Enforcement action for annual return filing breaches

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. 

Court prosecution

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 section 155 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 under section 344(1) of the Companies Act 1967 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.)  When this happens, the Registrar will give notice of her intention to strike the company’s name off the register (“Striking Off Notice”).

 The Striking Off Notice will be sent to the company, its directors, company secretaries and shareholders. 

 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.

FAQs

1. Why have I received an ACRA-initiated Striking Off (ASO) notice?
A: ACRA can strike off a company under Section 344(1) of the Companies Act 1967, 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 an annual return). When the striking off process commences, ACRA will send a letter to give notice of the intention to strike the company’s name off the register (“Striking Off Notice”). The Striking Off Notice will be sent to the company, its directors, company secretaries, and shareholders. 

 Section 344(1) of the Companies Act 1967 states that where the Registrar has reasonable cause to believe that a company is not carrying on business or is not in operation, the Registrar may send to the company, and its directors, secretaries, and members, a letter to that effect. If an answer showing cause to the contrary is not received within 30 days after the date of the letter, a notice will be published in the Gazette with a view to striking the name of the company off the register.

2. What do I need to do to prevent my company from being struck off?
A: (a) If you wish to object to the striking off, please submit an “Objection against striking off” via Bizfile within 30 days from the date of the Striking Off Notice. There is no fee payable for this transaction. The status of the company at this stage is still “Live” and the company remains registered with ACRA. More details on how to lodge an objection can be found here under 'Who can object and how to lodge an objection against striking off'. For a step-by-step guide, you can refer to this document.

Please also ensure that your annual returns are filed up-to-date. Under Companies Regulations, the failure to file annual returns is a circumstance to which the Registrar may have regard when determining whether a company is carrying on business.

(b) Common errors when filing an objection via Bizfile
When filing objections, do ensure that all mandatory fields are completed. If you encounter “This field is required” error when lodging an objection via Bizfile, please update your corporate email address via Manage > Update information > Update entity information > click ‘edit’ Basic information > check ‘Update entity email address’ and provide ‘Entity email address’. After the corporate email address is updated, you can proceed to lodge the objection again.