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 lodgment penalty of up to $600 for each late filing. If you are unsure when your company has to file its annual return, click here for more information.
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.
Disqualification of directors for filing breaches
A director who is convicted of three or more filing related offences under the Companies Act within a period of five years will be disqualified as a director, under S155 of the Companies Act. 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 of the conviction. 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. ACRA will also disqualify a director with at least three companies struck off by ACRA within a period of five years.
Striking off companies that failed to file ARs
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. For the avoidance of doubt, the striking off of the three companies refers to striking off initiated by the Registrar and does not include voluntary applications for striking off.