A) Post-incorporation Matters that Require Directors’ Attention
1) Statutory Compliance
Director, Managing Director & Chief Executive Officer (“CEO”)
Appointment & Resignation
A director is a person who manages the affairs of the company. A director must make decisions objectively, act in the best interests of the company, and be honest and diligent in carrying out his duties.
When an individual is appointed as a director of a company, the company will be required to file electronically (“efile”) the appointment of the incoming director with the Accounting and Corporate Regulatory Authority (“ACRA”) within 14 days from the date of his appointment. Likewise, the resignation of a director of a company must be efiled with ACRA within 14 days from the date of resignation. In the case where a company has only 1 resident director, that sole resident director cannot resign from the company until a new replacement resident director is appointed.
It is not mandatory to appoint a managing director (who must be a director) or CEO for the company.
Director’s Disclosure of Interests in Transactions, Property, Offices etc
If any director or CEO of the company is in any way interested, whether directly or indirectly, in a transaction or proposed transaction with the company, he will be required, as soon as practicable after the relevant facts have come to his knowledge, to do the following:
- declare the nature of his interest(s) at a meeting of the directors; or
- send a written notice to the company containing the details on the nature, character and extent of his interest(s) in the transaction or proposed transaction with the company.
Directors are also required to disclose their shareholding in the company and related companies, including their family members’ interests in securities of the company. In the case of a CEO of a non-listed Singapore company (who is not a director), he will be required to disclose his and his family members’ interests in securities of the company.
Chairman of the Board
The Chairman of the Board of Directors, if one is appointed, should be a director of the company. Generally, the company’s constitution may provide that the Chairman has a casting vote.
Appointment & Resignation
Every company must appoint one or more secretaries, each of whom must be a natural person who has his principal place or only place of residence in Singapore. It is the duty of the directors of a company to ensure that each secretary of the company is a person who possesses the requisite knowledge and experience to discharge the functions of the secretary of the company.
The Act stipulates that the office of the company secretary should not be left vacant for more than 6 months at any time.
The appointment and resignation of the company secretary must be efiled with ACRA within 14 days from the date of appointment or resignation as the case may be.
Holding of Annual General Meeting (“AGM”)
An AGM is a mandatory annual meeting of the shareholders of the company. At the AGM, the company’s financial statements, amongst others, will be laid before the shareholders for them to ask questions concerning the financial statements.
A company is required to convene its first AGM within 18 months of its incorporation. Subsequent AGMs must be held once every year and not more than 15 months after the last preceding AGM.
If the company defaults in holding an AGM, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$5,000 and also to a default penalty.
Appointment & Resignation
A company must appoint auditors within 3 months from the incorporation of the company, unless the company is exempted from audit requirement under the Act. The auditors of the company, once appointed, will hold office until the conclusion of the first AGM and be subject to re-appointment at the AGM of the company.
There is a requirement for the company to efile the appointment with ACRA within 14 days from the date of appointment. Likewise, when auditors of a company resign, this resignation must be submitted to ACRA within 14 days from the date of resignation.
Auditors of public interest companies or their subsidiaries will be required to obtain ACRA’s consent for resignation before the end of the term of their appointment.
Accounts and Audit
A company is required to keep accounting and other records that will sufficiently explain the transactions and financial position of the company, and to enable true and fair financial statements and accompanied documents to be prepared. The company is also required to retain these records for minimum 5 years from the financial year end in which the transactions/operations to which those records relate are completed.
- Small companies / Small group
Following recent amendments to the Act, private companies (including all entities within the group) with the financial year commencing on or after 1 July 2015, that meet any 2 of the following 3 qualitative criteria for the immediate past 2 consecutive financial years (“FY”) may qualify for audit exemption:
- Total revenue for each FY does not exceed S$10 million;
- Total assets at the end of each FY does not exceed S$10 million; or
- Total employees at the end of each FY are not more than 50
Likewise, for a group to be a small group, it must meet at least 2 of the above 3 qualitative criteria on a consolidated basis for the immediate past 2 consecutive financial years.
