Why it is better to outsource Corporate Secretarial duties
Updated: Oct 31, 2021
Must appoint company secretary under Companies Act
Section 171 of the Companies Act stipulates that a company secretary must be appointed within 6 months after incorporation. A secretary must be a natural person and be ordinarily resident in Singapore. This means that he or she can be a Singapore citizen, permanent resident or holder of Employment Pass, EntrePass, S Pass or Dependent’s Pass.
If a company has more than one director, then one of the directors can also be appointed as company secretary. However, if the company has only one director, then he or she cannot assume the role of company secretary simultaneously.
ACRA further mandates that directors cannot let the company secretary position stay unfulfilled for more than 6 months at any one time.
Responsibilities of company secretary
A company director’s main role is in managing the business and running the operations. He or she is also expected to expand and grow the business. This will allow the company to achieve its financial goals and other social objectives.
A company secretary, on the other hand, is basically in charge of the various administrative, statutory and regulatory requirements required by law. Some of the requirements include filing of annual returns, holding of annual general meeting (AGM), maintenance of shareholders’ register etc. The secretary ensures that all requirements set by ACRA are fully met. This allows company directors to put in 100% of their attention in running the business.
The following illustrates some of the job scopes of a company secretary
1. Updating and filing with ACRA
To file different types of resolutions required by Companies Act
Change in personal particulars of company offices and shareholders
Appointment, resignation and death of company officers
Minutes of meeting
Registration of charge
Update share information
Close a local company
2. Maintaining statutory registers
Minutes book of AGM and EGM
Register of members, charges, allotment of shares etc
3. Preparing board meetings and AGM
Prepare directors’ resolutions
Prepare meeting agenda, distribute minutes of meetings and financial reports to shareholders
Attend meetings and record minutes of meetings
4. Other services
Ensure filing deadlines are adhered to
Communicate with shareholders in areas such as dividends, share ownership, transfer of share ownership etc
Penalties if corporate secretarial duties are not met
Some of the most common corporate secretarial duties include filing annual returns and holding AGM. In this section, we look at the penalties if these duties are not met.
1. Failure to file annual return
The annual return is a form lodged by the company secretary with ACRA. It contains important information such as the names of directors, secretary and its shareholders. It also indicates the date to which the financial statements of the company are made up to. All these information helps the stakeholders to make better decisions.
According to ACRA, companies need to file annual returns within five months (for listed companies) or seven months (non listed companies) after their financial year end.
With effect from 30 April 2021, the late lodgement penalty is as follows:
$300 for late lodgement filed within 3 months after filing due date; or
$600 for late lodgement filed more than 3 months after filing due date
2. Failure to hold Annual General Meeting
An AGM is a place whereby a company can present its financial statements to its shareholders. During the meeting, shareholders can raise their concerns, engage the company directors and vote on important issues that will affect them.
Section 175 of the Companies Act requires the company to hold its AGM within a time frame. Listed companies are required to hold the AGM within 4 months after financial year end. On the other hand, non listed companies are required to hold AGM within 6 months after financial year end.
Directors who fail to hold AGM may be prosecuted in court. The Straits Times reported that in 2018, ACRA charged 12 company directors for failing to hold AGMs. In addition, ACRA can enforce the following fines for AGM and annual returns filing breaches:
Who can be a company secretary
According to ACRA, a company secretary must fulfil the following conditions:
You can either be a Singapore citizen, permanent resident or holder of Employment Pass, EntrePass, S Pass or Dependent’s Pass
You have not been barred from acting as a secretary
You are not the sole director of the company
Based on the criteria above, most directors can also be company secretary. Alternatively they can also appoint their shareholders, friends or relatives to assume the role. However, do note that the secretary needs to follow the important deadlines and file all the necessary documents. He or she must also keep abreast with the latest developments or guidelines issued by ACRA. Failure to comply with regulatory requirements will result in penalties given by ACRA.
According to ACRA’s media release, on Feb 2019, company director Tan Hang Song was found guilty of committing multiple offences under Sections 175 and 197 of the Companies Act. He had knowingly and wilfully allowed 9 companies to default in holding the AGM and in filing the annual returns. He was found guilty by the States Courts and fined a record $113,400 for 54 charges ($2,100 per charge). He was also disqualified from acting as a director of companies for a period of 5 years.
As a result, most company directors still prefer to outsource their corporate secretarial duties to professional firms such as MLT Professional. In this way, they can fully concentrate on managing their business.
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