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The COVID-19 (Temporary Measures) Act 2020 – Uncommon Relief for Uncommon Times

16 April 2020

This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

On 7 April 2020, the Singapore Parliament passed the COVID-19 (Temporary Measures) Act 2020 (the “Act”). Amongst other things, the Act is targeted at providing temporary relief from certain legal obligations in light of the current coronavirus pandemic. In particular, the Act aims to provide temporary relief and/or measures in respect of (i) an inability to perform certain contracts, and (ii) financially distressed individuals, firms and other businesses.

Applicability of the Act

Pursuant to Part 2 of the Act, temporary relief is given to parties who are unable to perform a “scheduled contract” due to the COVID-19 pandemic or any law, order or direction made because of COVID-19 (“COVID-19 event”). A “scheduled contract” can be any of the following:

  1. A contract for the grant of a loan facility to an enterprise, where such facility is secured against any commercial or industrial immovable property, plant, machinery or fixed asset located in Singapore, and:
    1. Such enterprise is incorporated, formed or established, and carries on business, in Singapore;
    2. Not less than 30% of its shares or other ownership interest is held by citizens of Singapore or permanent residents of Singapore or both; and
    3. The turnover of the group (within the meaning of the Accounting Standards applicable to it) to which it belongs does not exceed $100 million in the latest financial year;
  2. A performance bond that is granted pursuant to a construction contract or supply contract;
  3. A hire-purchase agreement or conditional sales agreement where the good hired or conditionally sold is any plant, machinery or fixed asset located in Singapore that are for business purposes, or a commercial vehicle;
  4. An event contract;
  5. A tourism-related contract;
  6. A construction contract or a supply contract;
  7. A lease or license of non-residential immovable property.

An affected party who is unable to perform a “scheduled contract” will be able to obtain temporary relief if the following requirements are met:

  1. Parties must have entered into a “scheduled contract” before 25 March 2020;
  2. A party to a “scheduled contract” is unable to perform an obligation to be performed on or after 1 February 2020; 
  3. The inability is caused to a material extent by a COVID-19 event; and
  4. The party in default has served a notification for relief on the other party or parties to the contract and other specified persons in accordance with section 9(1) of the Act.

The requirement of “material extent” is not specifically defined in the Act. However, the Act provides helpful examples (see section on “Illustrative examples” below) which provides some guidance regarding the requirement. The satisfaction of this requirement is likely to be a highly contentious point when a party’s request for relief is challenged by an enforcing party. 

The notification process

If a party to a scheduled contract intends to seek relief, it must within a stipulated period of time, even without a prior demand for performance, serve a notification for relief on:

  1. The other party or parties to the contract;
  2. Any guarantor or surety for the notifying party’s obligation under the contract; and
  3. Any such person as may be prescribed by the Act or its related regulations.

The Singapore government has yet to specify the form of the notice, what the stipulated period of time is and the additional prescribed person(s) to whom notice must be given. However, given the speed at which the Singapore government has passed the Act, it seems likely that these regulations will be enacted in short order after the relevant provisions under the Act come into force.

Effects of notification

If served with a notification for relief, the counterparty may not, for a period not exceeding six (6) months (“Prescribed Period”), take any of the following prohibited actions (“Prohibited Actions”):

  1. Commencement or continuation any court or arbitral proceedings under the Arbitration Act against the counterparty or its guarantor or surety;
  2. Enforcement of any security over any immoveable property or moveable property used for the purpose of a trade, business or profession;
  3. Application for a meeting of creditors to be summoned to approve a compromise or an arrangement in relation to the party in default or his or her guarantor or surety;
  4. Application for a judicial management order in relation to the party in default or his or her guarantor or surety;
  5. Commencement of any bankruptcy or insolvency proceedings against the counterparty or its guarantor or surety;
  6. Appointment of a receiver or manager over any property or undertaking of the party in default or his or her guarantor or surety;
  7. Commencement or levying of execution, distress or other legal process against any property of the party in default or his or her guarantor or surety, except with the leave of the court and subject to such terms as the court imposes;
  8. Repossession of any goods used for the purpose of a trade, business or profession under any leasing agreement, hire-purchase agreement or retention of title agreement;
  9. Termination of a lease or licence of immoveable property for the non-payment of rent or other moneys;
  10. Exercise of a right of re-entry or forfeiture under a lease or licence of immovable property, or the exercise of any right that has a similar outcome;
  11. Enforcement against the counterparty or its guarantor or surety of a court judgment, an award made by an arbitral tribunal or a determination by an adjudicator under the Building and Construction Industry Security of Payment Act; and
  12. Such other action as may be prescribed.

The Act also spells out serious consequences for taking action in contravention of the prohibitions. Breaching the prohibitions set out above could result in a criminal conviction and a fine of up to SGD 1,000. Furthermore, any court or arbitral proceedings commenced in breach of the Act must, on lodgement of a copy of the notification for relief with the court or arbitral tribunal, be dismissed.