- Dormant companies
A company that has no accounting transaction since incorporation or in the previous financial year may be exempted from audit requirements but will be required to prepare unaudited financial statements in compliance with the Act:
As an exception, the only transactions that ACRA allows dormant businesses to have are those pertaining to:
- the taking of shares in the company by a subscriber to the constitution in pursuance of his undertaking in the constitution;
- statutory compliance fees such as secretarial, audit and registered office fees etc., and fines under any written law;
- filing fees paid to ACRA; and
- payment or receipt by the company of a nominal sum not exceeding S$5,000
With effect from 3 January 2016, a dormant non-listed company (other than a subsidiary of a listed company), with financial year ending on or after 3 January 2016, is exempted from the requirement to prepare financial statements if:
- the company fulfils a substantial assets test (i.e. total assets do not exceed S$0.5 million); and
- the company has been dormant from the time of formation or since the end of the previous financial year.
Publication of Company’s Name and Registration Number
It is a requirement for the name and registration number of a company to appear in legible form on all business letters, statements of account, invoices, official notices and publications of the company.
Corporate Income Tax
In Singapore, a company is taxed at a flat rate of 17% on its chargeable income. A company will need to be aware of the following 2 deadlines:
- Filing of Estimated Chargeable Income (“ECI”): within 3 months from its financial year end; and
- Filing of Corporate Income Tax return: by 30 November of every year
Goods and Services Tax (“GST”)
GST is a broad-based tax on local consumption and is chargeable on goods and services sold in Singapore as well as goods imported into Singapore. A supply of goods or services made in Singapore is subject to GST at the prevailing standard rate of 7%.
A company must register for GST if its taxable supplies for the last 12 months exceeded S$1 million or if it expects to make taxable supplies exceeding S$1 million in the next 12 months. However, a company may apply for GST registration on a voluntary basis even if the taxable supplies are not expected to exceed S$1 million. A company that voluntarily registers for GST must comply with certain conditions after registration.
2) Operational Matters
Typically, licences and/or permits are not required for registration of a Singapore company. However, if the proposed company name contains words such as “architect”, “defence”, “college”, “surgery” etc. and/or those with business activities such as real estate, legal, banking and medical/clinical laboratory etc., the name application will be referred to the relevant regulatory authority for clearance.
b) Singapore Business Federation (“SBF”)
Companies with a paid up capital of S$0.5 million and above are required to be members of the SBF. Depending on the level of the company’s paid up capital, an annual membership fee is payable to SBF.
c) Work Passes
With the exception of certain work pass exempt activities, a foreigner who intends to work in Singapore must have a valid work pass before he can start work. This includes foreigners in Singapore on short-term work assignment or those undergoing practical training attachments. Companies that hire non-residents without valid work passes will infringe local employment laws.
There are various work passes available in Singapore depending on the type of work to be performed by the foreigner. The Ministry of Manpower (“MOM”) will take into consideration, amongst other factors, the applicant’s monthly salary, relevant working experience and qualifications when reviewing a work pass application.
d) Office Space
It is a statutory requirement for a Singapore company to have a registered office address in Singapore.
The registered office of the company must meet the following criteria:
- Is open and accessible to the public for not less than 3 hours during ordinary business hours on each business day; and
- Has a physical office address in Singapore. A post-office box address is not allowed.
The registered address of a company can be the same or different from its place of business. Depending on the types of business activities, foreign investors or entrepreneurs can consider renting a commercial office to conduct their business or opt for a serviced/virtual office.
B) Exit or Closing Down
A Singapore-incorporated company can close down its business by either applying to ACRA for striking off or appointing a liquidator to wind up its affairs voluntarily. The striking off approach is generally simpler and cheaper.
For the striking off application to be considered by ACRA, the company must be able to meet certain conditions. The whole process to strike off a company will take approximately 4 months.
In the case of winding up, a liquidator will be appointed to take charge and dispose of the company’s assets (if any) for the benefit of the company’s creditors. Based on the claims lodged by the creditors, the liquidator will distribute the proceeds from the disposal among the creditors. Upon completion of the distribution, the company will be dissolved and will cease to exist.
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