Common penalties for companies in Singapore
5 minute read
Now that you have a legal business in Singapore, it is important to operate within the legal boundaries.
According to the Singapore Companies Act, each company must comply with the annual filing requirements to the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS). Avoid penalties and legal repercussions by complying with the regulations.
Here is a summary table of common penalties for companies in Singapore:
|Type of breach||Penalties amount (SGD)|
|The AGM is held late||Composition sum of $300|
|The AR is lodged late||Late lodgement fee of $300|
|Financial statements laid at AGM are more than 6 months old for a non-listed company or more than 4 months old for a listed company||Composition sum of $300|
|Failure to update registry||Fine of $5,000|
Revised Penalty Framework for Annual Lodgements
Starting April 30 2021, ACRA will implement a new 2-tier penalty framework to encourage voluntary compliance. Here’s what you need to know of the new changes:
|Entity type||Current late lodgement penalty||New late lodgement penalty|
|Local companies||Flat rate of S$300|
$300 for late lodgement filed within 3 months after filing due date; or
$600 for late lodgement filed more than 3 months after filing due date.
|Variable Capital Companies (VCC)|
|Foreign companies||8-tier penalties ranging from $50 to $350|
|Limited Liability Partnership (LLP)|
For more information of the revised penalty framework, click here!
Late lodgement fees
Businesses have to comply with several statutory obligations under the Companies Act, Cap 50. Some of these requirements stipulate that companies or its board of directors have to lodge documents with ACRA on change of registered business address or resignation of directors.
When a business fails to meet the requirements, ACRA may take enforcement action and exercise discretion to compound the breach if the offender pays a composition sum.
If the breach comes in the form of not filing a statutory required document, the chances are that it will not be possible to pay a composition sum to resolve the issue. If the documents are presented later, a late lodgement fee shall be incurred.
Bear in mind that a composition sum is not identical to a late lodgement fee! These two terms have different meanings.
To learn more about composition sums and late lodgement fees, take a look here.
Amendments to company laws
On January 10 2022, the Singapore government announced a series of changes to the Companies Act and Limited Liability Partnerships (LLP) Act under the Corporate Registers (Miscellaneous Amendments) Act.
The changes were sought to improve the compliance of companies and LLPs while reducing the likelihood of illegal financial activities.
Sounds confusing? Here’s the breakdown.
|Changes to||Old law||New law|
|Register of nominee shareholder||A shareholder could hold shares on behalf of another nominator who did not have to identify themselves.||Local and foreign companies must keep a non-public register of the nominee shareholders and the nominators that must be updated within seven days of being informed by the nominee.|
|Register of nominee directors||Local companies must update their register of nominee directors within 7 days.|
|Register of members||Foreign companies must update their register of members within 30 after any changes within the registry.|
|Identification of registrable controllers||LLPs, local and foreign must record all individuals that have executive control of the company and record them as the registerable controllers.|
Failure to comply with these changes could result in an S$5,000 fine. For more information, refer here.
Should your business fail to hold an AGM or miss the deadline to file financial reports, it is at risk of suffering fines, summons, and various other penalties.
At Sleek, our team of experts can help with all of your required filing requirements. This way, you can focus on growing your business while we keep everything compliant.
Contact us to begin!