To address the unique difficulties in the construction sector, in addition to the above Prohibited Actions, the Act provides further relief with regard to “scheduled contracts” that are construction contracts or supply contracts.

First, the Act (i) allows extensions of expiry dates for the call of performance bonds to after the Prescribed Period and (ii) prohibits an enforcing party from calling on such performance bonds at any time earlier than 7 days before the date of expiry of the performance bond or equivalent as stated in the performance bond or equivalent.

Second, for the purposes of calculating liquidated damages or assessing damages in general, where a subject inability occurs on or after 1 February 2020 and before the expiry of the Prescribed Period, any period for which the subject inability subsists and falling within that period is to be disregarded in determining the period of delay in performance by the affected party.

For event contracts or tourism-related contracts, where the other party to the contract has forfeited any deposit (or part of any deposit), the other party must, on receipt of the notification for relief, as soon as practicable restore the deposit or part of the deposit, unless determined otherwise by an assessor appointed under the Act. No cancellation fee is payable if the inability to perform was, to a material extent, caused by a COVID-19 event.

Illustrative examples

To assist the public’s understanding of how the Act is properly applied to real-life scenarios, the Act also helpfully provides several examples where parties may apply for relief as a result of being unable to perform a scheduled contract.

Example 1: Lease agreement for business

An example would be where Person A leases premises from Person B to run his restaurant business. The COVID-19 pandemic causes a sharp decline in the restaurant’s business, resulting in Person A having insufficient funds to pay rent that is due on 29 February 2020. Person B serves a demand letter on Person A. Person A may serve a notification for relief on Person B. Thereafter, Person B may not terminate the lease, exercise any right of re-entry or forfeiture, or take any other Prohibited Actions relating to non-payment of rent.

Person B may however take a prohibited action from the earliest of the following:

  1. The expiry of the Prescribed Period to which the relief applies;
  2. The withdrawal by Person A of his notification for relief;
  3. A determination by an assessor that the case is not one to which relief ought to apply.

Example 2: Loan facility to manufacturing business

In another example, Entity A carries on a manufacturing business and takes out a loan facility from Bank B that is partially secured against Entity A’s machinery and stock-in-trade. The loan facility is further guaranteed by Person Z. Under the loan facility, an instalment is due on 20 April 2020.

Entity A imports materials from other countries for its manufacturing business. Due to COVID-19, the import of such materials to Singapore is adversely affected. As a result, Entity A cannot manufactur sufficient good and its sales revenue declines sharply. Entity A is therefore unable to repay the loan instalment on 20 April 2020.

Entity A may serve a notification for relief on Bank B. Thereafter, Bank B may not:

  1. Enforce the security over Entity A’s machinery; or
  2. In respect of Entity A’s obligation that is secured by its machinery --
    1. Commence an action in court against Entity A or Person Z; or
    2. Appoint a receiver or manager over any property or undertaking of Entity A.

Bank B may however:

  1. Enforce the security over Entity A’s stock-in-trade;
  2. Commence an action in court against Entity A in relation to any part of the loan that is unsecured;
  3. Take any action against Entity A against any part of the loan that is unsecured;
  4. Commence an action against Person Z in relation to the guarantee Person Z gave to any part of the loan that is unsecured.

Example 3: Private hire car driver

In a third example, Person A is the hirer under a hire-purchase agreement with Entity B for a motor vehicle. Person A uses the vehicle as a private hire car. Due to COVID-19 and declining passenger numbers, Person A was unable to pay his monthly instalment due on 30 March 2020.

Person A may serve a notification for relief on Entity B, which would prevent Entity B from taking any Prohibited Action, including repossessing the vehicle or commencing an action in court against Person A in relation to the unpaid instalment during the Prescribed Period.

Assessor’s determination

Should there be any disagreement arising out of or in relation to the notification for relief, the dissatisfied party(ies) can make an application to refer such issues to an “assessor” appointed by the Minister.

Such applications must be made in the form and manner prescribed by the regulations made under the Act by the Minister, accompanied by the prescribed fee. Lawyers cannot represent the parties in proceedings before an assessor, and each party must bear their own costs for the proceedings.

Upon an application for an assessor’s determination, the assessor will determine whether the case in question is one to which section 5 of the Act applies (i.e. the inability to perform a “scheduled” contract).

Subject to the assessor’s determination on the above, he or she may make further determinations in order to achieve a just and equitable outcome, including but not limited to:

  1. Requiring a party to the contract to do anything or to pay any sum of money to discharge any obligation under the contract; and
  2. Requiring a party to return the goods or give possession of the immovable property to the other party, in a case where the party, in breach of section 5 of the Act, commenced a legal action against the other party or enforced any security over the other party’s goods or immovable property.

In addition, the assessor will also determine if section 7 of the Act (i.e. the inability to perform an event contract or tourism-related contract) also applies to the case at hand. If the case relates to an event contract or a tourism-related contract, the assessor may determine whether it is just and equitable for any deposit to be forfeited. Conversely, if the assessor determines that it is not just and equitable for any deposit to be forfeited, he or she can determine that such deposit be restored as if it had not been forfeited.

