When starting a business in Singapore, we may wish to incorporate a private limited company. Since we will have to comply with the Singapore Companies Act, we should have an understanding of what some of the requirements may be.
As a separate legal entity, a company enables easier transfer of ownership and succession planning, fund raising for expansion and investments, as well as ensuring a clear distinction between shareholder(s) and company liabilities while doing business, and the rights of each party.
Various types of companies fall under the Singapore Companies Act, including both private and public companies. Small business owners will only need to comply with requirements for their private limited companies.
Read Also: How To Choose The Right Legal Entity To Start A Business In Singapore
What Is The Singapore Companies Act?
First enacted in 1967, the Companies Act is the primary legislation governing the responsibilities and conduct of companies in Singapore. Singapore is regularly recognised internationally as one of the easiest places to do business, and it is partly the Companies Act that ensures that it simple to start a company in Singapore.
What To Look Out For In The Singapore Companies Act?
There are a few main parts of the Singapore Companies Act:
– Incorporation and powers of companies (Part III);
– Regulation of shares, debentures and charges (Part IV);
– Duties of directors and officers of a company (Part V);
– Regulation of accounts and audit (Part VI);
– Operation of scheme of arrangements, reconstructions and amalgamations (Part VII);
– Role of receivers and managers (Part VIII);
– Operation of judicial management (Part VIIIA);
– Winding-up provisions, including voluntary and involuntary winding up (Part X);
– provision of corporate criminal offences (Part XII, Division 2)
In particular, small business owners can zoom in on some of the following requirements within the Companies Act:
#1 Incorporation Of A Company
The Companies Act contains comprehensive provisions for the incorporation of companies in Singapore.
Most small business owners will likely choose to incorporate a private limited company that is an Exempt Private Company or Limited by Shares. These types of companies are limited to a maximum of 20 shareholders or 50 shareholders respectively. For an Exempt Private Company, corporations cannot be a shareholder.
We have to register a company with ACRA, it is also within the Companies Act that we choose a name that is not undesirable or identical to another business. The Companies Act also stipulates that anyone aggrieved by the registration of the company have up to 30 days to appeal the decision.
Read Also: 7 Types of Company Structures That You Can Register Your Business
#2 Ensuring Corporate Information Is Transparent
Under Part V of the Companies Act, it is the responsibility of a company’s management team to have a registered office within Singapore and provide its opening hours. The registered office has to be accessible to the public for not less than 3 hours during ordinary business hours.
The company also has to furnish information of its name and registration number on its corporate materials such as:
– all business letters
– statement of accounts
– invoices
– official notices
– publications
– cheques
– orders
– receipts
– letters of credit
#3 Roles And Responsibilities Of Company Directors And Officers
Companies must have at least one company director who is a resident in Singapore. They cannot resign from this position unless there remains at least one company director who is a Singapore resident.
The company director is responsible for managing the affairs of the company, and ensure accurate and timely record keeping, prepare financial applicable statements and comply with corporate filings and other disclosures.
It is also within the Companies Act for directors act honestly and to use reasonable diligence in doing his duties.
An annual general meeting (AGM) must be held once every calendar year, and not 15 months after the holding of the last AGM. In its year of incorporation, companies can hold its first AGM within 18 months of its incorporation. Notice has to be given to all persons who are entitled to receive notice of the meeting. Private companies may dispense with AGMs.
Within the Companies Act, there are further stipulations on the convening of AGMs and passing resolutions, as well as Extraordinary General Meeting (EGM) if applicable.
Companies also have to submit an annual return.
Read Also: What Is Your Responsibility As A Company Director In Singapore?
#4 Every Company Must Have A Company Secretary
The Companies Act requires every company to have one or more company secretaries. The person will have to also consent to acting as the company secretary.
Read Also: What Is The Role Of A Company Secretary And Why Every Private Limited Company Needs One
#5 Keeping Accounting Records
Companies have to keep proper accounting records of their “true and fair” profit and loss accounts, and balance sheets. According to the Companies Act, records need to be kept for 7 years of the completion of transactions or operations.
The profit and loss statement has to be laid out at the company’s AGM, at a date not later than 18 months after incorporation and 15 months subsequently.
Part VI of Companies Act also relate to the financial year of a company, and how it affects its operations, especially if there are subsidiaries.
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