Lending in Singapore

The main piece of legislation which governs the lending of money in Singapore is the  Moneylenders Act 2008 of Singapore (the “Moneylenders Act”).  The Moneylenders Act generally prohibits the carrying out of the business of moneylending in Singapore, unless (a) he is authorised to do so by a licence, (b) he is an excluded moneylender or (c) he is an exempt moneylender. Any person who lends money in exchange for repayment of a larger sum is presumed to be a moneylender under the Moneylenders Act.

It should be noted that the Moneylenders Act is primarily targeted at unlicensed moneylending to individuals (i.e. those providing consumer credit and personal loans) and is not meant to curb financial activity between commercial entities. If a foreign lender is not subject to any other regulatory or licensing requirements in Singapore and is lending (from outside of Singapore) to a Singapore-incorporated company, this would generally not fall within the ambit of what the Moneylenders Act seeks to regulate.

Corporate lenders and banks would typically seek to rely on one or more of the exceptions provided for in the definition of “excluded moneylender” under the Moneylenders Act. Exceptions usually sought to be relied on include a lender who lends money solely to corporations, limited liability partnerships, trustees or trustee-managers of business trusts and trustees of real estate investment trusts, and a lender licensed, approved, registered or otherwise regulated by the Monetary Authority of Singapore. Banks or other financial institutions licensed in Singapore are likely to fall in the latter category. Unless the terms of their licences prohibit or restrict them from lending money, they would not be required to obtain any separate or additional moneylending licence to carry out the business of lending money.

Finally, an exempt moneylender is one that is granted an exemption by the Ministry of Law, but this appears to be on an exceptional basis and is not usually relevant for corporate lenders and banks.

Taking of security situated in Singapore

There is no general requirement for a person to obtain a licence or regulatory approval solely for the purposes of taking security over assets located in Singapore or being the beneficiary of security granted by a Singapore entity.

Under the Moneylenders Act, licensed moneylenders are required to limit their monthly interest rate to a maximum of 4 percent. As mentioned above, this is more relevant for personal loans.

In relation to corporate loans and financings, there is no statutory cap on the level of interest rates and fees that banks and corporate lenders can charge. These terms are generally based on commercial negotiations between the lender and the borrower, taking into consideration various factors such as credit risk, loan tenure and prevailing market conditions. It should however be noted that if a contractual provision provides for a default rate of interest which is too excessive (i.e. being payable only upon default), it may be unenforceable as a penalty if it (a) creates a secondary obligation triggered by a breach of contract that (b) requires the defaulting party to pay an amount of money that seeks to hold the defaulting party in terrorem (i.e. “in fear”, or to deter) to their primary obligations.

There are no exchange controls in Singapore restricting the disbursement or repayment of foreign currency loan proceeds. This means that companies and individuals in Singapore can freely (a) receive loan proceeds in foreign currencies from offshore or local lenders and (b) repay principal, interest, and fees in foreign currencies to lenders outside or within Singapore.

It should be noted that if any interest due from an entity is or is deemed to be derived from Singapore for the purposes of the Income Tax Act 1947 of Singapore, all payments of, or in the nature of, such interest, are subject to withholding tax (currently at the rate of 15 per cent) if, at the time the interest is paid, the person beneficially entitled to the interest is not a resident in Singapore or  subject to any concession or relief under any applicable tax treaty or any other applicable waiver or exemption.

Generally, the lex situs (i.e. “law of the place”) principle applies to the creation of security in Singapore, which means that any asset which is located in Singapore should be secured under a security document governed by Singapore law.

A. Real Property

In Singapore, security may be created over real property by way of a legal or equitable mortgage or charge, although the mortgage is usually the preferred form of security over real property. Where the land is registered under the Land Titles Act 1993 of Singapore (the “Land Titles Act“) — which is almost invariably the case as nearly all land in Singapore is now registered land — the legal mortgage must be in the statutorily prescribed form. A bank’s standard mortgage terms, covenants and conditions are typically outlined in a Memorandum of Mortgage, which is filed with the Singapore Land Authority’s Land Registry. The Memorandum of Mortgage is then incorporated by reference into the aforementioned prescribed form mortgage document. The mortgage document may also be supplemented by an annexure amending the terms of the Memorandum of Mortgage or setting out additional terms and conditions as agreed between the parties to the mortgage. Once executed, the mortgage will have to be lodged with the Singapore Land Authority. If the mortgagor is a Singapore incorporated or registered company, particulars of the mortgage will also have to be filed with the Registrar of Companies pursuant to the requirements of Section 131 of the Companies Act.

