The Accounting and Corporate Regulatory Authority (ACRA) of Singapore has recently introduced regulations designed to prevent money laundering and the financing of terrorism. As a company owner or director of a Singapore incorporated company, it’s important that you are aware of the compliance requirements and guidelines as set forth and updated from time to time by the Singapore company registrar ACRA.
ACRA’s Directors Compliance Programme
This year, ACRA has introduced a Directors Compliance Programme to educate corporate directors about their compliance requirements. Instead of prosecuting directors for a first offence, the scheme take directors who have not met their legal obligations and offers them training. According to ACRA, of the 1,500 directors who have participated in the programme so far, most were owners of small or medium sized businesses who were not aware of their obligations. Many had rushed to start a business without being fully informed about the duties which they were required to carry out. By giving them training, ACRA can help directors improve their transparency with their stakeholders and to stay in line with legal requirements.
In 2016, the scheme aims to train up to 9,000 directors via half-day training sessions that operate twice a month. With around 10,000 summons issued annually against directors who fail to meet their legal obligations, there is clearly a need for this training scheme.
Essential statutory requirements for compliance in Singapore
In order to comply with legislation, companies wishing to do business in Singapore must appoint a local director who resides in the region, as well as a Company Secretary and an auditor. Companies must also have a registered address for their office which is accessible to citizens during working hours. Depending on the nature of the business, there are also licensing laws and requirements for accounting and disclosure. In terms of taxes, companies are required to file annual tax returns and register for goods and services tax (GST).
These requirements might seem like a lot, but they are considerably less bureaucratic than comparable laws in Western economies.
The position and obligations of a company director
A company director in Singapore must be registered with ACRA and abide by the Singapore Companies Act. Directors are responsible for ensuring that their company meets the statutory requirements described above, and must make decisions which are in the best interests of the company. Importantly, the legal definition of a director includes anyone who is performing the functions temporarily or anyone who is technically a director but is currently inactive. In both cases, the person is still legally responsible for keeping their company in compliance.
If you are a director reading this, you should be particularly mindful of the requirements for the holding of Annual General Meetings (AGMs) and the handling of Annual Returns. AGMs inform shareholders about the outlook for the coming months and give members the opportunity to raise any concerns or issues which they have. The Annual Return is a statement of the composition and activities of the business, including information on assets and financial statements, which must be filed with ACRA one month after each AGM. The Directors Compliance Programme focuses on educating business directors about these particular requirements, as they are the obligations which are most commonly not met.
The duties of a director in a startup in Singapore
As well as meeting compliance requirements, the director of a startup in Singapore should ensure that their company is managed in a socially responsible way, by adopting ethical practices and engaging with society on a broader level. They must also ensure that there is no clash between their personal interests and those of the company, and reveal any such conflicts of interests as and when they arise. ACRA have produced a Guidebook for Directors for SMEs which provides further information about the practical and ethical requirements for effective directorship.
The importance of ongoing training
The ongoing training of business workers is an important part of professional development that benefits both the company and the employees. The benefits of ongoing training for employers are the confidence that their staff are working with up to date knowledge and best practises, and an increased retention rate as staff are given opportunities to grow within the company. Schemes such as the DCP from ACRA are just one example of the training available in Singapore for professionals. Further governmental training programs in Singapore include the P-Max program for the development and training of newly-hired professionals, managers, and executives, and the SkillsFuture Credit program which gives credits to all Singaporean citizens to spend at educational institutions.
More information about launching a business in Singapore
You can find more information about the schemes in place for startups in the Launch in Singapore section of our website, which includes tips on incorporation and how to navigate business laws and regulations in Singapore.