Frequently Asked Questions: Obligations of Private Limited Companies in Singapore

1. Shareholders

(a)  A company's shares may be wholly owned by a single shareholder, whether this is a natural person or corporate body, and whether local or foreign.

(b)  A company with no corporate shareholders and not more than 20 shareholders is known as a private exempt company, and such companies enjoy exemptions from certain requirements (please see below).

2. Directors

(a)  A company must have at least one director, who must be ordinarily resident in Singapore. Any purported resignation or vacation of office which would have the result of breaching this requirement shall be invalid.

(b)  If a company carries on business without having at least one director who is ordinarily resident in Singapore for more than 6 months, any shareholder who knows that it is carrying on business in that manner shall be liable for the payment of all the debts of the company contracted after the 6 month period.

(c)  Failure by the company to comply with certain statutory requirements exposes a director personally to penal sanctions on a strict liability basis (i.e., regardless of fault on his part).

3. Company secretary

A company must have at least one secretary, being a natural person with his/her principal place of residence in Singapore. The secretary has to be a person whom the directors believe to have the requisite knowledge and experience to discharge the function of secretary of the company. The position of company secretary cannot be vacant for more than 6 months.

4. Registered office and Registration Number

(a)  A company must have a registered office within Singapore to which all communications and notices may be addressed.

(b)  A company has to ensure that all business letters, statements of accounts, invoices official notices and publications issued or signed by the company must bear its registration number.

5. Auditors

If it is not exempted from audit requirements (as mentioned below), a company must have an auditor.

6. Accounts & audit

(a)  A company is required to keep proper accounting records and any other such records that will sufficiently explain the transactions and financial position of the company and enable true and fair profit and loss accounts and balance sheets to be prepared and audited, if necessary. Such records must be kept even if the company is dormant.

(b)  The following are exempted from having to audit their financial statements:

(i)  A company which is dormant (as described in paragraph (d) below) during a financial year;

(ii)  A private company that throughout the financial year concerned and for the 2 preceding financial years, satisfies at least 2 of the following criteria:

• has a total annual revenue of not more than S$10 million;

• has total assets of not more than S$10 million;

• has not more than 50 employees.

  For companies which form part of a group, the exemption only applies if the requirements are satisfied by the whole group on a consolidated basis.

(c)  If the exemptions in (b) do not apply, the company must have its accounts duly audited.

(d) For the purposes of an audit exemption, a company is considered dormant only if it has no accounting transactions during the relevant financial year. The following transactions will however be disregarded:

(i)  the taking of initial shares in the company by a subscriber according to the company’s constitution;

(ii)  the appointment of a secretary of the company;

(iii)  the appointment of an auditor;

(iv)  the maintenance of a registered office;

(v)  the keeping of registers and books;

(vi)  the payment of any fee, late fee, or fine to ACRA.

(vii)  the payment or receipt by the company of a nominal sum not exceeding S$5,000.

7. Presentation of Financial Statements, Annual General Meeting (AGM) and Annual Return

(a) A company's financial statements have to be presented to its shareholders after the end of each financial year. The financial statements are usually to be presented at an AGM, which is to be held within 6 months after the end of each financial year. However, no AGM needs to be held if the financial statements are sent to the shareholders within 5 months after the end of the financial year and no shareholder requests the holding of an AGM. A company which satisfies certain specified dormancy requirements is also exempted from preparing financial statements and holding an AGM.

(b) A company must file with the Accounting and Corporate Regulatory Authority (ACRA), within 7 months after the end of each financial year, an Annual Return containing information regarding the company's share capital, shareholders, directors, etc. Along with this Annual Return, a company must file a set of its (audited) financial statements, unless the company is a company which satisfies certain specified dormancy requirements or is a private exempt company which is in a position to file a declaration of solvency. The solvency declaration requires the directors to confirm that as at the date that the profit and loss account has been made up, the company appears to be able to meet its liabilities as and when they fall due.

8. Statutory books & registers

(a) A company must maintain certain registers, including a register of directors' and chief executive officers’ shareholdings, a register of “nominee directors”, a register of “nominee shareholders” and a register of “controllers”. In addition, there have to be maintained minutes' books to record resolutions of the shareholders and directors.

