Corporate Secretarial Compliance
Topic 1: Corporate Secretarial in Singapore
Under Section 171 of the Singapore Company’s Act (Cap. 50), a company must appoint a local Company Secretary within six months of incorporation.
A Company Secretary is the backbone of all administrative and compliance-related functions in the company. The person is in charge of administrative and reporting responsibilities, such as establishing and maintaining the company’s records and assisting the company director(s) in ensuring that the company’s records comply with all regulatory requirements on a timely basis.
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What is the main role of a Singapore Company Secretary?
ompany secretaries (who are also considered officers of a company) assist in the administration of a company and ensure that directors and shareholders are kept well informed of statutory obligations, such as the annual filing of audited accounts and the holding of annual general meetings (“AGM”).
requirements-of-a-Singapore-company-secretary Singapore Company Secretary Guide In Singapore, the criteria for being a company secretary for a private limited company is not stringent and this role can be undertaken by any Singapore resident (i.e. Singapore citizen, permanent resident or an individual with an employment pass) above 18 years of age.
This unfortunately leads to a “gap” of knowledge as inexperienced company secretaries may lapse in keeping the company, its directors, shareholders and auditors duly informed of the statutory requirements and deadlines.
Additionally, there is no minimum cap on the number of companies that an individual can be a company secretary of; hence the level of dedication and responsiveness of the company secretary may be compromised.
On the other hand, there are far more requirements for being a company secretary of a public company, as the company secretary would need to be trained and qualified as a lawyer, an accountant, or be a member of the Singapore Association of the Institute of Chartered Secretaries and Administrators (“SAICSA”).
While these requirements only apply to a company secretary of a public company, ACRA may require a private limited company to appoint a professionally qualified company secretary if the company is found to be persistently in default of the statutory requirements.
The Duties and Responsibilities of the Company Secretary
The company secretary may also perform the following duties, depending on the needs of a company:
- Maintain and update the company’s registers and minutes books
- Administer, attend and prepare minutes of meetings of directors and shareholders
- Assist the Chairman of the meeting in the conduct of the meeting
- Ensure compliance with statutory requirements under the Companies Act
- Ensure compliance with the company’s Memorandum and Articles of Association (“M&AA”)
- Keep the company and its directors aware of the deadlines for annual returns and any other returns that should be filed with ACRA
- Advise the company on and attend to the appropriate electronic filings with the ACRA for changes within the company within the prescribed timeframes as set out by the ACRA
- Ensure safe custody and proper use of the company seal, if applicable
- Communicate to the company and its directors any relevant changes in statutory law on a timely basis
- Function as an intermediary between the company and the relevant authority for specific needs of the company such as ACRA, the Stock Exchange and the Inland Revenue Authority of Singapore
A good company secretary is also always approachable and available to provide the company with advice as to what the proper procedures should be with regards to any agreements, corporate guarantees, leases and investments, or any other issues that the company may have whilst conducting its business in Singapore.
The Powers of the Company Secretary
Since the company secretary is generally recognized as the key person who maintains the records of the company, certification of company documents by the company secretary is generally accepted. For example, when opening a bank account, a company is required to pass a resolution by directors to approve the account opening. The bank will usually require a certified copy of this resolution for its records before it processes the opening of an account. This certified copy will typically be jointly signed by a director and the company secretary. Similarly, auditors will request company secretaries to certify the records of a company’s minutes book for their annual statutory audits.
Singapore-company-secretary-appointments Singapore Company Secretary Guide
More importantly, a company secretary can also advise the company and its directors on what should be done to stay compliant when executing various corporate actions. For example, when entering into a loan agreement, the company secretary can advise the company and its directors if any terms and conditions of the loan agreement could potentially conflict with the company’s M&AA, assist to prepare the necessary documentation such as a directors’ resolutions in writing to approve the transaction, appoint a corporate representative to legally represent the company to sign all relevant documents pertaining to the loan agreement and ensure that the proper authorization is given for the affixing of the common seal of the company in accordance to the company’s M&AA.
Topic 2: Changing a Singapore Company’s Corporate Secretary
Why is it important to have a good corporate secretary?
