Existing Support Measures will Help SMEs Impacted by Legislation to Facilitate Restructuring of Contracts

Singapore, 3 November 2020… The Monetary Authority of Singapore (MAS) said today that the extended credit relief measures announced by MAS and the financial industry on 5 October 2020 will provide support to SMEs affected by the Re-align Framework [1] passed in Parliament on 3 November 2020 to help businesses severely impacted by COVID-19 to renegotiate selected types of contracts. Other affected borrowers can approach their banks or finance companies to explore funding solutions to meet their cashflow needs.

2     In addition, measures that  MAS, MOF and IRAS introduced earlier this year to provide S-REITs [2] with greater flexibility to manage their cash flows and raise funds amid the challenging environment due to COVID-19 will remain helpful for S-REITS which may be affected by the Re-align Framework. The measures introduced earlier comprise an extension of the deadline for distribution of taxable income by MOF and IRAS [3] , and an increase in the leverage limit and deferment of new regulatory requirements by MAS [4] .  MAS will continue to closely monitor developments in the S-REITs industry and maintain stability in the market.

3     The General Counsel, MAS, Mr Paul Yuen said, “The latest legislative measures [5] will facilitate the restructuring of contractual obligations in an expedient, fair, and equitable way. The temporary nature of these measures and exclusion of financial contracts from these measures preserves the sanctity of contracts in Singapore, which is a critical feature of Singapore’s attractiveness as an international business and financial centre.  At the same time, the suite of existing relief measures will provide support to businesses that may be adversely affected by the legislative measures.”

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1. [1] The Re-align Framework, implemented through amendments to the COVID-19 (Temporary Measures) Act passed on 3 November 2020, will help businesses that have been significantly impacted by COVID-19 to restructure or renegotiate their contractual obligations in an expedient, fair and equitable way.

1. [2] Real estate investment trusts listed on the Singapore Exchange (SGX-ST).

1. [3] For taxable income derived in the FY ending in 2020, S-REITs will have until 31 December 2021 to distribute them; and for taxable income derived in the FY ending in 2021, they will have until 31 December 2021 or 3 months after the end of FY2021, whichever is later, to distribute them.

1. [4] Please refer to MAS’ media release on 16 April 2020 and 3 June 2020 for more details.

1. [5] The Simplified Insolvency Programme, implemented through amendments to the Insolvency, Restructuring and Dissolution Act passed on 3 November 2020 and the Re-align Framework.