Where title to land has not yet been issued, typically there would be an assignment of the relevant agreement relating to the land, such as a sale agreement or a building agreement, together with an execution in escrow of the prescribed form mortgage document, thereby enabling the mortgagee to perfect the security by registering the mortgage once the separate title is issued. In the interim period before title is issued, a caveat will typically be lodged with the Singapore Land Authority to protect the mortgagee’s interest.

B. Plant, machinery and equipment

When it comes to taking security over plant, machinery and other equipment, the usual method of is by way of a charge.  Charges can be categorised into two types: fixed or floating. A fixed charge is where the chargee can exert sufficient control over the secured asset such that any dealings by the chargor with respect to that asset requires the consent of the chargee. A fixed charge would ordinarily be taken over plant, machinery and other equipment since these are not types of assets which the chargor would need the flexibility to dispose of in the ordinary course of its business. Where the intention is to take a fixed charge over an asset, one possible method to exercise control over such asset as a practical matter is to require signs or plaques to be affixed which clearly state that the secured asset is subject to a fixed charge and that any dealing with such asset will require the consent of the chargee.

On the other hand, floating charges are usually granted over a fluctuating pool of assets which remains under the day-to-day control of the chargor such that the secured assets may be added or taken out of such pool despite the existence of the charge. This is more appropriate in cases where such plant, machinery and other equipment would need to be frequently replaced or renewed.

If a charge is created over the plant, machinery and equipment of a sole proprietor or partnership, it may be registrable as a bill of sale under the Bills of Sale Act 1886 of Singapore. A bill of sale must be in the statutorily prescribed form. If the charge is created by a company, it must be registered with the Registrar of Companies.

C. Inventory

Security over inventory, such as goods or products which a company holds for sale, is usually taken by way of a floating charge since it allows the chargor to have continued use of its inventory. Crucially, it permits the disposal of the inventory which is subject to the security in the ordinary course of its business without the need to obtain the chargee’s consent every time secured inventory is to be disposed.

D. Receivables

Security over receivables, book debts and other choses in action is commonly created by way of an assignment. An assignment may be legal or equitable, each with its own set of requirements and implications.

Pursuant to the Civil Law Act 1909 of Singapore, in order to take effect as a legal assignment, the assignment must (a) be in writing, (b) be absolute, (c) be notified in writing to the counterparty in the underlying agreement and (d) not purport to be by way of charge only.  If any of these requirements are not met, the assignment will be an equitable assignment. The distinction between an equitable and legal assignment is of limited practical significance, the key difference lies in enforcement. The assignee of a legal assignment is entitled to enforce the assigned rights in its own name whereas the assignee of an equitable assignment has to join the assignor in any action brought to enforce the assigned rights. Another practical difference is that if notice of assignment is not given to the account debtor in an equitable assignment and the account debtor pays the assignor, such payment can extinguish the account debtor’s debt to the assignor. In a legal assignment, the debt will only be extinguished if the account debtor pays the assignee.

To perfect such assignment over receivables, book debts and other choses in action, a notice of assignment has to be delivered to the account debtor. Priority between competing interests in the assigned rights is determined by the order by which notice of assignment relating to the relevant competing interests is delivered to the account debtor. However, this “first in time” (to give notice) rule has certain exceptions. For example, if the first assignee does not give notice to the account debtor but the second assignee does, and the second assignee has notice of the first assignee’s interest in the debt, the second assignee would not prevail despite being first in time to give notice to the account debtor because it had notice of the earlier assignment. Nevertheless, the timing of these notices — whether they are delivered upon the creation of the security or only after an enforcement event — is often negotiated by parties, with the typical considerations being the number of account debtors, the value of receivables from each account debtor and whether the body of account debtors is expected to change over time.

An assignment of receivables may be often accompanied by a corresponding charge over a bank account into which the assignor is contractually obliged to pay the proceeds of such receivables into.

E. Shares

The method of taking security over shares depends on whether the shares are in scrip form (which is usually the case for privately held shares) or scripless form (which is usually the case for listed shares).

