Every business and organisation must comply with a set of rules and regulations put in place by the government and authorities. The Accounting and Regulatory Authority of Singapore (ACRA) is the government authority that supervises the registration and regulation of all organisations in Singapore. ACRA is a highly professional and competent regulatory authority that makes it easy for businesses to smoothly function in Singapore. It is essential for companies to strictly follow ACRA regulations.
To minimise the chances of your company running into trouble with ACRA, this article explains the five most common mistakes the companies make that break ACRA compliance guidelines.
1. Not Maintaining Statutory Records
Statutory records are proof of a company’s existence as a valid legal entity. They also verify the ownership details of the company and other significant information related to the company secretary, directors, and shareholders. All organisations operating in Singapore must maintain comprehensive statutory records.
These records must be well-maintained. They should be updated from time to time—whenever there is a major shift in the company. Such updates must be recorded and reported to ACRA to prevent any future issues. For example, removing a director, adding a stakeholder, and appointing a new auditor and accounting firm in Singapore are all situations in which the records must be modified and reported.
Failure to create, maintain and update statutory records can result in a penalty of up to S$5,000 per violation, along with negative publicity and other consequences. It is the responsibility of the company secretary and the legal team to ensure the company records are maintained.
2. Not Notifying ACRA about Organization Changes
Many Singaporean companies make the grave mistake of not notifying ACRA whenever there is a change in the company policy, structure, name, official address, business working procedures, shareholders, directors, or executives. Such changes must be filed with ACRA within 14 days.
Changes to a company cannot be made official until ACRA has been notified about them. Failure to notify ACRA about any significant changes to the company within 14 days can result in penalties from ACRA.
3. Not Holding Annual General Meetings
Annual general meetings (AGMs) are part of the annual filing requirements. Every Singaporean company must hold AGMs to fulfil the requirements set by ACRA. At least one AGM must be held each year. The purpose of the meeting is to present the previous year’s financial statements and get shareholder approval of shareholders for any important company decisions.
To hold an AGM, the company must send a meeting agenda to the shareholders. The agenda consists of details about the venue and the resolutions to be discussed at the meeting. Moreover, the organisation must provide complete documents, such as financial statements, the director’s report, and other important information for complete transparency.
Private companies have the option to not conduct AGMs, but they have to pass a resolution for it with a majority shareholder vote.
Failure to hold AGMs can result in a fine of up to S$5,000.
4. Not Submitting Annual Returns to ACRA
Every company in Singapore must submit an annual return document to ACRA. The company secretary must ensure that the company prepares all the relevant documents. The director(s) verifies the information included in these documents and submits the annual return within 30 days of an AGM.
If the annual returns are not filed with ACRA, the organisation, it’s directors as well as other officeres involved are held accountable and fined up to S$5,000 if found guilty.
5. Submitting False Records
Every document submitted to the ACRA should be accurate and transparent. Company secretaries, directors, and accounting firms in Singapore must maintain complete financial and legal transparency with ACRA and other regulatory authorities. Any manager or company that submits a false or a misleading document can face jail time of up to 2 years and a severe fine of up to S$50,000.
Apart from the submission of inaccurate documents, incomplete or partially-filled documents can also cause problems for the companies. Any document that is not consistent with the complete financial analysis of the company or the national organization database can get the company into trouble.
In a Nutshell
In Singapore, it is a must to comply with ACRA rules and regulations. This will prevent any possible penalties and enable the company to function smoothly without running into legal troubles. Accounting firms in Singapore such as TY Teoh can help companies in fulfilling the requirements of ACRA and prevent any potential issues. For more information, feel free to get in touch with us.