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Recent Amendments to Singapore Companies Act

The recent amendments to Singapore Companies Act were brought about to tighten the registration process of the corporate service providers in Singapore. In addition, the proposed amendments to the Singapore Companies Act make it even more compelling.

The Singapore Companies Act that governs all companies is under review. The companies have to follow every dictate of this law in order to be compliant with it. Some of them are strict and increases the cost of managing a company. For a long time there was a feeling that some pro-business changes were necessary in this act.

Finally in October 2007, the minister of finance formed a Steering Committee to review the Companies Act. The goal of the committee was to come up with suggestions to build an efficient corporate regulatory framework to encourage growth of Singapore economy. Five areas were selected for the reform. They are as follows.

  1. Directors’ Duties
  2. Shareholders’ Rights and Meetings
  3. Capital Maintenance (including Amalgamations and Takeovers)
  4. Accounts and Audit
  5. The Administration of Companies

Timeline of Reforms in Singapore Companies Act

  • In 2011, after four years of hard work the Steering Committee completed its review and submitted its report.
  • In 2012, The Ministry of Finance completed its review of the Companies Act.
  • On May 2013, the Ministry of Finance and ACRA invited public comments on the draft of Companies (Amendment) Bill 2013.
  • On Oct 2013, the Ministry of Finance and ACRA invited public feedback on the second installment of the draft Companies (Amendment) Bill. This second part deals mainly with the legislative amendments pertaining to foreign companies.
  • On 17 February 2014, Ministry of Finance introduced the Accounting and Corporate Regulatory Authority (Amendment) Bill 2014 in Parliament.

Proposed Regulatory Framework for Corporate Service Providers

  1. To prevent suspected money laundering activities, the bill is going to improve rules and regulations for the corporate service providers.
  2. Some reforms are proposed to regulate activities of filing agents and the qualified individuals.
  3. The bill proposes strict laws related to the renewal of registration as a qualified individual or a filing agent.
  4. The bill is going to make it compulsory of these professionals to get some training.
  5. Individuals convicted for fraud or dishonesty and the bankrupts will not be able to continue in this profession.
  6. A breach of commitment or the unlawful activities will bring penalties to the perpetrator.

Proposed Amendments – Foreign Companies

  1. A foreign entity will only be required to employ at least one authorized representative.
  2. Foreign and Singapore companies will file same kind of financial statements.
  3. Striking off of a foreign company;
    1. If the foreign company has failed to fill in a vacant representative job within a period of twelve months.
    2. If the foreign company has failed for 12 months to respond to a request about its continued registration in Singapore.
    3. If it lets the sole authorized representative position vacant for more than six months, after the death of the employee acting in that capacity.

Other Aspects of the Companies Act

  1. The bill proposes to redefine the assets covered under the scope of the deemed interest provision. It intends to exclude a company’s fellow subsidiaries and its holding company.
  2. The Registrar will have more powers and can correct errors in the registers.
  3. The bill will make it mandatory for a company to retain documents used to prepare and submit financial statements to AGM, members and to ACRA for a minimum of five years.
  4. Registrar will have more powers for the purposes of striking off a company if it is not carrying on business. Following are some other cases which give grounds for striking off of a company.
    1. If a company has not replied to the Registrar’s correspondence beyond a specified period.
    2. The company has not filed its annual returns or financial statements for a prescribed period.
    3. If a third-party source tells the Registrar that the company is not carrying on business and is slotted for striking off action.
    4. The company has no secretary or resident directors or If the Registrar cannot get in touch of the directors of the company.
  5.  If three or more companies under the directorship of a person get struck off within a period of five years, he may get disqualified from acting in such a capacity. Directors will have to wind up defunct companies.
  6. Directors and secretaries will get debarred, if they fail to submit documents even after three months after deadline. The new law will prohibit these individuals in taking new appointments in such capacities. Only after the task is fulfilled the debarment will be lifted.

It is expected that most or all of the above mentioned changes will take the shape of laws in near future.

Please feel free to contact us on +65 6536 0036 or drop in an email at info@accountingservice.com.sg