Company incorporation comes with a lot of responsibilities. You not only need to take care of managing your business but also make sure your company is compliant as per government requirements. This applies to every company regardless of its size, activity, or business module. Any miss can cause you a lot of hassles as well as penalties in some cases.
One such requirement is the filing of your Annual Returns. Let’s break the complex topic into a more straightforward concept. Shall we?
What is Annual Return Filing?
Annual return is an electronically lodged form with the Accounting and Corporate Regulatory Authority of Singapore (ACRA). As ACRA governs and administers the Singaporean company regulations, you must abide by its requirements.
The form includes essential factors such as company details, details of its directors, members, secretaries, share capital, the company’s financial statements, and the date of the AGM (if any). The critical information of annual return filing helps the company’s stakeholders decide everything about the company.
Who Needs to Do It?
Your company-appointed officer files the annual return filings through ACRA’s portal BizFile+. It could be either the company director or the company secretary. Or you can request an agent to do the filling on your company’s behalf.
In most cases, the secretary does the filling. But the company directors need to make sure that the company’s annual financial statements are accurate and per accounting standards.
What Happens if Annual Return Filing with ACRA is Non-Compliant?
A company can be penalized by ACRA for non-compliance for the following reasons:
- If the AGM isn’t held within the given timeline (unless exempted).
- If the company didn’t submit the annual financial statements and Annual Return as per the given deadline.
- If the presented annual financial statements at the AGM are not updated.
As for recent changes, ACRA has revised the penalty framework for late annual lodgments with a simplified 2-tier penalty to take effect from 30 Apr 2021. This is part of ongoing efforts to make compliance simple and to encourage companies and LLPs to take their statutory obligations on annual reporting seriously.
Under the revised penalty framework, all Singapore-incorporated companies, VCCs, and LLPs will be imposed with a late lodgment penalty of $300 if the annual return or annual declaration is filed within 3 months after the filing due date or $600 if the lodgment is filed more than 3 months after the filing due date.
Further, suppose a director has been convicted of three or more filing-related offences under the Companies Act within a period of five years. In that case, they will be disqualified as a director. In addition, they will not be able to be appointed as a director or take part in the operations of a local or foreign company for the next five years from the date of the conviction.
ACRA can also decide to strike off the company if it fails to file its returns regularly, and the Registrar has good reasons to believe that the company is not carrying on business or is not in operation. The director with at least three companies that the Registrar strikes off within a period of five years could be disqualified by ACRA.
So ensure all the required steps are taken and your company complies with the government regulations if you want your business to succeed. After all, it’s better to be safe than sorry.
Compliance Rating and Certificate
If a company meets the annual filing demands by ACRA, it will get a green checkmark next to its company name on the online directory. The company can receive a Certificate of Compliance after getting this mark.
If the requirements aren’t met, the company will get a red cross mark. This indicates that the company can’t obtain the certificate.
Entrepreneurs need to meet the annual filing requirements. It validates the existence of the company. Anyone interested in dealing with your company will be able to go through the basic information and ACRA’s rating on your company.
Timelines to File Your Returns
As per the Companies Act, Section 197, a company’s Annual returns submission should be based on the AGM. Therefore, the company should do it one month from when the AGM was held.
This doesn’t apply to companies going through company incorporation filings. The newly incorporated companies can hold their AGM and report Annual Returns filling within 18 months from the incorporation date.
The AGM can be held in person or through a written form with shareholders’ consent.
The Process & Documents Required
As per the Singapore Companies Act, it’s vital to do the annual return filing within 30 days from the day of the AGM. The annual return filing requires the following documents with up-to-date information:
- Company’s name
- Registration number
- Office address
- Principal activities
- Information about the company’s directors and secretary
- Details of the shareholders, share capital, and more
- Annual financial statements of your company
- Auditors, if any
It’s essential for the director or the company secretary to sign the annual return filing before it’s submitted. Two points to remember when filing these documents are:
- The company should include the audited annual financial statements when reporting the Annual Return Filing through ACRA.
- The deadline is 30 days since the company held the AGM. However, some instances allow filing annual returns without having an AGM.
eXtensible Business Reporting Language (XBRL) for annual financial statements
Since 2014, the Singapore government has required companies to document financial statements in XML format, and it’s a FREE, open-source format. As per XBRL, some companies are excluded from filing financial statements, such as:
- Foreign companies
- Foreign company branches
- Limited by guarantee
- The companies that are allowed to document financial statements as per accounting standards apart from Singapore Financial Reporting Standards (SFRS) and International Financial Reporting Standards (IFRS).
Some other companies that are exempted from attaching their audited financial statements include:
Small Companies:
Small companies are the ones that meet two out of the three below criteria:
- Companies that have less than S$10 million annual revenue.
- Companies that have less than S$10 million in assets.
- Companies with a maximum of 50 employees.
Exempt Private Companies (EPC):
Exempt Private Companies (EPC) are:
- With 20 shareholders and no more.
- Only natural persons as shareholders, not corporate shareholders.
- A private company owned by the government that is declared in the Gazette can also be an exempt private company.
Dormant Companies:
A dormant company is a company that has not accumulated any revenue or run any business activities in the last financial year.
Appoint HeySara as your company secretary
Incorporating a business entails a slew of duties. While selecting a company secretary is not only required by law, they are also critical to the firm’s success. So choose HeySara as your corporate compliance service provider and rest assured your compliance matters will be in good hands.
