penalties, the named audit partner requirement for audit reports, and expanded AML disqualification grounds for directors. Read our full CALA 2025 guide for directors for a comprehensive overview.

For transactions that were already in progress before 6 May 2026, companies should take legal advice on whether the new double-tier requirements apply. The general position is that the commencement of CALA 2025 provisions applies to new transactions — but where a shareholder resolution had not yet been passed as at 6 May 2026, the new rules likely apply. If you need legal advice on your share buyback transaction and the new approval requirements, we can point you in the right direction.

Beyond corporate compliance, sound financial planning and investment decisions are equally important considerations for business owners navigating share restructuring transactions.

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