Public Consultation on Proposed Amendments to the Companies Act in respect of Shipowner’s Liens

23 MAY 2018

Public Consultation on Proposed Amendments to the Companies Act in respect of Shipowner’s Liens

Consultation Period:
23 May 2018 to 13 Jun 2018

Introduction

  1. The Ministry of Law invites the public to provide feedback on proposed amendments to the Companies Act to exempt liens over sub-freight and sub-hire (“Shipowner’s Liens”) from the requirement of registration under s 131 of the Companies Act.

Background

  1. A Shipowner’s Lien is a contractual right to sub-hire or sub-freight due to the charterer in the event of the charterer’s default under a head charter, provided that such sub-hire or sub-freight have not already been paid. This contractual right is a common feature in standard maritime contracts for the charter of ships (e.g. Baltic and International Maritime Council standard forms and New York Produce Exchange Form).

  2. A recent Court judgment[i] has clarified that a Shipowner’s Lien falls within the meaning of a charge under s 131 of the Companies Act either as a floating charge under s 131(3)(g) of the Companies Act or a charge on book debts under s 131(3)(f) of the Companies Act. Accordingly, such liens are void against the liquidator and creditors of the company if they are not registered under s 131 of the Companies Act.

Proposed Amendment

  1. Recognising the practical and commercial obstacles to registration of such instruments, the proposed amendment aims to preserve the ease of doing shipping business in Singapore by exempting Shipowners’ Liens from the requirement of registration notwithstanding its status as a charge.

Public Consultation

  1. The Ministry of Law invites interested parties to provide their views and feedback on the Companies (Amendment) Bill (see Annex A(74.4 KB)). The consultation period is from 23 May 2018 to 13 June 2018. All views may be sent in electronic form or hard copy form to the address below:

Ministry of Law
Policy Advisory Division
100 High Street
#08-02, The Treasury
Singapore 179434
Fax: 6332 8842
Email: MLAW_Consultation@mlaw.gov.sg

[i] Duncan, Cameron Lindsay v Diablo Fortune Inc [2017] SGHC 172

Note
Shortly after the launch of this consultation, the Court of Appeal released its Grounds of Decision in the case of Diablo Fortune Inc v Duncan, Cameron Lindsay and another [2018] SGCA 26. Respondents may wish to consider the Court of Appeal judgment in their responses to the consultation exercise.

(Updated 24 May 2018)

Last updated on 24 May 2018