ACRA's approach to Enforcement

1. In an increasingly complex and dynamic business landscape, ACRA has to maintain a regulatory regime that is progressive, responsive, effective and efficient. We strive to safeguard Singapore’s reputation as not only a trusted marketplace but also easiest places in the world to do business in. For our stakeholders to better understand our approach to enforcement, this Enforcement Policy Statement categorically sets out how we deal with enforcement issues and how we apply the appropriate regulatory tools to address them.

For business owner, officers and corporate service providers

2. This Enforcement Policy Statement contains information relevant to businesses, business owners and its officers and corporate service providers. We urge these stakeholders to peruse this Policy Statement to better understand ACRA’s enforcement approach.

For those who wish to lodge complaints

3. For members of public who intend to lodge or had lodged complaints with ACRA about alleged statutory breaches should read this Enforcement Policy Statement to better understand what information is required when lodging complaints, what types of cases warrant investigations, our investigation timelines, our key considerations when deciding on the enforcement action to take and the types of compliance and enforcement measures that ACRA undertakes.

For those who are being investigated and face prosecution

4. For members of the public who are being investigated by ACRA or are facing prosecution by ACRA should read this Enforcement Policy Statement which lists key statutory obligations, various enforcement measures that ACRA may undertake including composition and court fines and information on making representations to ACRA on compliance or investigation matters.
5. Our enforcement philosophy is to encourage compliance and deter misconduct. It is important to note that we do not investigate offenders for each and every statutory breach but when we do, we will respond to different types of statutory breaches in different ways by applying one or more regulatory tools available to ACRA. These tools range from denial of service, imposing attendance of an outreach session, issuing of a warning, making an offer to pay a composition sum in lieu of prosecution, striking off, disqualifying, issuing of a debarment order to prosecution, with the possibility of seeking deterrent sentences in egregious cases. 
6. The subject matter of certain cases may require us to refer to other law enforcement agencies such as the Police, the Commercial Affairs Department or some other regulators where it is more appropriate to do so. Examples include a penal offence such as criminal breach of trust under the Penal Code or a security-related offence under the Securities and Futures Act, both of which do not come under the purview of ACRA.
7. To maximise the use of ACRA’s limited resources, ACRA will decide whether to take enforcement action by applying the following 3 key factors:
   1. whether there is sufficient public interest
   2. what is the harm done by the alleged breach
   3. whether the complaint is bona fide and if so, whether it contains sufficient information to mount investigations
8. If the complaint meets all 3 key considerations, investigation will be conducted followed by an assessment on whether to enforce and what is the appropriate regulatory tool to use.

Factor 1 - Public Interest

9. In ascertaining if there is public interest, ACRA is guided by the following considerations.

Accuracy and integrity of the public registers maintained by ACRA

10. One of ACRA’s paramount concerns is the accuracy and integrity of these registers as members of the public and stakeholders such as investors and banks increasingly look to the public registers maintained by ACRA for relevant information about business entities.
11. In this regard, ACRA pays special focus to the failure to file Annual Returns (ARs) (breach of section 197 of the Companies Act (CA)). ACRA will investigate these breaches and take enforcement action.
12. If there is a failure to update change in existing information concerning directorships (breach of 173 CA) or registered address (breach of section 143 CA), ACRA will generally investigate.

The provision of timely and accurate financial information

13. The timely and accurate filing of financial information that must meet accounting standards is another one of ACRA’s key areas of concern, especially in relation to listed companies and larger private companies as the public relies on such financial information to do business with or invest in these companies.

Fraud, false declarations and other forms of dishonest behaviour

14. Fraud, false declarations and other forms of dishonest behaviour that impact our public registers or financial information are viewed seriously and will be investigated by ACRA or the relevant enforcement agency.
15. One such example is that of a corporate service provider who was not paid his director’s fees and proceeded to abuse his corporate service provider access by lodging a false declaration with ACRA that someone else had consented to be a director in his place. In addition, he back-dates the lodgement to the date he himself was appointed, as if he were never a director of the company at all. ACRA took this offender to task.

Breach of Fiduciary Duties

16. The law imposes relationships of trust on certain individuals with the business entities and, where applicable with the shareholders as well.  Where such action impugns on the integrity or accuracy of ACRA’s register, or where the nature of the breach is particularly serious, ACRA would be prepared to investigate and take enforcement action against an offender. - Notably, under section 157 of the CA, a director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office.

Factor 2 - Harm Caused by the Breach

17. A higher priority will be accorded to cases in which serious harm has been caused.
18. In assessing the extent of the harm caused by the breach, the following factors will be considered:
1. the extent of harm caused by the alleged breach to victims and/or to Singapore’s reputation as a financial centre (including the extent of abuse by the business vehicles/persons behind the vehicles);
2. whether the commission of the alleged breach was premeditated or due to inadvertence. In some cases where filing errors are made, ACRA may simply require that a correction be made and not pursue the matter further. For example, a registrant who has genuinely made a typographical error such as typing a wrong number in his application concerning a certain registered business address;
3. whether there was rectification, restitution and/or compensation made by the offender;
4. whether the complainant has any other better recourse such as by civil action in the courts. For example, when a company decides not to effect share transfers in favour of an investor due to contractual/commercial disputes surrounding the circumstances. 

Factor 3 - Complaint must be Bona Fide and contain Sufficient Evidence

19. As the utilisation of ACRA’s resources for investigation and enforcement action must be justified and thereafter prioritised, ACRA also takes into account the following:
    1. anonymous complaints will not be entertained;
    2. whether the complaint arose from personal or contractual disputes;
    3. whether the complainant is co-operative when ACRA seeks clarification or further evidence;
    4. the quality and relevance of evidence provided by the complainant
       1. The complaint must be supported by evidence that contains sufficient particulars to enable ACRA to commence investigation and establish that an offence had been made out. Information such as the name of offender, date offence committed, description of how the offence was committed together with supporting documents if applicable, must be provided to ACRA;
       2. The source of the evidence should be credible and capable of being verified.
    5. the complainant should not have any hidden agenda or vested interest in making the complaint.  An example of a hidden agenda would be to seek to use ACRA’s enforcement action to obtain an advantage in civil proceedings or in the management of the affected business entity;
    6. the complainant should also not have any adverse records with ACRA. An example would be when the complainant himself is under a Warrant of Arrest for failing to answer an ACRA summons.
20. Quite a number of alleged breaches of the legislation administered by ACRA invariably arose from a consequence of disputes between private parties. As a national regulator, ACRA’s resources would generally only be used to investigate and to enforce cases which involve the public interest. If there is no public interest involved, we will advise parties to resolve the matter privately and for the alleged breach to be rectified.
21. As an elaboration, contractual disputes or personal disputes will generally not be investigated by ACRA. These are some examples:
    1. a person acts as a director or company secretary for a professional fee. The fee is not paid and the individual then resigns as a director/company and thereafter lodges a complaint with ACRA alleging that the company has breached its statutory filing obligation to notify ACRA of the resignation.
    2. a person allows his business address to be used by a company as its registered business address for a fee. When the fee is not paid, the person then complains to ACRA that the company has no right to use his address.
    3. Party A agreed to inject funds in Party B’s company in exchange for becoming a shareholder and director in the company. After the funds have been paid, Party A was not made a shareholder or director and wanted ACRA to investigate Party B.