For entrepreneurs and business owners, understanding the intricacies of the Singapore Companies Act is not only crucial for ensuring legal compliance but also for fostering a conducive environment to drive business growth and success.
From company incorporation to the roles and responsibilities of directors and corporate secretaries, and recent amendments impacting audit exemptions and filing procedures, this article explores the essential aspects of the Singapore Companies Act that every business owner must be well-versed in.
What is the Singapore Companies Act?
The Singapore Companies Act, introduced in 1967 and regularly updated to stay relevant, is a comprehensive legislation governing various aspects of a business’s lifecycle. It covers critical areas such as incorporation, powers of companies, regulations concerning shares, duties of directors and officers, management of accounts, and more. The Act also accommodates local and foreign investments and addresses corporate criminal offenses.
Which organizations does the Singapore Companies Act apply to?
The Singapore Companies Act applies to all public and private companies registered in Singapore, including foreign companies with branches in the country. Non-compliance may lead to legal consequences and penalties. Business owners must familiarize themselves with the Act to ensure adherence to regulatory requirements and mitigate potential risks.
4 Things That Businesses Must Know About Singapore Companies Act
The Singapore Companies Act holds crucial information that every business owner should be well-versed in to ensure legal compliance and smooth operations. Here are four essential aspects to understand:
1. Incorporation of a Singapore Business
The Singapore Companies Act outlines the process for businesses to get incorporated in the country. To start a new company, several key steps need to be followed. Firstly, choosing a unique and appropriate name that represents the business is crucial. Afterward, the company must register with the Accounting and Corporate Regulatory Authority (ACRA). The chosen form of business incorporation, whether as a public or private limited company, should align with the company’s size and objectives. Most private startups opt for private limited liability companies.
Moreover, every registration must fulfill the minimum requirements for shareholders and board members as specified by the Act. It is essential to understand that the registrar has the authority to reject incorporation applications that fail to meet all requirements.
2. Roles and Responsibilities of a Corporate Secretary
A corporate secretary is an indispensable requirement for all businesses in Singapore, alongside a resident company director. The appointment of a secretary must be fulfilled within six months of establishment, and the individual must be a Singapore resident who consents to the appointment. Failure to appoint a secretary within the given timeframe may lead to a fine of S$1,000.
3. Roles and Responsibilities of a Singapore Company Director
A director holds the responsibility of overseeing a company’s operations and influencing major decisions in line with the Singapore Companies Act. While a director doesn’t need to be an employee, at least one local resident director is required in Singapore.
Directors must maintain a clear separation between their personal interests and those of the company. They must diligently manage the organization, exercising reasonable care, skill, and effort in the performance of their duties. Directors must not exploit their position or privileged information for personal gain, ensuring the company’s prosperity remains the primary focus.
4. Conducting Company Meetings
The Singapore Companies Act distinguishes between the following two types of company meetings.
Annual General Meetings (AGMs) are essential compliance requirements and involve all company shareholders. However, with a modification to the Act in August 2018, private companies are exempted from holding AGMs if they provide their financial statements to members within five months of the fiscal year-end.
Extraordinary General Meetings (EGMs) are called to address urgent issues that arise between scheduled AGMs. The Constitution, the company’s written regulations, provide guidelines on how to conduct general meetings other than AGMs.
3 Latest Changes to the Singapore Companies Act in 2017
The 2017 amendment to the Singapore Companies Act introduced important changes, including audit exemption eligibility, the role of company secretaries, and timelines for annual returns filing. These updates impact businesses of all sizes and industries, streamlining processes and enhancing compliance strategies for a more efficient operation.
1. Eligibility for Audit Exemption
The latest amendments to the Singapore Companies Act 2017 have introduced audit exemption possibilities for companies. To qualify, these entities must be private companies and meet at least two of the following three conditions for the immediate past two financial years:
The cumulative annual revenue is less than S$10 million.
The number of employees does not exceed fifty.
The combined assets owned by the company for the year are less than S$10 million.
Meeting these criteria allow companies to avoid the mandatory audit requirement.
2. Changes to the Role of Company Secretary
Company secretaries are no longer required to be physically present at the company’s registered address. They can operate from any location within Singapore.
3. Annual Returns Filing
The latest amendment to the Singapore Companies Act has introduced changes to the timeline for annual returns filing. Previously, listed companies with international branches had to file returns 60 days after their Annual General Meeting (AGM), while other companies had 30 days.
Under the new rules, the filing deadlines are as follows:
- Listed companies must file their annual returns by the last day of the fifth month after their financial year ends.
- From the end of their financial year, all other companies have seven months to file their annual returns.
It’s important to note that companies should avoid arbitrarily changing their fiscal year-end. However, they can do so under specific conditions, such as informing the Registrar of the financial year end during incorporation or after any legitimate modifications. If the new fiscal year is over 18 months long or has been changed within the last 5 years, companies need to seek permission from the Registrar for the amendment.
How can we help
At Premia TNC, we understand the complexities and nuances of the Singapore Companies Act, and we are here to assist you every step of the way. Our team of experienced professionals can provide you with expert advice and practical solutions tailored to your unique business needs. Combined with our global perspective, our comprehensive understanding of local laws allows us to offer you valuable insights and strategies to optimize your business operations in Singapore.
Don’t let the intricacies of the Singapore Companies Act hinder your business aspirations. Partner with Premia TNC, and let us help you achieve your goals in Singapore’s dynamic and thriving market. Contact us today to discover how our expertise can benefit your business.
Frequently Asked Questions
1. What is the Singapore Companies Act?
The Singapore Companies Act is the primary legislation governing the establishment, management, and dissolution of companies in Singapore. It outlines legal requirements and regulations that businesses must adhere to.
2. To whom does the Singapore Companies Act apply?
The Act applies to all companies registered in Singapore, including private and public companies, as well as foreign companies operating within the country.
3. What are the penalties for non-compliance with the Singapore Companies Act?
Non-compliance may lead to fines, prosecution, or in severe cases, the company's deregistration.
