Growing pains

Companies incorporated in Singapore must comply with regulations established by the Accounting and Corporate Regulatory Authority (ACRA) in accounting and corporate governance. Non-compliance carries severe consequences, such as reputational harm, penalties, and legal action. Businesses must recognise the significance of adhering to ACRA regulations and take proactive steps to prevent potential problems. Why? Because failing to comply with these regulations can unleash a host of consequences, from damaging their reputation and facing hefty penalties to getting entangled in legal troubles.

In this article, we will discuss the top 5 growing pains that companies experience with compliance and explore practical solutions to overcome them. By identifying and addressing these challenges, businesses can effectively manage their compliance efforts and ensure smooth operations.

Changes in information

Companies may go through various changes due to evolving market conditions, strategic decision-making, organizational growth, or external factors that necessitate adjustments to their operations. However, many companies fail to notify ACRA about changes in their company policy, structure, name, official address, business working procedures, shareholders, directors, or executives. These changes should be filed with ACRA as early as within 14 days depending on the type of information to be updated.

Failure to notify ACRA about significant changes within the specified timeframe can have serious consequences. Non-compliance with this requirement may result in penalties imposed by ACRA.

Singaporean companies need to ensure timely notification to ACRA for any changes in their company information. It is crucial to file the necessary documents and updates within the timeframe to maintain accurate records and comply with ACRA regulations.

For more information on information that needs to be updated, click here: https://www.acra.gov.sg/how-to-guides/updating-information-of-companies-and-company-officers

To make these changes, you can access BizFile+ and navigate to the section for filing changes related to the personal particulars of authorised representatives or directors of foreign companies.

Maintenance of Registers and Records

Proper maintenance of Statutory Records is a legal requirement for Singapore companies. These records serve as proof of the company’s existence, validate ownership details, and contain vital information about directors, secretaries, and shareholders. However, many companies fail to create, update, and maintain these records accurately which could be due to a lack of awareness or resource restraints.

Failure to comply with the obligation of maintaining Statutory Records can result in significant consequences. Companies may face penalties of up to S$5,000 per violation, along with negative publicity and other adverse outcomes. Inaccurate or outdated records can lead to legal complications, hinder business operations, and damage the company’s reputation.

Implement a record-keeping system that streamlines the process and provides reminders for updates and documentation.

Ensure you have updated information pertaining to the following roles in accordance to the Companies Act:

• Members, who are often also known as shareholders
• Directors
• Secretaries
• Auditors
• CEOs
• Controllers, also commonly known as beneficial owners

The Companies Act mandates that companies keep accurate and updated registers of specific roles via BizFile+ within 14 days from the date of the change.

Conducting Annual General Meetings

Annual general meetings (AGMs) are a crucial requirement for Singaporean companies to fulfil their annual filing obligations. These meetings serve as a platform for presenting financial statements, obtaining shareholder approval, and making important company decisions. However, some companies fail to hold AGMs or neglect the process altogether.

Directors who do not comply with AGM requirements can face legal prosecution, which may result in disqualification or debarment from holding director positions. ACRA also has the authority to impose penalties on companies that fail to conduct the necessary AGMs. Furthermore, late lodgment fees will be imposed for annual returns that are submitted after the designated deadline.

To avoid penalties and ensure compliance, companies must diligently schedule and hold their AGMs. This involves notifying shareholders about the meeting, providing necessary documents, such as financial statements and director’s reports, and seeking shareholder approval for important matters. Private companies have the option to pass a resolution for not conducting AGMs, but this should be done through a majority shareholder vote. By fulfilling these requirements, companies can maintain transparency and meet their legal obligations.

Filing annual returns with ACRA

Under the jurisdiction of ACRA, all Singapore incorporated companies, Variable Capital Companies (VCCs), and Limited Liability Partnerships (LLPs) must comply with annual lodgment requirements, which include filing annual returns and declarations within specified timelines.

Late filing of these documents will result in penalties imposed on companies, VCCs, and LLPs.

ACRA has introduced a simplified 2-tier penalty framework for late annual lodgments, effective from 30th April 2021. According to the revised framework, singapore-incorporated companies, VCCs, and LLPs will face a late lodgment penalty of $300 if the annual return or declaration is filed within 3 months after the filing due date. If the lodgment is submitted more than 3 months after the due date, the penalty increases to $600.

For more information on this, click here: https://www.acra.gov.sg/announcements/revised-penalty-framework-for-annual-lodgments-to-take-effect-from-30-apr-2021

To avoid penalties, the company secretary should ensure that all necessary documents are prepared for the Annual Return. The director(s) must verify the accuracy of the information included in the documents and submit the annual return within the required timeframe.

Presenting False or Misleading Statements

ACRA expects Singapore companies to uphold the integrity of their corporate documents by providing truthful and accurate information. However, there is a concern that some individuals may willingly submit or authorise the submission of false or misleading documents to ACRA.

Submitting false or misleading statements can have serious consequences for both the individuals involved and the reputation of the company. The penalties for such actions can include a substantial fine of up to S$50,000 and a maximum prison sentence of 2 years.

It is crucial for individuals responsible for corporate documents, such as company secretaries, directors, and accounting firms, to prioritise accuracy and transparency. Regular internal reviews and compliance checks can help identify and rectify any potential inaccuracies or misleading statements before they are submitted to ACRA.

Don’t risk non-compliance with ACRA

Feeling overwhelmed by the weight of compliance for your Singapore company? We’re here to help you shoulder that burden! Contact us today and let our team become your trusted partner in managing the registration and compliance of your Singapore company.

With our expertise and knowledge of ACRA regulations and Singapore company law, we will guide you through the complex regulatory landscape, ensuring that you stay in good standing and avoid penalties.

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