A director of a company incorporated under the Companies Act, Cap 50 ('the Act') has to comply with a number of statutory obligations under the Act. The following are two of the statutory obligations which ACRA takes enforcement action.
- Section 175 of the Act requires the company to hold an Annual General Meeting (AGM). Listed companies are to hold the AGM within 4 months after Financial Year End (FYE), while any other company is to hold their AGM within 6 months after FYE. Private companies may not need to hold an AGM if they meet the criteria specified in section 175A of the Act (elaborated below).
- Section 197 of the Act requires a listed company 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 175A sets out the criteria where private companies need not hold an AGM:
- if all members have approved a resolution to dispense with the holding of AGMs;
- if the company sends their financial statements to members within 5 months after the FYE; or
- if the company is a private dormant relevant company that is exempt from preparing financial statements.
The following safeguards are put in place:
- A member who wishes to request that an AGM be held must notify the company to hold an AGM not later than 14 days before the last day of the 6th month after FYE;
- Directors must hold an AGM within 6 months after FYE if notified by any one member of the company to do so. The company may seek the Registrar’s approval for an extension of time to hold AGM; and
- Private companies must hold a general meeting to lay financial statements if any member or auditor requests for it not later than 14 days after the financial statements are sent out. Directors must, within 14 days after the date of request, hold a general meeting to lay the financial statements.
The AR provides critical information that helps the company’s stakeholders to make informed decisions. 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 members, and the date to which the financial statements of the company are made up to.
Note: For companies with Financial Year Ending before 31 Aug 2018, the following statutory obligations and deadlines are still applicable
- Section 175(1) of the Act - The company must hold its first AGM within 18 months of incorporation, and subsequent AGMs yearly at intervals of not more than 15 months
- Section 197(1)(b) of the Act - The company is required to lodge an AR within 30 days after its AGM. A company having a share capital and keeping a branch register in any place outside Singapore, is required to lodge an AR within 60 days after its AGM.
- Section 201 of Act - The directors of the company are required to lay at the AGM, financial statements that are made up to a date:
- Not more than 6 months before the date of the meeting (if the company is not a listed company); or
- Not more than 4 months before the date of the meeting (if the company is a listed company).
When a company/director lodges an AR through ACRA's online filing system, BizFile+, the following information is required in the AR form:-
- The date the financial statements are made up to; and, if applicable
- The date the AGM is held for laying the financial statements in (a).
If the company has dispensed with the holding of AGM or qualifies for the AGM exemption and a member requests for an AGM to be held after the company has filed an AR, the company is required to lodge a “Notification of AGM” online through Bizfile+. The following information is required in the form:
- Date of member’s request for AGM to be held; and
- Date of AGM
Upon filing of the Annual Return (AR) in Bizfile+ a late lodgment penalty will be imposed for the late filing of the AR. ACRA may separately take enforcement action for the AGM and AR breaches which includes offering of composition sum or prosecution action.
Enforcement actions against companies and directors for annual returns filing breaches
Late Lodgement Fee for the Late Filing of Annual Return (AR)
Companies are required to file their ARs under s197 of the Companies Act (CA). Late lodgment penalty is imposed at the point when the annual return is being filed, and the penalty amount will be calculated based on the date when the AR is being filed:
|
Requirements
|
Type of Breach
|
Type of Penalty
|
Imposed Against |
Length of Default
|
Penalty Imposed at Point of Filing
|
|
Section 197
|
The AR is lodged late
|
Late lodgement fee for the late filing of AR
|
Company |
Within 3 months after the AR filing due date
|
$300
|
| Section 197 |
The AR is lodged late |
Late lodgement fee for the late filing of AR |
Company |
More than 3 months after the AR filing due date |
$600 |
Applicable for filing due date on or after 14 Jan 2022
Example
ABC Company Private Limited’s Financial Year End (FYE) is 31 Dec 2019. It has held its Annual General Meeting (AGM) on 29 Jun 2020 and lodged its AR on 20 Aug 2020. The company has breached section 197 of the CA. The penalty imposed is as follows:
|
Requirements
|
Due Date
|
AR Lodgement Date
|
Penalty
|
|
Section 197
|
31 Jul 2020 (FYE + 7 months)
|
20 Aug 2020
|
$300
|
Applicable for FYE on or after 31 Aug 2018
Composition Sum
ACRA may offer composition to companies and/or directors that breach statutory obligations in lieu of prosecution. The composition sums are as follows:
|
Requirements
|
Type of Breach
|
Type of Penalty
|
Penalty
|
|
Section 175
|
The AGM is held late
|
Composition
|
A minimum composition sum of $500
|
|
Section 197
|
The AR is lodged late
|
Composition
|
A minimum composition sum of $500
|
Example
XYZ Company Private Limited’s FYE is 31 Dec 2019. It has held its AGM on 1 Aug 2020 and lodged its AR on 30 Aug 2020. The company has breached section 175 of the CA and section 197 of the CA. ACRA may offer composition as follows:
|
Requirements
|
Due Date
|
AGM Date/Lodgement Date
|
Penalty
|
|
Section 175
|
30 Jun 2020 (FYE + 6 months)
|
1 Aug 2020
|
A minimum composition sum of $500
|
|
Section 197
|
31 Jul 2020 (FYE + 7 months)
|
30 Aug 2020
|
A minimum composition sum of $500
|
Applicable for FYE on or after 31 Aug 2018
Court Prosecution
ACRA may prosecute the companies and/or directors that breach statutory obligation in court if:-
- Companies and/or 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 director’s residential address by registered post. The summons will state the date, time and the Court which 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.
