Frequently Asked Questions
Corporate Secretary
Companies must appoint a company secretary within 6 months from the date of incorporation. This position cannot be left vacant for more than 6 months or the directors may face a penalty of up to S$1,000.
A company secretary is responsible for the administration of the company. He is also required to ensure that all the directors and shareholders are informed of their statutory obligations such as the filing of annual returns.
The responsibilities of a secretary can be varied depending of a company’s needs.
Below are some examples:
– Maintain and update the company’s registers and minutes books
– Administer, attend and prepare minutes of meetings of directors and shareholders
– Assist the Chairman of the meeting in the conduct of the meeting
– Ensure compliance with statutory requirements under the Companies Act
– Ensure compliance with the company’s Memorandum and Articles of Association (“M&AA”)
– Keep the company and its directors aware of the deadlines for annual returns and any other returns that should be filed with ACRA
– Advise the company on and attend to the appropriate electronic filings with the ACRA for changes within the company within the prescribed timeframes as set out by the ACRA
– Ensure safe custody and proper use of the company seal, if applicable
– Communicate to the company and its directors any relevant changes in statutory law on a timely basis
– Function as an intermediary between the company and the relevant authority for specific needs of the company such as ACRA, the Stock Exchange and the Inland Revenue Authority of Singapore.
A company secretary must be:
– A natural person.
– Locally resident in Singapore.
The sole director of a company and the company secretary cannot be the same person.
A professional RFA ensures that all compliance requirements are made promptly and according to the Companies Act 1967.
A filing agent is a person who or which, in the course of his or its business, carries out on behalf of any other person (for example, a customer) any transaction with the Registrar using the electronic transaction system, or via any other means allowed by the Registrar, if the electronic transaction system is unavailable.
A registered qualified individual is one of the requirement of being a RFA
The person must:
be a qualified individual, which term is defined in the ACRA (Filing Agents and Qualified Individuals) Regulations to mean:
– an advocate and solicitor of the Supreme Court of Singapore;
– a public accountant registered under the Accountants Act;
– a member of the Institute of Singapore Chartered Accountants;
– a member of the Association of International Accountants (Singapore Branch);
– a member of the Institute of Company Accountants, Singapore;
– a member of the Chartered Secretaries Institute of Singapore; or
– a corporate secretarial agent; i.e. a person who is carrying on the business of providing corporate secretarial services for one or more companies and has been doing so for at least 3 years in the preceding 5 years; and has been a secretary of a company for at least 3 years in the preceding 5 years.;
– be a fit and proper person; and
– if applicable, not less than 2 years have elapsed since the cancellation of his previous registration as a qualified individual due to a sanction by ACRA.
An annual general meeting (AGM) is a way for your company to present its financial statements (accounts) to shareholders (members). Shareholders can then ask questions about the health of your business. An AGM is therefore an important opportunity to address their concerns. All companies in Singapore are required to hold AGMs. The date of your company’s AGM is declared to ACRA when filing your Annual Return on BizFile+.
If you are a listed company, you must hold an AGM within four months after your company’s financial year end and file the annual return within five months after your company’s financial year end.
If you are not a listed company, you must hold an AGM within six months after your company’s financial year end and file the annual return within seven months after your company’s financial year end.
File annual returns within five months (for listed companies) or seven months (for non- listed companies) after financial year end.
All companies are required to file their annual returns on time. Companies that file annual returns after the due date will be imposed with a late lodgement penalty of up to $600 for each late filing.
ACRA may prosecute the company and/or its directors that breach statutory obligation in court if:
- The company and/or its directors do not accept the offer of composition; or
- when ACRA decides not to offer composition for the breaches.
ACRA may also not offer composition after a summons is issued. ACRA will serve the summons to the company’s registered office address and/or the director’s residential address by registered post. The summons will state the date, time and the Court where the company’s representative or director is required to appear before. In court, the company’s representative or director can decide whether to plead guilty or claim trial to the charges. If the director and/or the company are convicted by the court, they may be fined up to a maximum of $5,000 per charge.
The company’s representative or director must attend court even if a representation has been made to ACRA. If the company fails to send a representative (with a letter of authority) to attend court, the court may proceed to fix the matter for an ex parte hearing to decide whether the company is guilty of the charges. If the director fails to attend court, a warrant for his arrest will be issued by the court.
ACRA can strike off a company if there is reasonable cause to believe that a company is not carrying on business or is not in operation (e.g. failing to file annual return.)
A director with at least three companies struck off by ACRA within a period of five years could be disqualified by ACRA. Once disqualified, an individual will not be allowed to be a company director or take part in the management of any local or foreign company for five years, effective from the date on which the third company is struck off. A disqualified director cannot take on any new appointment as a director or be in any way directly or indirectly concerned or take part in the management of a company.
Accounts
In Singapore, these are the following accounting standards”
– Singapore Financial Reporting Standards (International)
– Financial Reporting Standards
– Singapore Financial Reporting Standard for Small Entities
– Charities Accounting Standards
You can refer to here for the applicable standards
It depends on your management’s requirements. If they need to know the profitability of the business on a timely basis, we will recommend updating the accounts on a monthly basis. For GST registered companies, the accounts need to be updated minimally on a quarterly basis so as to submit GST returns to IRAS timely.
