After successfully incorporating a company in Singapore, a business owner must pay attention to the importance of compliance with annual regulatory requirements.
These requirements are not designed to cause inconvenience but rather, to ensure that there is continuous business transparency and accountability that can benefit the company, its investors, and all its stakeholders alike.
It is a good thing that these requirements have a designated timetable which makes it easy for the company to adhere to. Sensible and advanced planning can help in meeting the deadlines with ease and accuracy.
In this article, business owners will get important information that can ensure successful compliance with annual regulatory requirements.
Why Comply with the Requirements
Diligent filing of annual regulatory requirements is essential for two reasons:
- It provides potential investors and future collaborative partners a clear and concise view of the company’s financial standing that can help in their final decision to make the necessary investment or financial support.
- It eliminates the possibility of having directors and officers of the company to accrue legal consequences including payment of a penalty according to the rule of law.
What Makes for a Successful Compliance
All private limited companies in Singapore, both active and dormant, are required to file annual regulatory requirements issued by the Accounting and Corporate Regulatory Authority (“ACRA”).
Read on to find out the 4 key points to consider in order for a successful annual filing of requirements.
Preparation of Financial Statements
The annual financial statements of a company should reflect all financial activities during that particular accounting year as mandated by the Financial Reporting Standards of Singapore.
It refers to the following:
- Statement of Financial Position (i.e. Balance Sheet)
- Statement of Comprehensive Income (i.e. Profit and Loss Account)
- Statement of Changes in Equity
- Statement of Cash Flows
For SMEs with relatively small monthly financial transactions, bookkeeping records can be updated on a quarterly or an annual basis.
For companies with a large volume of regular accounting transactions coming in on a daily or weekly basis, it is wise to keep ledgers updated every month.
The deadline for the completion of a company’s financial statements is greatly influenced by the date that the Annual General Meeting (AGM) is organised because it is where approval of all accounts and finances will be finalised.
Annual General Meeting (AGM)
After company incorporation in Singapore, it is required to conduct an Annual General Meeting (AGM) once every calendar year. The general rules to follow include:
- Holding the first AGM during the 18-month period after its incorporation
- Succeeding AGMs must be organised not later than 15 months after its last AGM
- Only accounts updated within the last 6 months before the next AGM can be included in the report
Private companies are allowed to be involved with AGMs if a company resolution pertaining to it has been approved by all members with voting rights.
AGMs can be done outside Singapore unless explicitly stated in the company’s Memorandum and Articles of Association (M&AA). This is particularly applicable to foreign owners and investors who made the decision of incorporating a company in Singapore.
Filing of Estimated Chargeable Income (ECI)
This pertains to the estimated taxable income of a company after the deduction of its tax-allowable expenses for the Year of Assessment.
The Estimated Chargeable Income (ECI) is a requirement by the Inland Revenue Authority of Singapore (IRAS) for all Singapore companies only.
All Singapore companies with responsibility to file the ECI must do so within 3 months of their Financial Year End.
However, there are certain companies that are exempted from submitting the ECI form – even after receiving an IRAS notification – provided that they meet both of the following criteria:
- If there is less than $5 million annual revenue for the company’s financial year in or after July 2017; and
- ECI is NIL for the Year of Assessment (YA).
To determine if you can apply for the waiver to file the ECI, seek confirmation from the IRAS.
Audit of Financial Statements
This is applicable to companies with at least two of the following characteristics:
- With 50 or more employees
- With total assets beyond S$10 million
- With total annual revenue beyond S$10 million
Repercussions for Unsuccessful Compliance
If a company defaults on any of the annual regulatory requirements, this could cause a number of problems such as legal reprimands from the ACRA and IRAS including steep penalties to each company director.
When this happens, both directors and employees are distracted from their specific duties and responsibilities which could hamper business operations.
In serious cases, it isn’t just the anxiety and shame they have to deal with; directors are at risk of disqualification for a period of time.
How Corporate Services Singapore Can Make it Fast and Easy
Prudence and sensibility dictate that a professional corporate services provider is a must for the company’s successful annual filing of requirements.
You can rely on the team of experienced specialists of Corporate Services Singapore provide you with necessary information and timely reminders to avoid any gap on your corporate compliance – so you can focus your commitment in running your business successfully.