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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.
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.
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.
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.
All the Singapore companies must file annual returns to ACRA as a part of their statutory compliance.
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.
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.
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.
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.
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.
To meet the 'small company' criteria, a company must fulfill two out of these three conditions:
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.
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.
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 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.
The new amendment is subjected to three safeguards that are:
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.
Large companies should not refrain from holding AGM. The two primary reasons for a large company to hold an AGM are:
Usually, in large companies, there is an external investment from angel investors, VC firms, etc.
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.
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.
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.
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