Selective share buybacks have long been a tool for Singapore companies to return capital to specific shareholders, restructure ownership, or facilitate founder exits. Under the Companies Act, any share buyback that does not offer shares to all shareholders pro-rata qualifies as “selective” and has always required a higher threshold of shareholder approval than an ordinary or general buyback. Phase 1 of the Corporate and Accounting Laws Amendment Act 2025 (CALA 2025), which commenced on 6 May 2026, has introduced a significant change to that approval process: a new double-tier approval mechanism that adds a second layer of protection for shareholders of the same class as those selling.

This article explains what selective share buybacks are, what the new double-tier approval requires, and what company secretaries and boards need to do to comply with the updated regime.

What Is a Selective Share Buyback?

A selective share buyback occurs when a company purchases its own shares from one or more specific shareholders rather than from all shareholders on equal terms. Common scenarios include buying out a departing founder, settling a dispute with a minority shareholder, or simplifying a cap table before a fundraising round.

Because the transaction does not treat all shareholders equally, the Companies Act has always required heightened approval. Prior to CALA 2025, a selective buyback required a special resolution — a 75% supermajority of votes cast at a general meeting — with the selling shareholder and their associates excluded from voting. This was intended to ensure that the non-selling shareholders had meaningful control over whether the transaction proceeded.

What CALA 2025 Changes: The Double-Tier Approval

Under the CALA 2025 amendments, a selective share buyback now requires two separate approvals:

Tier 1 — Special Resolution of All Shareholders: A special resolution passed by at least 75% of votes cast at a general meeting of the company, with the selling shareholder and their associates excluded from voting. This tier mirrors the pre-CALA 2025 requirement and continues to give all shareholders a say in the transaction.

Tier 2 — Approval of the Affected Class: A separate resolution passed by at least 75% of votes cast by members of the same class as the shares being bought back, again excluding the selling shareholder and their associates. This second tier is the new addition introduced by CALA 2025.

Both tiers must be satisfied for a selective buyback to proceed. If either resolution fails, the transaction cannot go ahead.

Why the Second Tier Was Introduced

The rationale behind the double-tier approval is grounded in fairness to shareholders of the same class. When a company buys back shares from one holder in a given class — say, ordinary shares — it effectively reduces the total number of shares in that class. This changes the percentage stake of every remaining ordinary shareholder, increases their proportionate exposure to the company, and may alter the balance of voting power.

Under the old regime, a shareholder holding preference shares could vote (and potentially carry the day) on a buyback of ordinary shares even though they would not be directly affected by the change in the ordinary share structure. The CALA 2025 reform ensures that the shareholders most directly affected by the transaction — those in the same class — must also give their approval by a supermajority.

This aligns Singapore’s selective buyback framework with the principle of class-based protection that already exists in other shareholder decisions, such as variations of class rights under Section 74 of the Companies Act.

Who Is Excluded from Voting

The exclusion from voting applies to the selling shareholder and their associates. “Associates” carries the same meaning as elsewhere in the Companies Act — it captures related persons and entities, including spouses, children, companies in which the shareholder holds a substantial interest, and other persons acting in concert. Company secretaries preparing the resolution and the notice of meeting must ensure that associates are correctly identified and excluded from both tiers of the vote.

A practical complication arises where the selling shareholder holds shares in more than one class. In that scenario, they would be excluded from voting on both the Tier 1 general resolution and the Tier 2 class resolution. The quorum and voting thresholds are calculated on the basis of eligible votes cast, so a correct exclusion is essential to ensuring the resolution figures are accurate.

What Company Secretaries Need to Prepare

The double-tier approval introduces additional procedural steps into what was already a carefully managed process. Company secretaries should ensure the following are addressed for any selective buyback proposed after 6 May 2026:

Identify the class of shares being bought back. If the company has only ordinary shares, this is straightforward. If there are multiple classes — say, ordinary shares and preference shares — the Tier 2 resolution must be held for the class whose shares are the subject of the buyback.

Prepare two separate resolutions. The Tier 1 special resolution and the Tier 2 class resolution should be clearly distinct documents, even if they are both tabled at the same general meeting or extraordinary general meeting. The notice of meeting must adequately describe both resolutions and explain that the buyback requires approval under both.

Identify and exclude all associates correctly. An error in the associate exclusion — for example, failing to exclude a spouse who holds shares — could invalidate the resolution and expose the company to challenge. Seek legal advice where the associate determination is not straightforward.

Ensure the buyback mandate remains current. A selective buyback must be authorised by an ordinary resolution of shareholders under a share buyback mandate. Verify that the existing mandate covers selective buybacks and has not lapsed. If the mandate needs to be refreshed, this should be done at the same meeting or a prior meeting.

Update the compliance calendar. The post-buyback lodgement requirements with ACRA — including the filing of a notice of share buyback — remain unchanged by CALA 2025. Ensure these are captured in the post-meeting checklist.

Interaction with the Pre-Existing Special Resolution Requirement

It is worth emphasising that the Tier 2 class resolution is an additional requirement, not a replacement for the Tier 1 special resolution. Both must be obtained. A company that secures strong majority support from the affected class but fails to pass the Tier 1 resolution has not met the statutory requirements, and vice versa.

Where all shareholders belong to a single class of ordinary shares, the Tier 2 class resolution will effectively be a subset of the Tier 1 general resolution — the class IS the body of all shareholders. In that scenario, the same votes count for both purposes, but the two resolutions are still formally distinct and both should be recorded in the minutes.

Practical Implications for Boards

Boards considering a selective buyback should factor the additional approval requirement into their transaction timeline. Convening an extraordinary general meeting, preparing notices and explanatory statements, and obtaining two supermajority votes is a more involved process than a bilateral agreement between the company and the departing shareholder. Legal and corporate secretarial fees are likely to increase modestly as a result.

The additional protection also changes the negotiating dynamic. A departing founder or exiting investor can no longer rely on the general shareholder base being broadly supportive if a significant bloc of same-class shareholders has concerns about the price or terms of the buyback. That class now has a statutory right to block the transaction independently of the broader shareholder vote.

Boards would be well advised to engage with key same-class shareholders early — particularly those who may have different economic interests or return expectations from the selling party — before committing to a buyback at a specific price and timeline.

Conclusion

The CALA 2025 double-tier approval requirement for selective share buybacks is a meaningful enhancement of shareholder protection in Singapore. By giving same-class shareholders an independent veto, it aligns the selective buyback regime with the broader principle that those most directly affected by a class-specific transaction should have a direct say in whether it proceeds.

For company secretaries, the change means additional procedural complexity at every selective buyback meeting. For boards, it means earlier and more careful engagement with the shareholder base before a buyback is proposed. Getting both dimensions right from the outset will ensure transactions proceed smoothly and without challenge.

For more information on the full range of CALA 2025 changes and their practical implications, see our guide on CALA 2025 amendments to the Companies Act. For questions about board resolutions and general meeting procedures, refer to our articles on board resolutions in Singapore and AGM requirements for Singapore companies.

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