Let’s say you have decided to set up a Private Limited Company, and have gone ahead to do so. You may congratulate yourself for taking the first step in starting a business, but don’t spend too much time doing so because there are lots to do. Besides hiring staff, finding office/outlet space, getting the business operations up and running, getting sales and launching marketing campaigns, and setting up a proper accounting system, you need to ensure that your company complies with the Companies Act. Say what? Complying with Companies Act? What’s that?
In this article, we have gathered nine things regarding compliance with the Singapore statutory requirements that you need to know to avoid getting your company on the wrong side of the law. Do note that these regulations are only applicable to a Singapore Private Limited Company, and not the other business structures such as Sole Proprietorship and Partnership. To find out more about the various business structures, please read the articles under the section All You Need To Know About Starting A Business.
1. Determining The Financial Year End (FYE)
Your newly set-up company needs to establish its FYE, which is the completion of your company’s accounting period. This is related to the fiscal year (a 12-month period that companies and governments use for accounting and financial reporting purposes) that you have determined when incorporating your company. Your FYE is essentially the end of your fiscal year. Now, a fiscal year does not have to correspond with the calendar year. In other words, it doesn’t need to be on the 31 December; it can be any day of the year. Many companies have FYE that ends on 31 March, 30 June; 30 September and so on. However, if your company is a subsidiary, its FYE must be the same as that of the parent company.
2. Appointing A Local Resident Director
Once you have incorporated your Private Limited Company, you must have at least one Director who is an ordinarily resident in Singapore (there is no maximum unless otherwise stated in your company constitution). An ordinarily resident is a Singapore citizen, Singapore Permanent Resident or Entrepreneur Pass (EntrePass) holder residing in Singapore. Of course, as the owner, you can be the Director as long as you are an ordinarily resident here. If you aren’t, you can appoint a Nominee Director to act as the local Director. For more information, please read our article Who is the Company Director? (And Do I Need a Nominee Director?).
The Section 4(11) of the Companies Act states that if there is only one Director in the company, the requirement under the Companies Act which is imposed on two Directors will be satisfied by the act of the single Director of the company. This applies when the company is filing for Annual Returns, financial reports and other regulatory activities with ACRA.
However, if the company has two Directors, then any reports or filings have to be signed by both Directors, though in limited circumstances ACRA may, upon application by the sole Director, accept a report signed by one Director (where for example the other Director cannot be found within Singapore). The company can also make an online application to file its Annual Returns with just one Director’s Signature via BizFile+.
However, ACRA generally will approve applications for “One Director’s Signature” only once, although in exceptional cases, it can consider granting a further approval. In such a case, sufficient documentary evidence must be provided to prove that the company is still unable to appoint another Director.
Please visit www.acra.gov.sg for more information. Look under “How-To Guides” followed by “Filing Annual Returns”, “Filing ARs Without holding an AGM” or “Filing AR with only one Director’s Signature with or without AGM”.
3. Appointing A Company Secretary
Nope, the Company Secretary isn’t someone who brings you coffee and answers your phone calls. Rather, the Company Secretary is the person in charge of all administrative, reporting and compliance-related functions in the company. The duties include establishing and maintaining proper records of the company as well as assisting the Company Director(s) in ensuring that the company’s records comply with all regulatory requirements and all necessary filings are done on time. Your company must appoint a local Company Secretary within six months of incorporation.
For more information, please read our article Who Is A Company Secretary? (And Do I Need One?). Don’t worry if you don’t have the budget to employ a full-time Company Secretary. Chances are you don’t need a full-time employee, at least not at the start-up stage. Many newly-incorporated companies engage corporate services firms to provide such a service.
4. Appointing Auditors
If your company does not qualify as Small Entities (SE), it needs to appoint an auditor within three months of incorporation. Wait a minute, what’s an SE? Your company is an SE if it meets any of the two criteria for at least two previous consecutive years:
- Total annual revenue does not exceed SGD10 million;
- Total gross assets do not exceed SGD10 million; and
- Does not employ more than 50 employees.
However, as soon as your company outgrows the criteria, you will need to appoint an auditor.
5. Registering With Singapore Central Provident Fund (CPF) & Skill Development Fund (SDF)
If you are a Singaporean or have been working in Singapore for a while, you can’t not know about CPF. But for the benefit of the uninitiated, let’s officially define CPF here. The CPF is a compulsory pension fund scheme set up by the government in which the employer and employee contribute a percentage of monthly salary to the fund. CPF contributions are mandatory for all local employees (including part-time employees) who are a Singapore citizen or PR earning more than SGD50 a month. Employment Pass holders, however, are not required to contribute to CPF.
As soon as you intend to hire your first employee, you should register as a new employer with CPF. To do so, you can e-submit your CPF contribution details through CPF’s e-Submit@web. Make sure you have your CorpPass and your company’s Unique Entity Number (UEN) ready when performing a CPF e-submission. You will be notified via email once your application is approved. A hardcopy welcome letter will also be posted to you. Keep that, because it contains your CPF Submission Number (CSN) and a Direct Debit Authorisation form, which you need whenever you are transacting with CPF.
As an employer, you are responsible for making CPF contributions to all your employees. You have a grace period of 14 days to pay the CPF contributions after the end of the month for which the CPF contributions are due. If the last day of the grace period falls on a Saturday, Sunday or Public Holiday, the CPF contributions must be paid by the next working day.
On top of the CPF contribution, your company must also pay the Skills Development Levy for all your employees (including full-time, part-time, casual, temporary and foreign workers rendering services wholly or partly in Singapore) up to the first SGD4,500 of gross monthly remuneration at the rate of 0.25 percent or SGD2, whichever is higher. The SDF is used to provide grants to companies that send their workers for training. The CPF Board is responsible for the collection of the Skill Development Levy on behalf of the Singapore Workforce Development Agency.
Final Note on CPF: Calculating CPF contributions can be quite complex, with employees of different ages and salaries contributing at different rates. It is best to follow the charts provided by CPF rather than depend on your own calculations. For a more detailed understanding, I suggest that you pay a visit to the CPF website.
6. Singapore Goods And Services Tax (GST) Registration
If your business has an annual turnover that exceeds or is likely to exceed SGD1 million, it is required to register for GST. GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. In some countries, GST is known as the Value Added Tax (VAT).
You can register for GST online at http://mytax.iras.gov.sg. A business may be subject to up to $10,000 fine and a 10% penalty of the tax due if your company is late in its registration or fails to register.
For details on GST, please read our article Everything You Need To Know About Goods And Services Tax (GST).
7. Holding Of Annual General Meeting (AGM) And Filing Of Annual Returns
So far, the above points should get you all set up for the commencement of business operations. But there is more.
Your company must hold an AGM every calendar year and not more than 15 months (18 months for a new company from the date of incorporation) after having the last preceding AGM. At the AGM, you need to table the company’s financial statements that are not more than six-month old for shareholders’ approval. Within one month of the AGM, your company must file its Annual Returns. It is considered an offence if your company does not comply with any of the above requirements.
If there isn’t a need for an AGM, you can have a resolution passed by all members with rights. However, the company’s financial statements must be circulated to all members for approval.
8. Archiving Of Records
According to the Singapore Companies Act, your company is required to ensure that proper books of accounts and other records are kept and archived for at least five years.
9. Notification Of Changes
Your company needs to update the Registrar of Companies (ACRA) whenever there is a change in the company’s particulars, such as change of shareholders, share capital and officers. Penalties may be imposed on your company if it fails to do so.