Appointing a secretary in a corporation is mandated by the Singapore government. Singapore’s Companies Act required all companies to have an eligible corporate secretary appointed within six months from the company’s date of incorporation. Failure to comply with this regulation may lead to penalties.
Fortunately, startups, especially foreign entrepreneurs, can seek guidance from Corporate Services Singapore. Nevertheless, amongst the four stakeholders in a company, the one having the least accountability is the company secretary, hence the reason why most startups, especially those with limited capital, may think twice before hiring one. But in truth, corporate secretaries are one of the most critical people within an establishment. This article highlights the four crucial reasons why startups need a corporate secretary to empower their business.
Comply With Singapore’s Legal Requirement
One of the critical roles of corporate secretaries in Singapore is to ensure the company complies with statutory regulations. For public corporations, secretarial services can be performed by a person who is a resident of Singapore. But the said person cannot be the company’s sole director.
Moreover, before the corporate secretary can be appointed, he or she must serve about three to five years of secretarial service with a public entity. He or she must also meet a specified set of criteria before getting the position. These requirements are due to the obligations of public secretarial services in legal practices and know-how. The job is usually in-house and full-time.
In contrast, private corporations are not required to abide by these strict requirements. The secretaries only need be of legal age and possess the country’s residency, Permanent Resident or Employment Pass. With the less stringent demand for corporate secretaries in a private company, it is no wonder the position is undervalued, particularly by startups. Nonetheless, their role and significance in a company are not any less important.
Corporate secretaries also perform a fiduciary function on businesses, serving as the primary person to execute specific requirements, including ACRA’s need for annual filing and annual general meetings.
Help the Company Manages Most Business and Operational Duties
The corporate secretaries serve as a link that connects the directors to their workers. They are in charge of preparing the meetings’ agenda and other non-official gatherings. Also, they are the go-to person when one wants to know relevant details about the company.
Moreover, they help maintain and note down every change in the company’s business. For instance, they would file and submit the document for change of address to the ACRA. Failure to do so may cause ACRA to render the company’s resolution invalid.
The company secretaries also take care of every transaction, which can impact the company’s distribution of shares and help to document all of the company’s share transaction.
Carry Out Essential Legal and Financial Responsibilities
In the aspect of legal and financial obligations, the company secretaries are the ones responsible for handling the company’s insurance covers and submit all account statements as per the Companies Act’s requirement. They also make sure the company abide by the rules and regulations established by the Memorandum of Association.
Avoid Potential Business and Administrative Mistakes
The primary hurdle that can arise from not appointing a company secretary is the failure of entrepreneurs in giving adequate focus to the business aspects of the company which commonly fall under the roles and duties of a corporate secretary. The following are some of the potential occurrences and mistakes arising from the absence of a dedicated corporate secretary in an organization.
- Failure to devise a business resolution: Companies that failed to submit the necessary documentation of any business change to ACRA causes their resolution to be rendered invalid.
- Forgetting a mandatory step in validating a business change: Forgetting to arrange a General Meeting to acknowledge a business change, such as naming a new shareholder, for instance, will cause the intended action to be void in the court.
- Inaccurate year-end reports: One of the leading roles of a corporate secretary in Singapore is to prepare accurate year-end reports. Incorrect year-end statements may give company issues once the period for tax filing comes. It can also compromise the opportunity for the company to maximize tax benefits.
- Improper management of records: Records that are poorly maintained can jeopardize any company. Without a company secretary to handle statutory records, such as members’ record and necessary documentation proving the company ownership, confusion may arise and eventually result in entrepreneurial catastrophe.
Engaging Professional Company Secretary Services in Singapore
Since startups are still building their groundwork in the industry, the absence of a person dedicated to performing secretarial tasks may disrupt their business. Working with a professional with Corporate Services Singapore help ease startups entry into the market.