As the global economy becomes increasingly driven by innovation and intangibles, the value of an enterprise is no longer limited to tangible assets. Cognisant of this shift, Singapore has taken the step to develop and launch an intangibles-specific disclosure framework.
On 4 September 2023, the Accounting and Corporate Regulatory Authority and the Intellectual Property Office of Singapore jointly launched the Intangibles Disclosure Framework (“Framework“). The Framework is part of the Singapore IP Strategy 2030 and is a key step to helping enterprises commercialise their intangibles.
The launch of the new Framework follows a public consultation on the Proposed Intangibles Disclosure Framework that ran from 14 December 2022 to 28 February 2023. You may read our earlier Legal Update titled “Public Consultation on Proposed Intangibles Disclosure Framework” for more information. The finalised Framework incorporates revisions from the proposed draft to address feedback received during the public consultation on technical and implementation matters.
The Framework enables enterprises to disclose and communicate the value of intangibles, such as brand value, patents, registered designs, human capital or internally generated intangibles, by outlining the key principles that an enterprise should follow when disclosing their intangibles in a report. It details the four pillars for disclosure, the requirements of each pillar, and provides guidance on how enterprises can disclose their intangibles.
This Update provides a summary of the key features of the Framework and why enterprises may wish to consider adopting the Framework.
Key Features of the Framework
The Framework seeks to allow enterprises to provide stakeholders with consistent information about an enterprise’s intangibles, so that a more informed assessments of their business and financial market prospects can be made.
Which intangibles?
Pursuant to feedback received during the public consultation, a distinction is made between “intangibles” defined in the Framework and “intangible assets” defined in the accounting standards. Under the voluntary Framework, enterprises are encouraged to disclose intangibles beyond those recognised under the accounting standards (e.g., human capital and/or internally generated intangibles). The intangible assets defined under Singapore’s prescribed accounting standards are a subset of intangibles defined in the Framework.
The Framework defines an intangible as “a non-monetary resource that manifests itself by its economic properties: it does not have physical substance but grants rights and/or economic benefits to its owner“.
What to disclose and how to disclose?
The Framework’s disclosure principles are anchored in the four pillars of strategy, identification, measurement and management (SIMM). Collectively, the pillars delineate a structure to guide enterprises to disclose their intangibles in a consistent and systematic manner.
For more information, click here to read the full Legal Update.