For scrip shares, security can be created through either a legal mortgage or an equitable charge. Under a legal mortgage, the shares are registered in the mortgagee’s name, making the mortgagee the holder of record while the mortgagor retains an equity of redemption. However, it is more common to take security over shares via an equitable charge. In this case, the chargor delivers the physical share certificates of the subsidiary whose shares are being charged to the chargee along with undated blank share transfer forms executed by the chargor. The security document establishing the equitable charge would expressly grant the chargee the right to complete and effect the transfer of the charged shares when such security becomes enforceable. Additionally, the constitution or articles of association of the subsidiary whose shares are being charged is also usually amended to remove any transfer restrictions over shares that may hamper a lender’s enforcement of the security.

For scripless shares, which are typically those of companies listed on the Singapore Exchange Securities Trading Limited (SGX-ST), the method of taking security depends on how the shares are held. Where shares are held directly with the Central Depository (“CDP“), the CDP maintains accounts for each depositor reflecting the title of that depositor to the securities. An account can be maintained directly with the CDP as an account holder or with a depository agent who is an account holder itself but carries out the function of a depository agent for parties who do not have a direct account with the CDP  (i.e. a sub-account holder). The existence of an account (either as an account holder with the CDP or a sub-account holder with a depository agent) is a pre-requisite to holding, transferring, granting and benefiting from a security interest over scripless securities in Singapore.

If the shares are held by an account holder with the CDP, security can be created through a statutory assignment or statutory charge using the prescribed forms under the Securities and Futures (Central Depository System) Regulations 2015, but it is common practice to create a statutory charge rather than a statutory assignment. An important point to note is that under a statutory charge, a chargee must maintain an account with the CDP.  In practice, most banks in Singapore hold an account with the CDP (and are therefore account holders). However, if the chargee is a foreign entity or is not a bank, the chargee must open and maintain an account with the CDP if a statutory charge is to be created.

If the shares are held in a sub-account with a depository agent, security is taken through a common law charge. This would typically require both the chargor and chargee opening and maintaining sub-accounts with same depository agent as the sub-account holder and delivering a notice of charge to the depository agent. In practice, this means that a charge must maintain an account with the same depository agent as the chargor. A common law charge is usually created by way of a deed.

When taking security over listed shares, additional care should be taken to ensure the relevant disclosure and reporting requirements are complied with.

F. Intellectual property

Under Singapore law, intellectual property such as copyright, patents, trademarks, and registered designs are regarded as personal and moveable property. As such, they may be the subject of a charge (fixed or floating) or a mortgage in the same way as other personal or moveable property.

There are statutorily prescribed formalities for the following security transactions:

• For patents: An assignment or mortgage of a patent or any such application, or any right in a patent or any such application, must be in writing and signed on or behalf of the assignor / mortgagor; and
• For copyright and registered designs: An assignment (for example, in the context of a legal assignment by way of security) must be in writing and signed by or on behalf of the assignor.

Notwithstanding that there are no statutorily prescribed formalities for other security transactions, it is generally advisable for such transactions to be set out in writing.

Singapore law does not generally prohibit a company from creating security over its future assets. Typically an all asset debenture when taken, would be sufficient to create a floating charge over future assets. However, if it is a fixed charge over that future asset which is to be obtained, then unless that future asset can be clearly identified at the outset, for prudence, it is recommended that the security document allows for a separate ‘designation’ of the future asset at the relevant time to ensure that it is clearly identified as being subject to the fixed charge. Additionally, for certain asset classes, further steps may be required in order to perfect the security at the relevant time in the future upon acquisition of the relevant asset. For example, in a charge over all the shares of a company owned by the chargor from time to time, when new shares are issued by the charged company, the chargor is typically required to provide the chargee with the share certificates of the additional shares at a minimum. Similarly, for an account charge, notice of assignment in respect of that particular account, should be served to the account bank, ideally at the point that that account is subject to security.

There is no restriction under Singapore law for a Singapore incorporated company to grant security to secure future obligations.

It is not uncommon under Singapore law for a single document (typically called a debenture) to be used to take security over all of a company’s present and future assets. However, standalone security agreements are required for certain classes of assets, such as:

• statutory charges and statutory assignments over scripless shares listed on the SGX-ST have to be in the prescribed forms under the Securities and Futures (Central Depository System) Regulations 2015;
• legal mortgages over real property in Singapore under the Land Titles Act have to be in the statutorily prescribed form; and
• mortgages over ships must be in the form prescribed under the Merchant Shipping Act 1995 of Singapore.

