As home to more than thirty thousand international businesses, it is no wonder that Singapore consistently ranks high among nations with an impressive ease of doing business. In the last decade, the country hasn’t slipped past the first three nations where investors would want to set up their companies.
Partly responsible for this feat is the government’s support for both small and large-scale businesses, transparency in dealings and procurements, and working legislation for all players. This legislation, which defines the code of conduct of businesses and itemises companies’ responsibilities to the government, is legally termed the Singapore Companies Act.
Every aspiring entrepreneur in Singapore – resident or foreigner – must intimate themselves with the provisions of this act to avoid sanctions. It was first enacted in 1967 and has undergone a few amendments to reflect the latest business realities. Just like every nation has a governing constitution, business operations and operators in Singapore also have the Companies Act as their guide.
Things That Businesses Must Know About Singapore Companies Act
In this piece, you will discover seven critical aspects of this Act that you must know if you own a business or plan to own one in Singapore. Here they are:
Incorporation of A Business Located in Singapore
The Singapore Companies Act highlights the steps for companies to become incorporated in Singapore. By the provision of this Act, new businesses have to choose a unique name that captures what they do, register with the Accounting and Corporate Regulatory Authority (ACRA), choose the form of business incorporation, and lodge any registration appeal within thirty days.
The Act also highlights the powers that registered businesses have in the country, whether foreign or local. Businesses are usually incorporated as public or private limited, depending on the size and scope, but most private startups will get incorporated as private limited liability companies. Each registration must meet the minimum number of shareholders and board members required to form a company. The Companies Act 1967, as it is called, also empowers the registrar to refuse applications for incorporation that do not satisfy all the requirements.
Roles of Officers and Directors of Companies
Included in the Act is the requirement that all companies seeking registration must have a minimum of one director who is a resident of Singapore. At no time in the existence of a Singapore-located company can it operate without this being followed. The director oversees the smooth running of the business and ensures adherence to the constitution establishing it. Holders of this title must, therefore, be diligent in ensuring that their companies stay focused on their responsibilities to their customers and regulatory agencies.
Some official responsibilities of directors that the Companies Act 1967 expects all businesses to fulfil include the holding of Annual General Meetings, filing of annual returns, and calling of Extraordinary General Meetings where necessary. According to the provisions of this act, newly incorporated companies can hold their first AGM within eighteen months of incorporation, but it must not exceed fifteen months going forward from there. The director, working with the company secretary, must ensure compliance with this.
Companies Must Make Their Operational Information Publicly Accessible
As part of the effort to enforce transparency, Part IV of the Companies Act mandates that businesses make their registered physical addresses, registration number, and opening hours known on their correspondences, cheques, and other documents.
Stated differently, all necessary information about the location, contact, opening hours, and other customer-centric details must not be hidden. A company also cannot be open for less than three hours during each of their working days by the provisions of this Act.
Companies’ Attitude to Accounting Records
Part VI of the Singapore Companies Act mandates all business establishments in the country to keep accurate accounting records of their profits and losses. At each AGM, this account has to be presented to the shareholders, and the document must be kept intact for the next seven years at a minimum. The form has to reflect the accurate and fair financial position of the company without any attempt to cut corners.
A Company Secretary is a Must
Alongside a minimum of one company director who must be a resident of Singapore, having a company secretary is also a condition all business establishments in the country must meet. The appointment of a company secretary has to be made within six months of its establishment. He or she must be a resident of Singapore and have indicated his or her consent to be appointed the company’s secretary.
The company types required to have a secretary under the Singapore Companies Act include:
- Exempt Private Company
- Private Companies Limited by Shares
- Unlimited Public Company
- Public Companies Limited by Shares
- Unlimited Exempt Private Companies
- Public Companies Limited by Guarantee
Any company operating in Singapore without a secretary after six months of incorporation risks having to pay a fine of S$1,000. The secretary must intimate directors of their roles and powers as dictated by the company’s constitution. The secretary is also the one to file the company’s returns with the relevant government agency.
Rights of Company’s Shareholders
The Singapore Companies Act also highlights the rights of a company’s shareholders, which include:
- Right to own the company’s assets if it should wind up.
- Right to call for and attend meetings.
- Right to vote and be treated fairly.
- Right to the company’s dividends.
These rights are not subject to any individual company’s whims and caprices; they are inalienable as far as the Companies Act is concerned. And as for dividends, the board of directors can recommend any particular amount, but it has ultimately to be approved by the shareholders.
Changes to the Singapore Companies Act
Since its first enactment in 1967, Singapore Companies Act has undergone a few amendments, with the 2017 amendment being the latest. Here are a few things that have changed and that you may need to note.
Review of the eligibility requirements for small business exemption from audit.
Under the new eligibility provision, small businesses and private limited liability companies can qualify for audit exemption if they satisfy at least two of these three conditions:
- The cumulative annual revenue of such a firm is not less than S$10 million.
- Employees do not exceed fifty.
- The combined assets owned by the company for the year in review are less than S$10 million.
Change in the role of the Company Secretary
Before the 2017 amendment, it required company secretaries to be physically available at the registered address of the firm. The amendment has removed this clause, and secretaries can operate from the company’s registered address or elsewhere within the country.
Changes to the Filing of Annual Returns
Before the 2017 change in the Singapore Companies Act, listed companies with international branches must file their tax returns within sixty days of holding their AGM, while other companies had just thirty days to comply. But in this new amendment, the time has been extended to the last day of the sixth month following the end of their fiscal year for listed companies with branches abroad and eight months for others.
Singapore Companies Act is a well-thought-out legislation to guide business owners and uphold sanctity in this niche. The document is comprehensive, covering the entire lifespan of a business. It has provisions for the incorporation and winding up of companies, and faithful adherence to these laws is one ingredient for a business to be successful in Singapore.
As a business owner in Singapore, you should be well-versed with all the rules and regulations governing company incorporation and also the statutory requirements you need to meet after that. Keeping track of everything can sometimes get overwhelming while you are busy trying to achieve your business objectives. But meeting all these requirements on time is a must for your company to stay out of any trouble or penalties. Hence, you should appoint an experienced and knowledgeable corporate service provider to manage it for you.