National security is put front and center with new Significant Investments Review bill

Legal experts believe cybersecurity and AI entities are likely to be affected by the measure.

- Noreen Jazul

Singapore has enacted the Significant Investments Review Bill to tighten scrutiny on major investments and changes in control of entities critical to national security. Legal experts suggest that this will impact how companies strategise fundraising and manage leadership changes, adding layers of complexity to the appointment of key personnel and the exit strategies of large shareholders. The law could reshape the landscape for businesses in sectors like critical infrastructure, sensitive technologies, and essential services, as they must now navigate stricter regulatory hurdles before making significant corporate decisions.

The Significant Investments Review Bill requires “designated entities” or companies identified as crucial to Singapore’s national security to perform enhanced due diligence on potential investors, particularly for those acquiring a stake of 12% or more, said Bird&Bird counsel Jolie Giouw in an interview with Singapore Business Review.

“[They may need to] adjust their fundraising strategies if certain investors are unable to obtain the requisite approvals to hold interests in such designated entities,” Giouw said.

“[This] may have far-reaching implications when the investor is part of a large group or conglomerate,” Giouw said.

“For individuals, in addition to family members, two individuals are also associates of each other if they are employees of the same employer, which means that individual investors may potentially have to undertake such checks on all their colleagues employed by the same company,” the law expert from Bird&Bird explained.