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Company Secretary Legal Responsibilities and Liabilities

All companies in Singapore are required to appoint a company secretary. This company secretary must be a Singapore citizen or permanent resident, or a holder of one of the qualifying passes. According to Section 171 (1AA) of the Companies Act, a company, whether a private limited company or public company, must appoint at least one company secretary within six months of the company’s incorporation. Corporate secretarial services may also be employed. Company secretaries have many legal responsibilities which they must carry out. Should they fail to do so, both they and their respective companies will be held liable for the offense. The following paragraphs will detail both the legal responsibilities to be performed and potential liabilities that could be suffered by a Singapore company secretary.

 

Legal Responsibilities of a Singapore Company Secretary

In Singapore, there is no legislation which explicitly defines the duties and responsibilities of a company secretary Despite this fact, the company secretary is responsible for all of the company’s reporting and administrative functions. Some of these functions are required by law.

One of a company secretary’s legal responsibilities is to keep the company compliant with all relevant regulations. This can be done by communicating with the company directors to ensure that all regulatory obligations have been fulfilled. The Singapore Companies Act mandates that all companies be compliant with the regulations set by the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS).

To be compliant with ACRA, a company must file accounts, directors’ reports, and audited reports in a timely manner. However, if the company has 20 or fewer shareholders, no corporate shareholders, and S$5 million or less in sales turnover, the company does not have to file an audited report. ACRA also requires companies to file annual returns and financial statements punctually. Each of these legally required filings are to be overseen by the company secretary.

Another aspect of compliance with ACRA involves the company’s annual general meetings (AGMs). ACRA, as well as the Singapore Companies Act, requires all Singapore companies to hold an AGM once every calendar year or within the 15-month period immediately following the company’s most recent AGM. The date which is earlier will be used. In the case of companies which have recently been incorporated, they must hold their first AGM within 18 months of the company’s incorporation. AGMs involve discussions of reappointment of auditors; approval of directors’ reports, auditors’ reports, and directors’ fees, remuneration, and emolument; declaration of dividends; and any other business transactions worth mentioning. If necessary, directors will also be re-elected. AGMs are to be arranged by the company secretary. Such meetings are to be arranged in a manner that complies with both the Companies Act and the company’s constitution.

All Singapore companies must also be compliant with IRAS. This is to be done by making the required filings. Such filings must be made by active and dormant companies alike. The filing requirements mandated by IRAS include estimated chargeable income, tax returns, a financial report, accounting records, and an audited report. Estimated chargeable income is to be filed within the three-month period immediately after the end of the company’s financial year. Even companies with zero income must make a filing. Their filings will state income as “nil”. Accounting records must include a balance sheet, an equity statement, a profit and loss account, and a cash flow statement. These records have to be kept for five years. Tax returns are due on November 30 of each calendar year. Financial reports are to include various financial statements related to the company, its operations, and its shareholders’ and directors’ interests. Audited reports are to be submitted by companies with 20 or more shareholders, a corporate shareholder, or S$5 million or more in sales turnover. Once again, the company secretary is to oversee and act accordingly about each of these requirements.

Company secretaries must also ensure that the company has also fulfilled all the general statutory compliance requirements. Fulfilling these requirements will both protect the company’s reputation and prevent any penalties or legal repercussions from being imposed on the company. Some of these requirements include notifying the relevant authorities of any changes related to the company’s shareholders, officers, and share capital on time; registering for the Goods and Services Tax (GST) if the company has a minimum of S$1 million in annual taxable revenue; and registering for a Central Registration number. Company secretaries also must give support to the board of directors regarding legal and administrative issues. One other responsibility is to remain informed and updated about all relevant changes and developments having to do with regulatory and statutory obligations. All of these legal responsibilities must be underlined by constant effective communication with the company’s shareholders.

