Singapore Companies Act: What your business needs to know
7 minute read
The Singapore Companies Act (CA) is the main law that regulates and governs company compliance in Singapore. Whether you’re a local company or a foreign one with subsidiaries, it is required to comply with this act when conducting business in Singapore.
We’ve highlighted all prevalent information on the CA that businesses need to know in this article. Keep reading for more.
Overview:
What is the Companies Act of Singapore?
The Singapore Companies Act was first passed in 1967.
It covers a business’ full lifecycle, from incorporation to winding up, inclusive of these:
- Incorporation and powers of Singapore companies
- Regulation of shares, debentures, and charges
- Duties of company directors and officers
- Regulation of accounts and audits
- Operation of the scheme of arrangements, reconstructions, and amalgamations
- Role of receivers and managers
- Operation of judicial management
- Winding-up provisions
- Local and foreign investments
- Corporate criminal offenses
The CA is constantly updated to keep up with the evolving business landscape. The latest update in 2017 included regulation changes to improve company ownership and control, and improve the ease of doing business.
Which organizations does the Companies Act apply to?
The Singapore Companies Act is applicable to all private and public companies incorporated in Singapore, as well as foreign companies with branches in Singapore.
Businesses failing to comply with this law will face legal consequences and penalties, depending on the nature of their offense.
What are the main regulations for businesses to take note of?
Here are the main regulations every business should know of.
Legal rights of a shareholder
The Singapore Companies Act dictates the legal rights of a shareholder which includes:
- Right to vote
- Right to dividends
- Right to be treated fairly
- Right to call and attend meetings
- Right to assets on winding up of company
The board of directors of the corporation has the authority to recommend the payment of a fixed dividend. Meanwhile, final dividends are approved by shareholders at a general meeting. Take a deeper dive into the roles and rights of a shareholder here.
Roles and responsibilities of a corporate secretary
A corporate secretary is the organization’s backbone when it comes to legal compliance. They do much more than just filing legal documents and abiding with Accounting and Corporate Regulatory Entity (ACRA) requirements.
A corporate secretary is in charge of running a company’s administration efficiently which includes:
- Ensuring the company’s statutory and regulatory obligations are met
- Acting as a mediator between shareholders and directors
This is why it’s crucial to ensure your corporate secretary is in the hands of an individual you trust — and that’s where you can rely on Sleek.
Roles and responsibilities of a Singapore company director
A director is in charge of overseeing a company’s operations and influencing the company’s direction on major issues. However, in accordance with the Singapore Companies Act, the director doesn’t have to be an employee.
In Singapore, a minimum of one local resident director is necessary.
A director’s personal interests must be kept separate from the corporation’s. As a result, any potential conflicts of interest in the company’s proposed transactions must be disclosed.
A director is required to act honestly, with personal or third-party interests having no bearing on the company’s decision-making process.
Directors should manage their organizations with reasonable care, skill, and effort while performing their duties.
The director should not take advantage of his or her position of authority or the information he or she has about the company. Directors’ powers should be used to promote the company’s best interests.
Conducting company meetings
There are two types of company meetings.
1. Annual General Meeting (AGM)
This involves all company shareholders and is one of the most basic compliance requirements.
With effect from August 31, 2018, the Companies Act has modified AGMs. Private companies are now automatically excused from holding AGMs if they submit their financial statements to members within 5 months of the fiscal year-end.
2. Extraordinary General Meeting (EGM)
This is called to address urgent issues that occur in between AGMs that are more regularly scheduled. The Articles of Association, commonly known as the company’s written regulations, specify how general meetings other than AGMs should be held.
What are the latest changes made to the Companies Act?
In 2017, the Singapore Companies Act was amended to increase openness regarding a company’s ownership and control, minimize regulatory burden, increase ease of doing business, and simplify debt restructuring.
Singapore Companies Act 2017 Amendment
The Companies Act (Amendment) Bill 2017 and the Limited Liability Partnerships (Amendment) Bill were both passed in 2017 to ensure that Singapore’s corporate regulatory regime remains robust and supports Singapore’s expansion as a worldwide hub for businesses and investors.
Here are some important highlights from the act.
Eligibility to be exempt from audits
Small businesses can be excluded from auditing if they meet specific requirements. Under the new changes, this includes private companies as long as they meet at least two of the three criteria listed below over the previous two years:
- Total annual revenue of less than S$10 million
- Total assets for the fiscal year are less than S$10 million
- No more than 50 employees
If a company fits the criteria for being a small business but is part of a larger group, the entire group must be considered a ‘small group’ to qualify for audit exemption.
Changes to the role of Company Secretary
Company secretaries no longer need to be physically present at the company’s registered office. For instance, a company secretary could be based at a secretarial firm while the registered location could be the company owner’s office.
Annual Returns Filing
Previously, listed firms with share capital and a branch outside of Singapore had to file their annual reports within 60 days of an AGM. For all other companies, the deadline was 30 days.
Under the new change:
- Publicly traded corporations must file annual reports within four months of the end of their fiscal year (FYE) while all other businesses must file within five months of their fiscal year-end
- Listed firms with a branch outside of Singapore must file annual returns by the last day of the sixth month following the end of their financial year, or by the end of the eighth month for all others
Do note that companies are discouraged from changing their fiscal year-end at will but can under the following conditions:
- Upon incorporation, and following any modifications to the FYE, notify the Registrar of the Financial Year End
- If you want to amend your financial year-end, you’ll need to get permission from the Registrar if the new fiscal year is more than 18 months long or has been changed in the last 5 years
How Sleek can help you stay compliant
Sleek has a team of experts who are well-versed with local law and regulations. With us, you can start a company and keep it compliant easily. Focus on growing your business, and leave the rest to us.
If you’ve any questions or need advice on company setup, feel free to reach out to us today. Let’s talk!
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