Undeniably, the corporate secretary’s main role and function is to ensure that the company is compliant with all the relevant laws under the Companies’ Act. In the unfortunate event where a corporate secretary is remiss in his or her duties, the victims who will suffer will be the company and its directors, who will have to make payment for penalties imposed and in the worst case scenario, answer to a court summons.
This in fact, is fairly common. In its news release on 14 April 2014, ACRA estimated that approximately 10,000 summonses had been issued in that year alone to companies and their directors who were found to be in default of the statutory requirements under the Companies’ Act.
Indeed, ACRA has stated clearly that it considers it to be the duty of the directors of the company to ensure that the corporate secretary appointed by the company is competent and possesses the requisite knowledge and experience. Hence, even if the company does fail to meet its statutory obligations, the directors will be unable to claim ignorance or point the finger at the corporate secretary, because the responsibility lies with the directors to ensure the corporate secretary has fulfilled all of his or her duties. Essentially, if a company has a good corporate secretary, it can rest assured that the advice provided by the corporate secretary is sound and will not needlessly worry about whether it can meet its ongoing compliance regulatory requirements.
Does my new corporate secretary fulfil the necessary requirements?
With regards to the secretary of a private limited company, there are no stringent requirements and there are only two requirements to be fulfilled:
- He or she should be residing locally in Singapore
- He or she is not the sole director of the company
However, to ensure that the corporate secretary is an individual who fully understands the roles and responsibilities of a corporate secretary, companies should ideally seek individuals who meet any one of the following requirements:
- Is a qualified person under the Legal Profession Act; or
- A public accountant registered under the Accountants Act; or
- A Member of the Institute of Certified Public Accountants of Singapore; or
- A Member of the Singapore Association of the Institute of Chartered Secretaries and Administrators (“SAICSA”).
Due to the nature of the corporate secretary’s responsibilities, it is ideal that someone bearing knowledge of the Companies’ Act and accounting principles is appointed. In addition, he or she should have sufficient experience in the industry. Generally speaking, SAICSA is the main body that governs corporate secretaries in Singapore and is arguably the most relevant qualification for a corporate secretary.
There are several reasons as to why a company may contemplate changing its corporate secretary, such as:
- Existing secretary’s inability to articulate or communicate clearly
- Failure of the secretary to provide proper guidance and advice in relation to ongoing compliance regulatory requirements
- Excessive additional fees charged by the secretary (besides the annual retainer fee)
- Inability of the secretary to provide ancillary services required by the company, such as registered office, or nominee director services
Certainly, the company’s choice to release its existing secretary and engage a new secretary may be due to any of these reasons. This article provides a guide on the important things a company should note before commencing with the change of its corporate secretary in Singapore.
The new corporate secretary whom you will be appointing should be able to assist you to prepare the necessary documentation, which will include the following:
- Directors’ Resolutions in Writing (“DRIW”) to note the appointment of the new secretary and resignation of the previous secretary
- Letter of Resignation for the previous secretary
- Form 45B for the new secretary to indicate his or her consent to act as secretary
- Lodgment to notify ACRA of the appointment and resignation of secretary
While the existing secretary may remain in office, the DRIW mentioned above can authorise the new company secretary to make the lodgment with ACRA on the company’s behalf. In addition, the new corporate secretary can also assist you to prepare the letter of termination and arrange for the collection of files from the existing corporate secretary.
For companies that may be in doubt about their previous corporate secretary’s competency in terms of keeping the registers of the company updated and ensuring that the relevant filings have been made, it may request the new corporate secretary to perform a due diligence exercise to ensure that the company’s statutory records are in proper order.
Certainly, the hardest hurdle that the company may face is the lack of co-operation from the existing secretary, particularly for companies who do not have a good relationship with, or have persistently experienced issues with obtaining a timely response from their existing secretary.
In situations such as the above, the company should be aware of the possible implications that such delays may result in, such as late filings with ACRA or IRAS, which may result in penalties imposed upon the company by the respective government authorities. Companies therefore should avoid changing their corporate secretary near statutory deadlines, or target to complete the entire process before such deadlines. Examples of such deadlines that the company should be aware of are:
- Deadline to prepare and finalise its audited or unaudited accounts
- Deadline to hold its Annual General Meeting (“AGM”)
- Deadline to submit its Annual Return with ACRA