 

Liabilities of a Singapore Company Secretary

When a company fails to comply with legal obligations, the company’s directors are not always the only ones to be held liable. Company secretaries may also be punished for the company’s non-compliance. This is because company directors often seek the assistance of the company secretary to resolve issues related to statutory compliance. This fact is acknowledged in the Singapore Companies Act. ACRA also agrees with such a stance by including company secretaries under the category of “officer”. By doing so, ACRA implies that they are bound by all applicable obligations and duties. Therefore, a company secretary cannot allow any instances of non-compliance to go unaddressed. Instead, such issues ought to be brought to the attention of the company’s directors.

For company secretaries, types of liabilities include financial penalties, court summons, imprisonment, or any combination of these.

There are several offenses that a company which is not compliant with the Companies Act might have committed. Among them are the following: not having any registered office address, having a bankrupt serve as the company director, providing misleading or false statements in official documents, and not holding the company’s AGM before the stipulated period expires. There are also late lodgement fees for late submission of annual returns and other important documents. Fines for actions deemed to violate the Companies Act range from S$300 to S$50,000. The late lodgement fee for late lodgement of annual returns is S$300. Late lodgement fees for late lodgement of other necessary documents range from S$50 to S$350. The value of these fees is dependent on the number of days by which the lodgement of the document is late. Some of these offenses may also bring about a jail term against the offender. The company secretary may be liable to any of these penalties, depending on the situation.

Companies, as well as their company secretaries, who are not compliant with IRAS’s regulations involving taxes must also face the consequences. Some of the offenses that could be committed by companies in this regard include non-payment or late payment of taxes, late filing of or failure to file income tax returns, and the making of errors in tax returns. At some point, a company will receive a Notice of Assessment. The company must pay taxes within one month of receiving the Notice of Assessment. If this is not done, the company will receive a 5% penalty. The company will also receive an additional 1% penalty for every month that the tax remains outstanding. This penalty will not exceed 12% of the outstanding tax. Should a company be late in filing or fail to file income tax returns, the offense may be compounded with a composition amount. This composition amount will range from S$200 to S$1,000. Its value depends on the company’s payment and filing records over the preceding two-year span. If this is not done, IRAS could also issue a notice to the company’s director. This notice must be responded to, and the response must contain all requested information. If even this is not done, the company director could potentially be summoned to court if outstanding documents are not filed and the composition amount remains unpaid. While most of these penalties apply to company directors, company secretaries could potentially be liable to them as well. This fact is in accordance with a statement issued by ACRA because, as was mentioned earlier, company directors usually depend on company secretaries for guidance in issues related to statutory or legal compliance. Hence, the company secretary would thus be complicit in the non-compliance.

It can clearly be seen that company secretaries must carry out a wide range of legal responsibilities. Such tasks may not be easy, but they are truly essential to the success of any company. Non-compliance, on the other hand, will lead to punishments being doled out. Company secretaries ought to understand that because of the nature of their role, they are liable to some of these punishments. However, a company secretary who faithfully and effectively executes all necessary tasks will not only avoid these penalties, but also help build up the company’s standing in the public eye.

 

Paul Hype Page & Co. will give you more information and assistance on policy updates, compliance regulations and changes to tax conditions. Corporate tax in Singapore.

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Here, you will find detailed information about Singapore’s Corporate Tax System. Paul Hype Page & Co helps companies with strategic tax planning, tax advisory, and accountancy services.

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IRAS (Singapore’s Tax Authority) governs Singapore’s tax system, helps develop a stronger economy, better environment and a more vibrant economy. All companies, regardless of industry, have a legal duty to pay taxes.

Singapore attracts investments from around the world by reducing its corporate income tax rate and introducing different tax incentives. Singapore has one of the lowest corporate tax rates in the world.

As your company’s Tax agent , Paul Hype Page & Co Chartered Accountant  will be fully responsible for the practice of ensuring that these conditions are met. It is important that we be highly qualified and well versed in local regulations and corporate laws, as we are responsible for the upkeep of important company files, tax reports and tax records.

Posted on March 25, 2019 at 6:07 am
Categories: Company Secretary Service

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