Additionally, in the local property financing market, it is not uncommon in transaction to have an all-asset debenture coupled with additional standalone security documents for more important assets, for example, a separate assignment of building agreement to assign the rights to the building agreement.

Under Singapore law, there are no formalities such as notarization or legalisation required in order for a loan agreement or for security documents over Singapore assets to be effective. That said, there are certain segments of the domestic loan market where it is not uncommon for the execution of a document by a borrower or a mortgagor to be attested to for evidentiary purposes (ie. to be witnessed by a lawyer or a notary).  It should be noted that this is not a legal requirement that has to be complied with.

Charges granted by a company which fall within the following categories are required to be registered with the Accounting and Corporate Regulatory Authority (“ACRA“) under Section 131 of the Companies Act 1967 of Singapore (the “Companies Act“) within 30 days of its creation (if the charge instrument is executed in Singapore) or 37 days of its creation (if the charge instrument is executed outside of Singapore):

1. a charge to secure any issue of debentures;
2. a charge on uncalled share capital of a company;
3. a charge on shares of a subsidiary of a company which are owned by the company;
4. a charge created or evidenced by an instrument which if executed by an individual, would require registration as a bill of sale;
5. a charge on land wherever situate or any interest therein but not including any charge for any rent or other periodical sum issuing out of land;
6. a charge on book debts of the company;
7. a floating charge on the undertaking or property of a company;
8. a charge on calls made but not paid;
9. a charge on a ship or aircraft or any share in a ship or aircraft;
10. a charge on goodwill, on a patent or a licence under a patent, on a trade mark or a licence to use a trademark, or on a copyright or a licence under a copyright or on a registered design or a licence to use a registered design.

In practice however, it is common for all charges to be registered with the ACRA even if it does not fall within one of the registrable categories in Section 131 of the Companies Act. In such scenarios, lenders and law firms would typically register the charge under the closest or most comparable category, such as a charge on book debts of the company.

Registration is carried out digitally via the ACRA’s Bizfile web portal. Failure to register such charges will result in the security created by the charge being void against the liquidator and any creditor of the company. It is also an offence which may result in the officers of the company being liable on conviction to a fine and also to a default penalty.

Security over personal chattel granted by an individual or a partnership must be registered under the Bills of Sale Act 1886 of Singapore in the prescribed form. Registration is carried out by filing the security document as a bill of sale with the Registry of the Supreme Court via the Singapore Judiciary’s Integrated Electronic Litigation System. Failure to register such security as a bill of sale would render it void in respect of the personal chattels comprised therein. Priority between competing bills of sale is determined in the order of the date of their registration.

Legal mortgages over real property in Singapore under the Land Titles Act must be registered with the Singapore Land Authority in the prescribed form. If the mortgagor is a company, the mortgage will additionally have to be registered under Section 131 of the Companies Act.

Mortgages over aircraft may be required to be registered with an electronic international registry for the registration of international interests as established by the International Interests in Aircraft Equipment Act 2009 of Singapore (“IIAEA“), which implements under the Cape Town Convention. Where a mortgage over aircraft has been registered under the IIAEA, it does not need to be registered as a charge under Section 131 of the Companies Act.

Mortgages over ships have to be registered with the Maritime and Port Authority of Singapore, stating the date and time of the registration.

Security over intellectual property registered in Singapore are also subject to the following registration requirements:

• For patents: The mortgage of, or grant of any other security interest in, a patent or application (or a licence or sub-licence under a patent or application) must be registered with the Intellectual Property Office of Singapore (“IPOS”), otherwise the grantee will not acquire rights against any other person who later claims to have acquired a conflicting interest. Further, if the registration is not done within 6 months of the transaction, the grantee will not be entitled to damages or an account of profits in respect of any infringement, save where the Court is satisfied that it was not practicable to register the transaction within that period and the transaction was registered as soon as practicable thereafter.
• For trademarks, registered designs, and layout of integrated circuits: The grant of any security interest (whether fixed or floating) or any right in or under the intellectual property must be registered with IPOS, otherwise the grantee (a) will not acquire rights against a person acquiring a conflicting interest in or under the intellectual property in ignorance of the transaction and (b) will not be entitled to damages, an account of profits, or statutory damages in respect of any infringement after the grant of security interest and before the date of the application for registration of the security interest.

