Epica Learn Series
A Complete Guide to Filing Annual Returns for Singapore Companies?
Know all about filing requirements for Singapore Companies.
Watch the video or read below
What is an annual general meeting(AGM) and annual return (AR)? why do we need it?
Table of Contents
Introduction
Singapore has been consistently ranked as one of the easiest countries to incorporate and operate a business in the world. As a result many foreign promoters incorporate their company in Singapore. Quite often because of lack of understanding they make mistakes as to the filing of returns and compulsory documents. All Singapore-incorporated companies must follow certain statutory obligations each year regardless of their size and structure.
The statutory compliances in Singapore are straightforward and simple. However, it is hard to keep track of all the deadlines when you are busy with your company's expansion and growth. A missed deadline could result in a fine or penalty. Therefore, all the Singapore business owners must learn about all these obligations and devise a strategy never to miss any of them.
One such annual compliance is to hold an AGM (Annual General Meeting) and file AR (Annual Return) to the Singapore Company Registrar, ACRA (Accounting and Corporate Regulatory Authority). The AR filing is a statutory obligation for both active and inactive companies in Singapore.
What is an AGM?
As per the Singapore Companies Act, all Singapore-registered companies must hold an AGM, short for Annual General Meeting, every year. It is an annual meeting of the company where all the company's directors and shareholders are generally present. The purpose of AGM is to update the company's members about the company's performance, financial results and to discuss company plans in general.
When to hold an AGM
As per Singapore Companies Act, an AGM must be conducted within six months from the company's financial year-end. Also, there should not be more than 15 months gap between two consecutive AGM.
As an exception to this rule, new companies are allowed to hold their first AGM within 18 months from their incorporation date.
Purpose of the AGM
A company consists of two different groups of people.
Directors run the company, whereas shareholders are the company owners who have invested their money in it.
AGM is conducted so the shareholders can learn the current status of the company's growth and devise new strategies for its expansion. The company's audited financial statements are also presented at the AGM for verification by the shareholders.
Key Facts about AGM
What is an AR?
All the Singapore companies must file annual returns to ACRA as a part of their statutory compliance.
Definition
An AR is an electronic document that contains the following information:
One of the company's directors or company secretary must sign the AR and verify its information.
When to file an AR?
The submission of a company's AR depends on the date of its AGM. Companies Act Section 197 states that a company must file its AR within 30 days after conducting the AGM.
Is attaching financial statements with AR Compulsory?
The company's financial statements must also be prepared and presented before the shareholders during the company's AGM. The financial statements must provide a summary of the company's financial activities during the respective financial year. The financial statements must be prepared as per Singapore's Financial Reporting Standards.
Content of financial statement
Format of the financial statements
The year-end financial statements must be prepared as per Singapore financial reporting standards. These may need to be submitted to ACRA with the annual return depending on your specific case. The financial statements must be in XBRL (eXtensible Business Reporting Language) format for submission.
However, some specific business entities are not required to submit their financial statements in the XBRL.
The Audit Exemption
Annual return filing is a mandatory yearly requirement for all Singapore companies. However, filing requirements are different for different companies. Companies that fit the criteria of a 'small company' or a dormant company are exempted from annual audit requirements.
Small Company criteria
To meet the 'small company' criteria, a company must fulfill two out of these three conditions:
Dormant company
A dormant company is a company that remained inactive and did not make any financial transaction for the respective accounting year.
Such companies are exempted from submitting audited financial statements with their annual return. They can prepare and submit an unaudited financial report that is called a director's report.
Submitting the AR
All the details of AGM and financial statements must be submitted to the company secretary within 30 days after the AGM. The company secretary will file the AR using the ACRA's online portal, BizFile. However, a corporate service provider like Epica can also assist you with the annual return filing.
Time Extension for preparing financial statements
The company secretary can apply for a time extension if the financial statements are not prepared within time to be presented at the AGM and filed with ACRA. The one-time extension of one or two months can be granted if the original deadline has not lapsed yet.
The new amendment to exempt companies from holding AGM
The new amendment in Singapore Companies Act permitted the private companies to dispense with AGMs if they send companies' financial statements to its members within five months from their financial year-end. The new amendment came into effect on 31 August 2018.
Three safeguards
The new amendment is subjected to three safeguards that are:
Benefits of new amendment for small companies
This amendment was introduced to save the compliance cost for small companies where the company's shareholders are the same as directors or less in numbers.
Why large companies should hold AGM
Large companies should not refrain from holding AGM. The two primary reasons for a large company to hold an AGM are:
External investment
Usually, in large companies, there is an external investment from angel investors, VC firms, etc.
A large number of shareholders
Large companies have many shareholders. There can be 50+ shareholders.
With the external investment and too many shareholders, it is safer to conduct AGM for a large company, so it can satisfy its investors and all the shareholders that the company is being operated in good faith.
Non-compliance in filing AR
ACRA may fine you for non-compliance. The penalties and fines depend upon the sections of the Companies Act that your company has breached and also the length of the default.
The minimum late lodgment fee is S$300.
Court Prosecution
ACRA can disqualify a director if he gets convicted of three or more filing offenses. ACRA can also strike off a company if it fails to comply with annual statutory regulations, e.g., failure to file AR for consecutive years. If ACRA strikes off three companies under the same director in five years, the director will also be disqualified for the next five years.
Summary
Holding an Annual General Meeting and filing annual returns are statutory obligations for Singapore-incorporated companies. The sole purpose of AGM and creating financial statements is to update and assure shareholders about the company's performance and management.Filing AR with ACRA assures ACRA that the company is complying with the Singapore Companies Act. Companies that fulfill all the annual compliances receive a Certificate of Compliance from ACRA.
However, it is hard to comply with all the annual obligations when you are focusing on your company's growth. In this scenario, a corporate service provider like Epica will take this responsibility off your shoulders. Epica can provide you a company secretary who will help you convene AGM and file the AR promptly. So, you can focus on expansion and growth while we take care of the deadlines for you.
Foreigner Package
New Company Setup
S$2,400
Local Package
New Company Setup
S$1,100
Transfer Package
Existing Company
S$1,000
Singapore Branch
New Branch Setup
S$4,000
Representative Office
New Setup
S$2,500
BVI Company
Singapore Bank Account
US$2,200
