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Statutory requirements – company
Statutory requirements – company
- The law relating to incorporating a company in Singapore is found in the Companies Act, Chapter 50 and administered by the Accounting & Corporate Regulatory Authority (ACRA).
- New provisions came into effect from 1st April 2004, whereby :
1. Companies are allowed to have one director and one shareholder
If a company has only one director, that sole director can be the sole shareholder but cannot concurrently act as Secretary of the Company. At least one director has to be locally resident.
2. Audit Exemption
Exempt private companies whose revenue is below the prescribed threshold (set at S$2.5 million for financial years commencing on or after 15th May 2003 and increased to S$5 million after one year) are exempt from the obligation to appoint auditors to audit their accounts. However, they must continue to maintain proper accounting records and prepare financial statements that comply with the Financial Accounting Standards (FRS).
3. Annual Reports
The directors of a company are required to make a report relating to the profit and loss of company for the financial year and the state of the company's affairs at the end of the financial year.
Every company must hold its first annual general meeting within 18 months after its incorporation. Subsequently, an annual general meeting must be held at least once in every calendar year. The interval between two general meetings should not more than 15 months.
Failure to hold Annual General Meeting or failure to file Annual Return, fine will not be exceeding S$5,000.00 and a default penalty respectively. In practice late for filing Annual Return, fine will be ranging from S$60.00 to S$700.00
4. Registration Numbers.
It is now required that a company shows its registration number on all business letters, statements of accounts, invoices, official notices and publications issued by the company from 1st October 2004.
5. Appointment of Professionally Qualified Secretary.
The requirement for private companies to appoint professionally qualified secretaries is removed. However, a private company is still needs a secretary, and the ACRA may require a private company to appoint a professional qualified company secretary if the company has failed to maintain its records in accordance with the requirements of the Companies Act.
6. Annual General Meeting (AGM)
Private companies need not hold a physical Annual General Meeting (AGM) if all its shareholders agree that AGM is not required. Matters to be decided at the AGM will be decided by written means.
7. Ordinary Shares with no votes.
All private companies, including those that are subsidiaries of public companies, will be allowed to issue ordinary shares with no votes or any number of votes per share.
8. Special Resolutions
The current requirements of 21 days' notice for meetings to pass a special resolution for private companies is amended to 14 days.
Members can pass a special resolution without a physical meeting provided that the resolution is approved by members who represent at least 75% (or such greater majority as may be required the Memorandum or Articles) of the total voting rights of all members. Ordinary resolutions will require the approval of members who represent at least a majority (or such greater majority as may be required by the Memorandum or Articles) of the total voting rights. These written resolutions may be passed using e-mail or electronic means.
9. Repeal of the Ninth Schedule of the Companies Act.
The Ninth Schedule is repealed in its entirety. The requirements of the Companies Act in respect of accounting and disclosure matters are now to be covered by the Financial Reporting Standards (FRS) and the Interpretations of the FRS (INT FRS).
As a result, consolidation by attachment, which was allowed by the Ninth Schedule, is no longer acceptable. A line-by-line consolidation will need to be prepared now. Alternatively, an exemption may be obtained from the Registrar from preparing consolidated financial statements. Where consolidated accounts are prepared, only the balance sheet of the company is required.