The Accounting and Corporate Regulatory Authority has initiated an extensive review of the country’s corporate laws and regulatory framework. The Companies Act Working Group has recommended certain legislative reforms for incorporating a company in Singapore to make the future working process easy for the firms. To know more, read the following points on Company incorporation in Singapore.
Dematerialisation Of Share Certificates
Currently, a company is required to issue physical share certificates to shareholders within thirty days of the transfer of shares, and sixty days of the allotment of new shares. The CAWG has recommended ending the requirement to provide physical share certificates. This is because the ACRA records the Electronic Register of Members of private limited companies. If the recommendation comes into action, then the companies will no longer be required to issue paper certificates.
A share certificate is the document verifying a stockholder owns shares of a company. Currently, companies in Singapore are required to issue physical share certificates to shareholders within 30 days of the transfer of shares, and within 60 days of the allotment of new shares. As of now, the Companies Act recognizes two types of evidence of title to shares:
- A certificate under the common seal or official seal of a company; and
- The electronic register of members maintained by ACRA for private companies.
Digital Meetings
CAWG has recommended amendments to permit general meetings and board meetings of a company to be held digitally. Presently, the Companies Act provides for such meetings but does not specify how they are to be held. A few provisions state that the general meetings must be held physically. The objective of the recommendation is to remove any current ambiguity and give companies a clear understanding that digital meetings can be equally valid if conducted according to the provisions of the Constitution. It also aims to benefit incorporated companies by saving time and costs of travel.
The Companies Act currently provides for such meetings but does not specify how they are to be held. Some provisions imply that the general meetings must be held physically, for example rules on presence, voting, rights of attendance, discussion, and speech.
The practice of most companies in Singapore is to expressly set out in their constitution the manner by which a general meeting or board meeting is conducted, and many have already adopted provisions for holding meetings digitally.
The proposed changes will:
- Remove current ambiguities and give companies a clear understanding that digital meetings can be equally valid if conducted according to the provisions of the constitution;
- Benefit companies by saving time and costs involved in travel.
Digitisation Of Documents
The CAWG has recommended amendments pertaining to digitisation. It would make it mandatory for companies to accept proxy instructions by electronic means, and permit for a wider scope of documents sent to members, officers, or auditors to be transmitted electronically. The objective is to avoid the need to deliver paper proxy forms and documents physically to a company to save time and costs of preparation, reviewing, and execution of the documents.
The CAWG has also recommended certain other amendments related to digitisation. These would:
- Make it mandatory for companies to accept proxy instructions by electronic means, and
- Allow for a wider scope of documents sent to members, officers, or auditors to be transmitted electronically.
Establishment of New Types of Companies
The CAWG has put forth a proposal to introduce two types of companies, i.e., micro company and a publicly accountable company. A micro company fulfils the requirements for total annual revenue and total assets, each being not more than S$500,000 for the previous two consecutive financial years. A publicly accountable company is a financial institution company limited by guarantee registered under the Charities Act that is listed or is in the process of issuing its securities for the purposes of trading on a securities exchange.
Revised Financial Reporting Obligations
Presently, incorporating a company in Singapore seeks the financial statements that abide by the Singapore Financial Reporting Standards. However, the proposal allows a non-publicly accountable micro company to prepare reduced financial statements consisting of the Statement of Comprehensive Income, Statement of Financial Position, and Specific key disclosures.
The updates on Singapore incorporation aims to bring in improvements in compliance legislation, in particular those arising in response to COVID-19. The amendment process for the Companies Act has passed the public consultation stage. Moreover, the proposals are subject to further speculation and refinements. Look for a professional company incorporation service provider in Singapore to help you in settling down your business.
