The Singapore Companies Act (CA) is the primary legislation governing company compliance in Singapore. It applies to both local and foreign companies operating in Singapore, including subsidiaries. In this article, we provide essential information about the CA that every business should know. Continue reading to learn more.
- What is the Singapore Companies Act?
- Which organisations does it apply to?
- Key regulations for businesses to note
- Recent changes to the Companies Act
- How RMS can help you stay compliant
What is the Singapore Companies Act?
The Singapore Companies Act was enacted in 1967 and covers various aspects of a business’s lifecycle, including incorporation, winding up, and more. It encompasses the following areas:
- 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 schemes of arrangements, reconstructions, and amalgamations
- Role of receivers and managers
- Operation of judicial management
- Winding-up provisions
- Local and foreign investments
- Corporate criminal offences
The CA is regularly updated to adapt to the changing business landscape. The latest revision in 2017 introduced regulatory changes to enhance company ownership and control and improve the ease of doing business.
Which organisations does it apply to?
The Singapore Companies Act applies to all private and public companies incorporated in Singapore, as well as foreign companies with branches in Singapore. Non-compliance with this law can lead to legal consequences and penalties, depending on the nature of the offence.
Key regulations for businesses to note
Here are some important regulations that every business should be aware of:
Legal rights of a shareholder
The Singapore Companies Act defines the legal rights of shareholders, which include the right to vote, receive dividends, be treated fairly, participate in meetings, and claim assets in the event of the company winding up.
Roles and responsibilities of a corporate secretary
A corporate secretary plays a crucial role in ensuring legal compliance within an organisation. They are responsible for meeting the company’s statutory and regulatory obligations and act as a mediator between shareholders and directors.
Roles and responsibilities of a Singapore company director
A director oversees a company’s operations and influences major decisions. The Singapore Companies Act does not require directors to be employees. It mandates at least one local resident director for Singapore companies. Directors must avoid conflicts of interest, act honestly, and use their powers in the company’s best interests.
Conducting company meetings
There are two types of company meetings:
a. Annual General Meeting (AGM)
AGMs are a fundamental compliance requirement and involve all company shareholders. Since August 31, 2018, private companies are exempted from holding AGMs if they submit their financial statements to members within five months of the fiscal year-end.
b. Extraordinary General Meeting (EGM)
EGMs are called to address urgent issues that arise between scheduled AGMs. The company’s Articles of Association outline the procedures for holding general meetings other than AGMs.
Recent changes to the Companies Act
The Companies Act underwent amendments in 2017 to enhance transparency, reduce regulatory burdens, simplify debt restructuring, and support Singapore’s growth as a global business and investment hub. Key highlights of the changes include:
Eligibility for audit exemption
Small businesses can be exempted from audits if they meet specific criteria. Private companies qualify for audit exemption if they meet at least two of the following three requirements 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 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 are no longer required to be physically present at the company’s registered office. For example, a company secretary can be based at a secretarial firm while the registered location can be the company owner’s office.
Annual Returns Filing
Previously, listed firms with share capital and a foreign branch had to file annual reports within 60 days of an AGM, while other companies had a 30-day deadline. Under the revised regulations:
- Publicly traded corporations must file annual reports within four months of the end of their fiscal year.
- All other companies must file within five months of their fiscal year-end.
- Listed firms with a foreign branch must file annual returns by the last day of the sixth month following the end of their financial year, while others have until the end of the eighth month.
Note that changing the fiscal year-end is discouraged, but it is possible under certain conditions, such as upon incorporation or with the Registrar’s permission.
How RMS can help you stay compliant
RMS offers expert assistance and in-depth knowledge of local laws and regulations. With our services, you can easily start a company and ensure ongoing compliance. Let us handle the complexities while you focus on growing your business.
If you have any questions or need advice on company setup, feel free to contact us today.