Prosecutorial action
ACRA will consider prosecuting the directors in court if:-
- they fail to compound (when offered a chance to compound); or
- the circumstances of the case are such that composition is not appropriate, for example, multiple breaches or recalcitrant breaches.
If a director seeks to compound his breach(es) after a summons has been issued, ACRA may not allow him to compound.
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.
In court, the director can decide whether to plead guilty or claim trial to the charges. If the director is convicted by the court, he may be fined up to a maximum of $5000 per charge.
Disqualification of directors for filing breaches
Companies and directors should take note that 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.
Striking off of companies that failed to file ARs
In 2016, the Companies (Amendment) Act 2014 were implemented to give ACRA the power to strike off a company if there is reasonable cause to believe that a company is not carrying on business or is not in operation. For example, the failure to file with ACRA the ARs for consecutive years.
ACRA will also disqualify a director with at least 3 companies struck off by ACRA within a period of 5 years. 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, commencing on 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
Debarment Order
In 2016, a debarment regime was introduced to empower the Registrar to debar any director or company secretary who is in default of a relevant requirement in the Companies Act, including failure to lodge any documents, for a continuous period of 3 months or more. A debarred person cannot take on any new appointment as a director or company secretary of other companies
Making Representation to ACRA
If a director would like to make representations to ACRA to review the summonses issued against him (for e.g. to reduce the number of charges), ACRA will require time to review these representations and such representations are rarely acceded to.
To make a representation to ACRA, please retrieve a Representation Form (PDF, 300KB) and provide the basis for the representation. Please also attach supporting documents (if any) to support the basis.
Once the Representation Form has been completed, please send it to ACRA [Attention: Enforcement Department (Investigation)] via:
- Email at: acra_ed@acra.gov.sg; or
- Post to: 55, Newton Road, #03-02, Revenue House, Singapore 307987
We may take up to 8 weeks to respond if the case is complex in nature.
To check on the status of the representation, please email to
acra_ed@acra.gov.sg.
Seeing a Compliance Manager
If a person wishes to see a compliance manager to discuss his case, he would need to make an appointment with his compliance manager so that an appropriate date and time is set aside for the compliance manager to meet up with him.
The person would be required to complete a Representation Form (PDF, 300KB) and send it to us (please refer to paragraphs 17 to 21 above). This is to enable the compliance manager to first assess if the case can be dealt with either through a telephone conversation or a written reply without the need for a physical meeting.
If the person does not provide sufficient information, basis or supporting documents in the Representation Form, the compliance manager would need to spend time to contact the person to obtain more information and this will lead to further delay in reviewing the case.
If an appointment is necessary, the compliance manager will contact the person by phone or via email to inform him of the appointment date and time.
IMPORTANT POINTS TO NOTE
Companies are statutorily required to hold an AGM (unless the company has dispensed with or is exempted from holding AGM) and lodge an AR within the stipulated timeframes.
The company and its directors should endeavour to hold the company’s AGM, if applicable, and lodge the AR within the stipulated timeframes to avoid facing enforcement action from ACRA.
In addition, company directors are to ensure that the particulars of the company (e.g. registered office address) and its officers are kept up to date.