(b) The register of directors’ and chief executive officers’ shareholdings is meant to show particulars of shares (including rights to acquire or dispose of shares) or debentures of the company or related corporations in which each director or chief executive officer of the Company has an interest. Essentially, a director or chief executive officer is required to disclose his interests in shares in the company, the immediate holding company as well as the ultimate holding company, and in any other companies which are subsidiaries of the same ultimate holding company (so-called "sister companies"), as applicable. The following are the detailed provisions dealing with interests in shares and related corporations:

i) A corporation shall be deemed to be a subsidiary of another corporation, if -

aa) that other corporation –

• controls the composition of the board of directors of the first-mentioned corporation;

• controls more than half of the voting power of the first-mentioned corporation; or

bb) the first-mentioned corporation is a subsidiary of any corporation which is that other corporation’s subsidiary.

ii) Where a corporation -

aa) is the holding company of another corporation;
bb) is a subsidiary of another corporation; or
cc) is a subsidiary of the holding company of another corporation,
that first-mentioned corporation and that other corporation shall be deemed to be related to each other.

iii) Where a person -
aa) has entered into a contract to purchase a share or has a right (present or future, conditional or unconditional) to acquire a share, or an interest therein, or to have a share transferred to him; or

bb) is entitled to exercise or control the exercise of a right attached to a share, not being a share of which he/she is the registered holder, that person shall be deemed to have an interest in that share.

iv) Where a body corporate has an interest in a share and –

aa) the body corporate is, or its directors are, accustomed or is under an obligation whether formal or

informal to act in accordance with the directions, instructions or wishes of a person;

bb) a person has a controlling interest in the body corporate; or

cc) a person is, the associates of a person are, or a person and its associates are, entitled to exercise or control the exercise of not less than 20% of the voting power in the body corporate;

that person shall be deemed to have an interest in that share.

v) A person is deemed to hold or have an interest in any shares or debentures held by members of his family, i.e. wife, husband, infant child, including stepson or stepdaughter, adopted son, or adopted daughter.

(c) A “nominee director” means a director who is accustomed or under an obligation whether formal or informal to act in accordance with the directions, instructions or wishes of any other person. A “nominee shareholder” means a shareholder who is accustomed or under an obligation whether formal or informal to exercise voting rights in accordance with the directions, instructions or wishes of any other person or who receives dividends on behalf of any other person. To enable a company to maintain an updated register of its nominee directors and nominee shareholders, those of its directors and shareholders who are nominees are required to disclose their nominee status and to provide prescribed particulars of their nominators.

(d) For the purposes of maintaining its register of controllers, a company is required to take reasonable steps to identify and obtain information regarding its controllers. A controller is defined to mean, essentially, an individual or legal entity that has “significant control” over or a “significant interest” in, a company. “Significant control” is considered to exist if an individual or entity (directly or indirectly) can determine the composition of the directors of a company or otherwise has the right to exercise or actually exercises, significant influence or control over a company. As for “significant interest”, this means an interest in more than 25% of the shares of a company, and for this purpose, the concept of “deemed interest” as mentioned in paragraph 8 above, also applies (e.g., when someone has 20% or more of the voting power in a body corporate, he is deemed to have an interest in the shares held by that body corporate). Controllers are under a legal obligation to provide the information necessary for a company to maintain an updated register of controllers.

9. Duty to disclose/provide information

(a)  The directors and chief executive officers of a company have a duty to provide the company with the necessary information to maintain its register of directors' and chief executive officers’ shareholdings. The directors and chief executive officers have a duty to notify the company within two days of any relevant event.

(b)  The directors and shareholders of a company have a duty to provide the company with the necessary information to maintain its register of nominee directors and its register of nominee shareholder within 30 days of any event affecting his/her/its status as nominee director/shareholder or of any change in the particulars of his/her/its nominator.

(c)  The controllers of a company have a duty to provide the company with the necessary information to maintain its register of controllers, within 30 days of any event affecting their status as controller or concerning their particulars.

(d)  A company must provide updated information to ACRA regarding its shareholders and officers and their personal particulars (name, address, nationality, identification). In turn, the shareholders and officers have a duty to notify the company within 14 days of any changes.

10. Non compliance

Non compliance with the statutory requirements generally attracts late filing penalties and/or for more serious defaults, fines and imprisonment.