The company must maintain proper records of its financial transactions. These include:
– Source documents that substantiate all business transactions, such as receipts, invoices, vouchers, bank statements, and other relevant documents issued to or received from customers;
– Accounting ledgers, schedules and journals documenting your company’s assets and liabilities, income and expenses, profits and losses; and
– Any other written evidence of transactions connected with your business.
Per Companies Act 1997, para 199(2), the company must retain its accounting records and supporting documents for 5 years from the relevant year.
The records of your company can be kept either manually or electronically, in a manner such that they can be conveniently and properly audited.
If your records are kept manually in a physical form, they should be kept in a legible and well-organised manner. For example, photocopies should be made of receipts printed on thermal paper in case the original receipts fade over time.
If your records are kept electronically, your company should ensure that proper internal controls are put in place to ascertain the integrity, completeness and reliability of the electronic records. This can be done by stating, for example, the manner in which records should be kept, when and how documents should be filed and stored in a database, or how image captures should be saved.
Firstly, the companies will not be able to prepare a financial statement to present at the AGM.
The penalty for failure to comply with the Companies Act 1997 on preparation of financial statements is liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 2 years.
Secondly, the company cannot fill the annual return with ACRA.
Penalty for late filing of annual returns is S$300 for late lodgement filed within 3 months after filing due date; or $600 for late lodgement filed more than 3 months after filing due date.
Lastly, the company will also be unable to file their corporate income tax on time with IRAS.
IRAS will make the steps here for late filing of income tax.
Preparation of Financial Statements
Under Companies Act 1967, para 201, the directors of every company must lay before the company at its annual general meeting the financial statements for the financial year unless it meets the exemption requirements per para 201(A).
IRAS similarly also will require you to prepare a set of audited/unaudited financial statements when you are preparing Form C-S/ Form C-S (Lite)/ Form C.
For submission of corporate income tax via Form C, the financial statements have to be submitted to IRAS.
You can refer to here for the documents to prepare when filing your corporate income tax.
A small company is exempted from audit requirements. Otherwise all companies have to be audited.
A company qualifies as a small company if:
(a) it is a private company in the financial year in question; and
(b) it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:
- total annual revenue ≤ $10m;
- total assets ≤ $10m;
- of employees ≤ 50.
For a company which is part of a group:
(a) the company must qualify as a small company; and
(b) entire group must be a “small group”
to qualify to the audit exemption.
For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.
The penalty for failure to comply with the Companies Act 1997 on preparation of financial statements is liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 2 years.
Tax
Your company is taxed at a flat rate of 17% of its chargeable income. This applies to both local and foreign companies.
Partial tax exemption for companies (from YA 2020)
| Chargeable income | % exempted from Tax | Amount exempted from Tax |
|---|---|---|
| First $10,000 | @75% | =$7,500 |
| Next $190,000 | @50% | =$95,000 |
| Total $200,000 | =$102,500 |
Tax exemption scheme for new start-up companies (where any of the first 3 YAs falls in or after YA 2020)
| Chargeable income | % exempted from Tax | Amount exempted from Tax |
|---|---|---|
| First $100,000 | @75% | =$75,000 |
| Next $100,000 | @50% | =$50,000 |
| Total $200,000 | =$125,000 |
Partial tax exemption for companies (YA 2010 to YA 2019)
| Chargeable income | % exempted from Tax | Amount exempted from Tax |
|---|---|---|
| First $10,000 | @75% | =$7,500 |
| Next $290,000 | @50% | =$145,000 |
| Total $300,000 | =$152,500 |
Tax exemption scheme for new start-up companies (where any of the first 3 YAs falls in YA 2010 to YA 2019)
| Chargeable income | % exempted from Tax | Amount exempted from Tax |
|---|---|---|
| First $100,000 | @100% | =$100,000 |
| Next $200,000 | @50% | =$100,000 |
| Total $300,000 | =$200,000 |
It is a myth that IRAS will not check companies’s tax submission for expenses below a certain threshold.
IRAS may perform audit checks on companies on random basis.
IRAS also perform investigation audit checks in the events of whistle blowers.
In cases where the error/omission/discrepancy in the tax return was made without any intention to evade taxes , the taxpayer may, under the Income Tax Act:
a. face a penalty up to 200% of the amount of tax undercharged;
b. be fined up to $5,000; and/or
c. be imprisoned up to three years.
In cases where the error/omission/discrepancy in the tax return was made with intention to evade taxes, the taxpayer may, under the Income Tax Act:
a. face a penalty up to 400% of the amount of tax undercharged;
b. be fined up to $50,000; and/or
c. be imprisoned up to five years.
GST is only compulsory if the company has:
– Revenue of more than S$1 million in the past 12 months or;
– Expect to make revenue of more than S$1 million in the next 12 months
If these criteria are met, a submission of the GST application to Inland Revenue Authority of Singapore (IRAS) is required within 30 days. Failure to do so will result in penalties.
Companies may choose to voluntarily register if the company makes any of the following:
– Taxable supplies;
– Only out-of-scope supplies (refer to sales of goods which did not enter Singapore and goods in transit)
– Exempt supplies of financial services which are also international services
The individual that is in charge of preparing the GST returns has to complete 2 e-Learning courses, “Registering for GST” and “Overview of GST” and pass the quiz for voluntary registration. The individual does not need to do so if he:
– Has the experience of managing other existing GST-registered businesses; or
– Is an Accredited Tax Advisers (ATA) or Accredited Tax Practitioners (ATP); or
– The business is applying to be registered under the Overseas Vendor Simplified Pay-only Registration Regime.