Where a foreign company is granting security over assets located in Singapore, lenders should also consider if there are any registration requirements in the foreign company’s jurisdiction of incorporation.

The usual such costs applicable for secured financings would be the payment of stamp duty in Singapore and also the payment of fees in relation to the registration of charges.

Stamp duty is payable on security documents which create security over immoveable property, stock or shares at the rate of 0.4% (or 0.2% in the case of an equitable mortgage) of the amount being secured, up to a maximum of S$500.  In a transaction where there are multiple such security documents, the requirement is only for one document to be stamped. Parties will therefore select the most appropriate document, and make payment of the S$500 stamp duty. The rule of thumb that is used in practice to assess whether a security document should be stamped, is whether or not the underlying asset relates to real estate (including tenancy or lease agreements) or stock and shares, and whether there is a Singapore nexus. As a matter of practice, the general view is that a security document would have a nexus to Singapore if it is a Singapore company granting such security or if the relevant assets being secured are located in Singapore or has a Singapore lex situs.

The cost of registering a charge pursuant to the requirements of Section 131 of the Companies Act is currently S$60 per charge.

It is possible for a Singapore incorporated company to provide guarantees or security for the obligations of another group company, or for a third party, as long as there are no restrictions prohibiting such act in its constitutional documents and if there is corporate benefit to the Singapore company in doing so.  The question of corporate benefit must be considered carefully because the company’s directors have a duty to ensure that any guarantee or security provided by the company are in the commercial interests of the company.

In the case where the Singapore company is guaranteeing or securing the obligations of its subsidiary, corporate benefit is generally straightforward to establish. However, in circumstances where it may be challenging to demonstrate corporate benefit, market practice is for shareholder approval to be sought.

The Companies Act prohibits a public company (or a company whose holding or ultimate holding company is a public company) from providing financial assistance, directly or indirectly, to any party (the “acquiring party“) for the acquisition or proposed acquisition of shares in that company, its holding company, or its ultimate holding company. Financial assistance includes the public company providing a guarantee or security for a loan made to the acquiring party.

However, there are “whitewash” procedures in the Companies Act that, if properly completed, allow a Singapore company to provide security or guarantees that would otherwise constitute prohibited financial assistance. The “whitewash” procedure most frequently used is that under Section 76(9BA) of the Companies Act, which provides that a company may provide financial assistance if:

1. the giving of such assistance does not materially prejudice the interests of the company or its shareholders, or the company’s ability to pay its creditors; and
2. the directors of the company pass a resolution that such assistance should be given and that the proposed terms and conditions thereof are fair and reasonable to the company. The resolution will also have to set out in full the directors’ grounds for reaching these conclusions, and be lodged with the Registrar of Companies.

Compared to other “whitewash” procedures under the Companies Act, the Section 76(9BA) procedure has the advantage of not imposing a waiting period after the resolution is passed, which allows for flexibility in the structuring of acquisition deals.

It is market practice for lenders in a syndicate to appoint a security agent or a security trustee to hold security on behalf of the syndicate.  As the concept of trust is recognised under Singapore law, the security is typically held on trust for the benefit of the syndicate of lenders. Consideration will have to be made if there are cross border elements which might affect this analysis, for example, if there are security documents governed by foreign law or if any of the secured assets are located overseas.

Not applicable.

A Singapore court will generally give effect to the choice of others laws unless it finds reason for it to determine that it has jurisdiction. For example, the Singapore courts have been known to accept that they have jurisdiction to open a restructuring or insolvency procedure, which would have the ability to compromise foreign law-governed debt, where there is a commercial Singapore nexus, which can be established in a number of ways.

The Insolvency, Restructuring and Dissolution Act 2018 of Singapore (“IRDA”) lists, non-exhaustively, the factors a Singapore court may consider in determining whether a foreign company can establish a “substantial connection” with Singapore, including:

• establishing the company’s Centre of Main Interests (“COMI”) in Singapore;
• carrying out and operating its business in Singapore;
• registering the company as a foreign company under the Companies Act;
• holding substantial assets in Singapore; and
• being found to have submitted to the jurisdiction of the Singapore courts.

