Why Do Companies Need To Comply With ACRA?
Private Limited Companies in Singapore need to stringently follow all of Accounting and Corporate Regulatory Authority (ACRA) regulations, in order to avoid being penalized. ACRA is the main governing body for business entities and corporate activities in Singapore, and will periodically make slight changes to the regulations that private limited companies in Singapore need to abide by.
Annual filings – Annual General Meeting (AGM) and Annual Returns (AR) are compulsory for all Singapore companies even if it’s dormant. Failure to comply with ACRA compliance requirements in a timely manner can result in penalties and severe consequences. This is for ACRA to ensure that the company’s information in its register is updated and accurate. Most small companies will not need to submit their audited Financial Statements along with AR. It is of importance to note that it is the responsibility of the Company Secretary to oversee and prepare annual filings in a timely manner.
Annual General Meeting (AGM)
All companies registered in Singapore are required to hold an Annual General Meeting (AGM) once every financial year for shareholders to look into its financial statements and voice out their concerns. All company shareholders must be familiar and privy to the financial activities of the company in the year, so that they have a good understanding of the financial situation of the company.
Under the Singapore Companies Act (Cap.50), it is stated that every company is required to hold the Annual General Meeting (“AGM”) on the below timeframe whichever earlier:
- once in every calendar year
- 15 months from the date of the last AGM
There is an exception for newly incorporated companies to hold their AGM within 18 months from the date of incorporation.
Annual General Meeting can be held in a physical way, whereby shareholders gather together, or it can also be held through written resolutions, which in this case, the physical appearance of the shareholders are not required for the meeting to take place. If your shareholders are mainly foreign businessmen, it would be best to undertake a written resolution rather than a physical meeting, for convenience. However, all shareholders must agree to have a resolution rather than a meeting for it to be allowed.
The content of an AGM commonly discussed are:
- The financial report
- Directors’ fees and other remuneration
- Re-election of directors
- Change of Auditors
- Declaration of Dividends
The directors of the company are responsible for preparing all relevant documents before the AGM and they will be presenting them to the shareholders. Minutes of the AGM must also be promptly written and signed by the company chairman, and submitted with AR on BizFile+.
Annual Return (AR)
Also, under the Companies Act, all companies registered in Singapore are required to file their annual returns (AR) within one month of holding the Annual General Meeting. An AR contains all the vital particulars of the company such as the company directors and secretary’s names and share details.
For a company to file their annual returns, the following information is required:
- Latest ACRA Bizfile
- Date of Annual General Meeting
- Financial statements if XBRL
Failure to comply with the above-mentioned timeline will incur a penalty of S$300 per financial year for each filing. Even after the submission of AR, you will need to submit your Income Tax Return with the Inland Revenue Authority of Singapore (IRAS).
This information will be important for those seeking to register a private limited company in Singapore. If you thinking of setting up a local company, contact us at +65 64932970 to arrange for a free Singapore Company Registration consultation.
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