Legislative changes relating to Annual General Meetings (AGMs) and Annual Returns (ARs) timelines will take effect on 31 Aug 2018. (Read ACRA announcement here.)
In line with the Singapore Government’s objective to create a business-friendly environment for companies, there are legislative changes made to the Companies (Amendment) Act 2017 which will be effective from 31 August 2018.
Three key changes are as follows:
(a) Alignment of timelines for holding Annual General Meetings (AGMs) and filing of Annual Returns (ARs) with the Financial Year-End (FYE) of the companies
- The due date of holding AGMs and ARs are tied to the companies’ FYE. Private companies should hold AGMs within 6 months after FYE and file ARs within 7 months after FYE.
- Unlike in the past, a newly incorporated company has to notify ACRA of their FYE upon incorporation and the duration of the company’s financial year should not be more than 18 months in the year of incorporation.
- In the absence of such notification before 31 August 2018, the anniversary of the date of the incorporation will be deemed by law to be their FYE.
(b) Exemption of private companies from holding AGMs subject to specified safeguards
- Private companies do not require to hold AGMs if they send their financial statements to their shareholders within 5 months of the FYE.
- However, there are safeguards to protect the minority shareholders’ interest. If there is any shareholder request for an AGM not later than 14 days before the end of the 6th month after FYE, the company would need to hold the AGM.
(c) Simplified process for filing ARs by solvent Exempt Private Companies (EPCs) and dormant private companies
- Solvent EPCs and dormant private companies are eligible to file Simplified ARs if the companies are not preparing audited financial statements and are not required to file financial statements with ACRA.
Notwithstanding the Government’s proactive measures to reduce the compliance cost for businesses, the directors will need to be mindful to fulfil their responsibilities and obligations in accordance with the regulations, in particular, the Companies Act.
For example, there is one of the recent breach cases by a company director in July 2018. He was fined for a record S$57,000 for failing to hold AGMs and failing to file ARs for 19 companies. In addition, he was also disqualified as a director.
To protect investors and relevant stakeholders’ interest, ACRA will publish a director’s disqualified status in the business profile and director profile report of a company which is accessible by the public.
In light of the importance of the statutory obligations of AGMs and ARs, if you are wondering whether you or your management has fulfilled the required obligations, please feel free to contact us and we will help you to do a complimentary check and share with you our professional advice.