Further, Singapore does not recognise the English law rule which states that an English law debt may not be discharged by a foreign law instrument, so agreements governed by foreign law (including English law) are susceptible to being compromised under a Singapore law scheme of arrangement. The courts will, however, apply such foreign law in determining the scope of an obligation under the agreement.

Yes, Singapore is a member of The Convention on the Recognition and Enforcement of Foreign Arbitral Awards and a foreign judgment may be recognised in Singapore under the Reciprocal Enforcement of Foreign Judgments Act 1959 of Singapore (“REFJA”) and the Choice of Courts Agreements Act 2016 of Singapore (“CCAA”).

In the event that the REFJA or CCAA does not apply to the foreign judgment, it may also be recognised at common law. Applicants will need to have commenced an action for the judgment debt and summary judgment on the basis that there is no reasonable defence.

While the Singapore courts will generally enforce the judgments of a foreign court where the requirements of the REFJA and/or CCAA are met, the Singapore court retains the discretion to set aside an order for registering the foreign judgment in certain circumstances. These include, but are not limited to, where the original court acted without jurisdiction, where the foreign judgment was obtained by fraud, where an appeal against the foreign judgment is pending and where the foreign judgment was in respect of a cause of action that for reasons of public policy could not have been entertained by the Singapore court.

Broadly, there are two types of liquidation in Singapore – (1) voluntary and (2) court-ordered liquidation.

1. Voluntary liquidation

Voluntary liquidations can be further divided into members’ and creditors’ voluntary liquidation. The former concerns the liquidation of a solvent company by a majority of its own directors who must sign a declaration of insolvency stating their opinion that the company will be able to pay its debts in full within 12 months after the commencement of a liquidation. The latter involves a company that is found likely to be insolvent. The company must convene a meeting of its creditors following which a resolution for the voluntary winding-up must be proposed. The company’s directors must also make a full statement of its affairs (including a list of creditors and a valuation of its assets).

In both types of voluntary liquidation, the insolvency process commences upon the company’s resolution to be placed in liquidation and the nomination of a liquidator. A creditors’ meeting must be convened immediately after (on the same day or no later than the following day) to consider the appointment of the liquidator and appoint a Committee of Inspection, if desired by the creditors. The liquidator will take over the management of the company’s affairs and assets upon their appointment, and will distribute assets, if available, to creditors through the declaration of dividends and in accordance with the priority prescribed in Section 203 of the IRDA.

In order to participate in the process, creditors will be required to file proofs of debt with the liquidator who will then examine and adjudicate such proofs. the liquidator may reject a proof of debt, but must inform the affected creditor and provide grounds for the rejection in writing. The creditor may apply to the court to appeal the liquidator’s decision.

2. Court-ordered liquidation

In a court-ordered liquidation, sometimes described as an involuntary liquidation, a company is put into an insolvency process by way of an application to the court. Such an application may be made by any of the following:

• a director of the company (with leave of the court);
• a creditor of the company (including contingent or prospective creditors);
• a contributory (including personal representatives of deceased contributories or the Official Assignee of the estate of a bankrupt contributory);
• the liquidator of the company;
• the judicial manager of the company;
• a government minister; and
• in the case of a banking business, the Monetary Authority of Singapore (the “MAS”).

Following the court’s acceptance of an application, a liquidator will be appointed and the insolvency process will commence as in a voluntary liquidation.

Secured creditors have the benefit of standing ‘outside’ the scope of a liquidation and are entitled to enforce their rights to realise their security. They may also submit proofs to the liquidator for any shortfall as unsecured creditors. A secured creditor may also choose to participate in the liquidation as an unsecured creditor for the entire debt if it opts to relinquish its security, or for the under-collateralised portion of its debt if it returns its security.

In a scheme of arrangement, secured creditors may be restrained from enforcing their security as they would typically be caught by the statutory moratorium. However, secured creditors can expect to vote in a separate class from unsecured creditors in a scheme meeting.

