Starting a new business venture by yourself or with a trusted partner can be an exciting journey, but it also comes with its fair share of confusing rules and regulations. If you’re planning to get set up in Singapore, you’ll need to read up on the Companies Act.
Whether you’re a Singapore local looking to start your first side hustle or a foreign investor planning to start a business in Singapore, chances are you’ve heard of the Singapore Companies Act (CA).
The Companies Act is the main law that governs how companies are formed, managed, and dissolved in the country. It aims to promote good corporate governance, protect the interests of shareholders and creditors, facilitate business transactions, and enhance Singapore's reputation as a leading financial and business hub.
In this blog post, we’ll take a closer look at key aspects of the Companies Act and go over important provisions every company owner, director, officer, shareholder, and creditor should be aware of before getting started in Singapore.
What does the Companies Act of Singapore cover?
The Companies Act covers a wide range of topics related to local and foreign companies in Singapore including:
- Incorporation of a company
- Share capital and shareholders
- Company directors and officers
- Annual requirements and filing obligations
- Winding up and dissolution
What is a Company?
A company is a legal entity that is separate from its owners (called shareholders) and managers (called directors). A company can own property, enter into contracts, sue and be sued in its own name. A company has perpetual succession, which means it can continue to exist even if its shareholders or directors change or die.
Types of Companies in Singapore
There are several types of companies that can be formed in Singapore, each with their respective characteristics and legal requirements. Bear in mind, the Singapore Companies Act still applies to all companies registered in Singapore, regardless of their size, nature, or industry.
The most common types of companies in Singapore are:
- Public limited company: This is a type of company that can offer its shares to the public through a stock exchange or other means. A public limited company must have at least 50 shareholders and comply with more stringent disclosure and reporting requirements than a private limited company. A public limited company can raise more capital from a wider pool of investors but also faces more competition and scrutiny.
- Public company limited by guarantee: This is a type of company that is usually formed for non-profit or charitable purposes. It does not have any share capital or shareholders but instead has members who guarantee to contribute a certain amount of money if the company is wound up. A public company limited by guarantee can apply for tax exemption if it meets certain criteria.
There are also other types of companies in Singapore that are less common but may suit your specific needs. These include:
- Unlimited company: This is a type of company that does not limit its liability to its share capital. This means that its shareholders are personally liable for all the debts and obligations of the company. An unlimited company may be preferred by some businesses that want more flexibility and control over their finances.
- Foreign company: This is a type of company that is incorporated outside Singapore but has a place of business or carries on business in Singapore. A foreign company must register with the Registrar of Companies in Singapore and comply with certain rules and regulations under the Singapore Companies Act.
Incorporating a Singapore Company
Once you have decided on the type of company you want to form for your business, you need to register and incorporate it with the authorities in Singapore. The process is relatively simple and fast if you follow these steps:
- Choose a unique and suitable name for your company. You can check the availability of your desired name on the Accounting and Corporate Regulatory Authority (ACRA) website. You also need to ensure that your name does not infringe any trademarks or offend any laws or regulations.
- Prepare a memorandum and articles of association for your company. These are the documents that set out the constitution, objectives, rules, and regulations of your company. You can adopt the standard model constitution provided by ACRA or draft your own customized one.
- Appoint at least one director who is ordinarily resident in Singapore. A director is a person who manages the affairs of the company and makes decisions on its behalf. A director must be at least 18 years old and not disqualified by law from holding office. A director can also be a shareholder of the company.
- Appoint at least one shareholder who can be an individual or a corporate entity. A shareholder is a person who owns shares in the company and has certain rights and responsibilities as an owner. A shareholder can also be a director of the company.
- Appoint a company secretary who is a resident in Singapore. A company secretary is a person who handles the administrative and compliance matters of the company, such as maintaining statutory registers, filing annual returns, and issuing share certificates.
- Register your company with ACRA online via BizFile+. You need to pay a registration fee of S$300 and submit the required information and documents, such as your company name, memorandum and articles of association, director’s consent, shareholder’s details, etc.
- Receive your certificate of incorporation from ACRA via email. This is the official document that confirms your company’s existence and registration number.
Congratulations! You have successfully registered and incorporated your company in Singapore. You can now start operating your business legally and enjoy the benefits of being a company owner.
What are Your Obligations as a Company?
Once you have incorporated your company, you need to comply with various obligations under the Singapore Companies Act and other relevant laws and regulations. Some of these obligations include:
- Holding an annual general meeting (AGM) within 18 months of incorporation and every subsequent year thereafter. An AGM is a meeting where shareholders can vote on important matters relating to the company, such as approving financial statements, appointing auditors, declaring dividends, etc.
- Filing an annual return with ACRA within 30 days after holding an AGM or within 7 months after the end of your financial year if you are exempted from holding an AGM. An annual return is a document that contains information about your company’s structure, activities, financial position, etc.
- Preparing financial statements that comply with the Singapore Financial Reporting Standards (SFRS) or other applicable accounting standards. Financial statements are reports that show your company’s financial performance and position for a given period.
- Appointing an auditor within 3 months of incorporation unless you are exempted from audit requirements. An auditor is a person who examines and verifies your company’s financial statements and expresses an opinion on their accuracy and compliance.
- Keeping proper accounting records that explain your company’s transactions and financial position. Accounting records include invoices, receipts, vouchers, bank statements, contracts, etc.
- Maintaining statutory registers that contain information about your company’s shareholders, directors, officers, charges, etc. Statutory registers include the register of members, register of directors, register of secretaries, register of charges, etc.
- Displaying your company name and registration number on your business premises, stationery, website, and other communication materials.
- Notifying ACRA of any changes in your company’s particulars, such as its name, address, directors, shareholders, constitution, etc., within the prescribed time limits.
Recent Amendments to Companies Act Singapore
The Companies Act is periodically reviewed and amended to keep up with the changing business environment and to enhance Singapore’s competitiveness as a global business hub. Some of the key amendments that took effect in 2017 and 2018 are:
- Improvement of transparency of Companies and LLPs: companies are required to maintain a Register of Controllers and Register of Nominee Directors
- Introduction of an inward re-domiciliation regime: foreign corporate entities may transfer their registration to Singapore. This means foreign entities can relocate their headquarters to Singapore without having to set up a new subsidiary or branch in the country
- Exemption from Holding Annual General Meetings (AGMs): private companies are no longer required to hold annual general meetings (AGMs), subject to specified safeguards.
How Can We Help You?
We understand that complying with the Singapore Companies Act can be challenging and time-consuming for new business owners. The good news is you don't have to do everything on your own! Our team of experienced and qualified professionals can assist you with all aspects of company incorporation and compliance in Singapore including:
- Choosing a suitable name and structure for your company
- Preparing and filing your memorandum and articles of association
- Appointing your directors, shareholders, and company secretary
- Registering your company with ACRA
- Preparing and filing your annual return and financial statements
- Maintaining statutory registers and notifying ACRA of changes
- And more!
With ATHR, you can have your Singapore company up and running quickly and easily. Our flexible service packages take the hassle out of setting up your online business, from managing your business registration to ensuring you meet all relevant compliance requirements. With us, you can rest assured your online business is in good hands.