In determining whether section 5 (and in addition, section 7) of the Act applies to the case in question, the assessor will take into account (i) the ability and financial capacity of the party concerned performing the contractual obligation, and (ii) whether a just and equitable outcome will be achieved.

Where the assessor makes a determination requiring the parties to carry out certain actions, such determination by the assessor can be enforced in the same manner as a judgment or a court order and is binding on all the parties to the application. Further, there is no appeal from an assessor’s determination and any person who fails to comply with the assessor’s determination without reasonable excuse shall be guilty of an offence.

Temporary relief for businesses and individuals in financial distress

The Act also provides temporary relief to businesses and individuals in financial distress to protect them from the short-term effects of the pandemic. To this end, the monetary threshold and statutory time frame to respond to demands from creditors set out in Singapore’s insolvency and bankruptcy laws have been adjusted accordingly.


  1. Monetary cap: The monetary threshold for corporate insolvency is increased by tenfold from SGD 10,000 to SGD 100,000.
  2. Time frame: The statutory time frame to respond to demands from creditors is extended from 3 weeks to 6 months.


  1. Monetary cap: The monetary threshold for personal bankruptcy has quadrupled from SGD 15,000 to SGD 60,000. The monetary threshold for determining whether an individual is suitable for a debt repayment scheme is also increased from SGD 100,000 to SGD 250,000.
  2. Time frame: The statutory time frame to respond to demands from creditors is extended from 21 days to 6 months.

The practical effect of the above increases in monetary caps and time frames is that creditors will not be able to commence insolvency proceedings against debtors unless the heightened thresholds are satisfied. For example, instead of having only 3 weeks to respond to a statutory demand, a debtor company now has 6 months to respond. Winding up proceedings can only be commenced by a creditor against a debtor after the increased 6-month period has lapsed without a response. 

Under the Act, directors, partners and trustee managers of a distressed company are temporarily relieved from their obligations to prevent their companies from trading while insolvent if debts are incurred in the company’s ordinary course of business. However, they remain criminally liable for any debts incurred fraudulently.

The Act also relieves directors or members from attendance in obligated in-face meetings. Alternative arrangements may now be made by companies for meetings where personal attendance of its members and/or directors is mandated by the Companies Act and/or the company’s constitution. Such arrangements include convening of meetings by electronic means, video or teleconferencing, and other similar methods. This provision will be particularly helpful to companies with directors or shareholders located abroad who are unable to travel to Singapore due to the various travel bans in place, who would otherwise be required to attend meetings in person under existing contractual obligations. 

Temporary relief for commercial tenants

Landlords and commercial tenants should be aware that leases or licences of non‑residential immovable property are protected under the Act.

Accordingly, if a commercial tenant is unable to pay rent or other monies due on or after 1 February 2020 due to a COVID-19 event, it may serve on its landlord a notification for relief. However, rental payment obligations are only postponed and not waived and the suspension of such payment obligations will only last of the Prescribed Period.

Once a notification for relief is served, landlords are barred from commencing legal proceedings against the tenant or exercising its rights of re-entry, foreclosure or foreclosure to evict a tenant due to non-payment of rent.

Temporary relief for remission of property tax

Under the Act, landlords are mandated to transfer any benefits relating to property tax remission on to their tenants by way of:

  • a payment of money, whether as a lump sum or by way of instalments; or
  • a set off against or a reduction of the whole or any part of any rent or licence fee payable by the tenant to the landlord.

The transfer of such benefits must be unconditional, i.e. it cannot be subject to any condition (whether a condition precedent or subsequent), including any change to any term or condition of the lease or licence agreement with the tenant. Any such condition which the landlord tries to impose will be void. Landlords who fail to pass along the benefit to their tenants without reasonable excuse may be found guilty of an offence and risk conviction of a fine up to SGD 5,000.

Landlords and tenants may also bring a dispute concerning the property tax remission to be heard and determined before a Valuation Review Panel. Any determination made by a Valuation Review Panel may be subject to appeal to the High Court.


Passed in record time by Parliament, the Act provides much needed relief for parties and businesses caught off-guard by the COVID-19 pandemic, which has been unprecedented in its scale as well as impact on the global economy.

With individuals and businesses scrambling to survive the next six to twelve months of the crisis, the Act introduces measures that are uncommon to Singapore, a country that has traditionally allowed market forces to dictate the outcome of commercial arrangements. By creating “breathing space” for individuals and businesses, the Act seeks to provide liquidity to commercial parties, recognising the “symbiotic” relationship that contracting parties have with one another.

In addition, by substantially amending the monetary thresholds and timeframes for creditors to commence insolvency proceedings, the Act eases the burden on companies that are striving to remain operational.

The actual impact of this “legal circuit breaker” remains to be seen, but its effect on the economy and the livelihood of individuals are likely to be far-reaching and invaluable, particularly if the pandemic takes a turn for the better in the next six to twelve months. 


Portrait ofWei Ming Tan
Wei Ming Tan
Of Counsel