Certain transactions may be voided and unwound upon insolvency and it is up to the liquidator to challenge these transactions by way of application to the court. These include:

• transactions at an undervalue (where consideration is significantly less than the asset value);
• unfair preferences (where preference is given to a creditor and the creditor is put in a better position than it would have been, and the company was influenced by a desire to produce such result, the court will restore the position of that creditor to what it would have been if the company had not given that preference);
• disposition of property after the commencement of a winding-up (where a winding up order has been granted or resolution for a voluntary winding-up has been passed);
• extortionate credit transactions (where the terms of the transaction require grossly exorbitant payments which are found to be harsh and unconscionable, or substantially unfair in gross contravention of the ordinary principles of fair dealing);
• avoidance of floating charges (transactions will be found invalid up to the value of consideration given for goods/services supplied, or constitutes a discharge or reduction of the creation of the charge or debt); and
• transactions defrauding creditors (where a transaction was made fraudulently).

With the exception of transactions defrauding creditors, each category is subject to a look-back period generally between 2 to 3 years, during which any transaction falling into the relevant category may be voided or unwound by the court.

Creditors may challenge a liquidator’s application to void or unwind a transaction.

Where the debtor is insolvent and being wound up, a creditor must set-off any mutual credits, mutual debts or other mutual dealings with the debtor against each other. Creditors can then submit a proof of debt for any outstanding debt that it still holds following the set-off exercise. This is a mandatory rule and operates automatically. Parties therefore do not have the option to contract out of this rule, as opposed to a solvent scenario where the creditor may retain its discretion as to whether or not to exercise its contractual right of set-off.

Set-off will not be recognised if, at the time the contract was made, the creditor was aware that a winding-up application was pending against the company.

The IRDA sets out the following preferential claims which are to be paid in priority to all other debts (including secured debts) in an insolvency:

• the costs and expenses of winding-up (including remuneration of the liquidator);
• any other costs and expenses of the winding-up and the costs of any audit;
• the costs of the application for the winding-up order;
• wages or salary payable under any contract of employment;
• any amount due to an employee as a retrenchment benefit or ex gratia payment;
• all amounts due in respect of work injury compensation under the Work Injury Compensation Act;
• all amounts due in respect of the contributions payable by the company relating to employees’ superannuation;
• all remuneration payable to any employee in respect of leave; and
• any tax or goods and services tax due.

Besides these preferential claims that rank ahead of a secured lender’s security in the prescribed order of priority, a number of other interests, such as pre-judgment attachments and Retention of Title clauses, can be created that may similarly out-rank a secured lender’s security.

While there is no specific statutory provision regarding pre-judgment attachments, such attachments (effectively freezing orders) may be granted by the Singapore courts to preserve assets as an ancillary to a main substantive cause of action. Applications for such attachments have been made by trustees and liquidators alike vis-à-vis third parties, including related parties who may have claw-back-related or other liabilities for losses to the insolvent estate they are administering.

A sale contract that includes a Retention of Title clause can also allow the seller to preserve its property rights to the goods until payment is made in full. Such clauses which are hardwired into sales contracts are generally upheld by the Singapore courts.

None that we are aware of.

While specific data on the proportion of corporate lending in Singapore attributable to traditional banks versus alternative credit providers is limited, recent developments indicate a growing shift toward alternative financing. Notably, in December 2024, Singapore’s state investment company, Temasek, established a private credit platform with an initial portfolio of S$10 billion (approximately US$7.5 billion), reflecting the global trend of institutional investors increasing their participation in private credit markets.

Singapore’s debt market — and that of the broader Southeast Asian region — is extensive and diverse, with significant overlap in the borrower base targeted by both traditional banks and alternative lenders. However, these sources of financing are not mutually exclusive. Borrowers may first secure syndicated or club financing from traditional banks and then layer in additional funding from alternative credit providers, either through a separate tranche within the same facility or via a parallel, side-by-side facility. This approach is sometimes necessary due to regulatory and risk management constraints on banks, such as exposure limits to a single counterparty and capital requirements, which may restrict the total amount banks are able or willing to lend to any one borrower.

Borrower preferences vary: some continue to favour the stability, reputation, and typically more competitive pricing offered by traditional banks, along with access to a broader suite of complementary banking products. In contrast, others may be attracted to the flexibility and bespoke structuring solutions provided by alternative lenders. Alternative lenders may also have a higher risk appetite and be willing to take equity interests, warrants, or other forms of upside participation, which is less common with traditional banks.

Despite the growing presence of alternative credit providers, traditional bank lending remains dominant in Singapore. Traditional banks continue to be the preferred source of financing for many borrowers, and this trend is expected to continue in the near term.

None that we are aware of at this point in time.