Common Statutory Breaches

  1. A company director has to comply with a number of statutory obligations. These obligations apply to all directors regardless of whether a director claims to be non-executive or is a nominee.
  2. The AGM provides shareholders with the opportunity to question the directors on the management and financial performance of the company. This is facilitated by requiring the directors to lay the company’s accounts at the AGM and provide these accounts to all shareholders not less than 14 days before the AGM.
  3. The AR provides critical information that helps the company’s stakeholders to make informed decisions. It is also an opportunity to update company information with ACRA so that company information is current and accurate. The format of the AR is prescribed under the Companies Act. The AR is an electronic form lodged with ACRA through its online filing system – Bizfile+ and contains important particulars of the company such as the name of the directors, its shareholders, the date to which the accounts of the company are made up and the date of the AGM at which those accounts were laid before the company.
  4. In view of the importance of holding AGMs and filing AR, ACRA has a system to pro-actively monitor these statutory breaches and has taken steps to instill compliance with these statutory obligations that are often breached by companies and/or their directors:
    1. failure by company and its directors to hold an AGM within the stipulated timeline. Listed companies are to hold the AGM within 4 months after its Financial Year End (FYE), while any other company is to hold their AGM within 6 months after FYE - section 175 Companies Act
    2. failure by company and its directors to file an AR within within the stipulated timeline. A listed company is to file Annual Returns (AR) within 5 months after FYE, and for all other companies, within 7 months after FYE. For companies having a share capital and keeping a branch register outside Singapore, Annual Returns must be filed within 6 months after FYE in the case of a listed company or within 8 months after FYE in the case of a company that is not listed – section 197 Companies Act 

ACRA’s 3”E” approach

  1. ACRA has deployed a 3’E” enforcement strategies to address these 3 common breaches.
  2. Education - first time offenders may be ignorant or unaware of their statutory obligations and may be invited to attend the Directors Compliance Programme (DCP) in lieu of enforcement. This is to enable them to thereafter comply and not re-offend.
  3. Enforcement – tougher enforcement action will be taken against egregious cases (e.g. multiple breaches or repeat offenders). We have also raised the composition sums and introduced three tiers as elaborated further below. If the offenders do not agree to pay the composition sums, they will be charged for the offences. Deterrent court fines will be sought if appropriate.
  4. Eradication – ACRA will initiate the striking off of companies that are not carrying on business or not in operation as they are a constant source of repeated breaches. 
  1. Companies and every director that breach their statutory obligations may be offered an opportunity to attend the Directors Compliance Programme (DCP), or pay a composition sum of in lieu of facing prosecution or to strike off the company.
  2. ACRA will only consider applying to the State Courts to issue a summons against a director if he: 
    1. fails to register and attend the Directors Compliance Programme (DCP) ) when ACRA writes to them to offer them a chance to attend the DCP;
    2. they failed to compound (when offered a chance to compound); or
    3. the circumstances of the case are such that composition is not appropriate, for example, multiple breaches or recalcitrant breaches.
  3. After a summons is issued by the courts, ACRA will send the summons to the director at his residential address by post. The summons will indicate the State Court number, date and time that the director has to attend court. If the director fails to attend court, a warrant for his arrest will be issued by the court. The director must attend court even if he has written to ACRA to review his summons 

Prosecution and seeking higher court fines

  1. For egregious cases that are prosecuted in court, ACRA will not offer composition, especially if the offender has pleaded guilty to not holding the AGM and not filing the AR before or compounded multiple breaches before.
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