What are the administrative steps a company needs to follow the first year after incorporation in Singapore…?
There are a number of administrative steps and tasks that a new incorporated company has to complete before and after it starts operating. Some of the tasks are related to regulations, such as buying a company seal, setting up statutory books, and registering for taxes and licenses. Other tasks relate to the commencing business operations, such as opening a bank account, setting up an office and sorting out insurance, etc. Here are some legal obligations that all Singapore companies must follow, regardless of their size or business structure.
The Singapore Companies Act states that every company must appoint a qualified company secretary within 6 months of its incorporation.
All Singapore companies are legally obliged to purchase a seal for stamping official documents. Often known as a “common seal”, these seals are metallic, ink-free, and leave an embossed impression of the company’s name and registration number on official documents such as share certificates and loan documents. Companies must pass a board resolution before affixing a common seal, and the documents must usually be countersigned by any two directors or one director and the company secretary. The Seal should be kept under the control of the company secretary.
Issue Share Certificates
It is mandatory for Singapore companies to issue share certificates to all of its shareholders. A Share Certificate is a legal document that certifies ownership of a specific number of shares in a corporation. These certificates should be issued under the company seal and signed either by two directors, or by one director and the secretary. Share certificates should be kept by individual shareholders and should be reissued when the shares are transferred, split, consolidated or otherwise reclassified.
Statutory books are the legal records of your company which are kept at its registered office in Singapore. Since statutory books are public document, they can be requested at any time, so they must be kept up-to-date and available for inspection. Statutory books contain:
- Up-to-date information about corporate officers such as directors, auditors, and secretaries; the information should appointments and resignations.
- A list of shareholders, how many shares they own and details of any share transfers.
- Information about fixed or floating charges and debentures used to secure any borrowing by the company.
- Resolutions and minutes from AGM meetings.
Appoint Auditor (if applicable)
Singapore companies are exempt from appointing an auditor if they satisfy two out of the following three conditions:
-The total annual revenue of the company must not exceed S$ 10 million;
-The total assets of the company for the financial year end must not exceed S$ 10 million;
-The number of full-time employees at the end of the financial year must not exceed 50.
Most new startups meet all three of the above conditions and as a result, they are spared the burden and expenses of having to appoint an auditor. They do not have to perform an annual audit and save those fees too.
It is important to keep accurate track of the income and expenses of your business from its very first day of operations. You should track and manage the profitability of your business, the tax regulations in most countries mandate that you must maintain accurate records of these transactions. Implementation of an accounting system software is a task that it should be done within the first days of your business, so before you transact any business. You should consult with your accounting executive on the selection of the accounting software since most of these systems require training and prior familiarity of your staff with a system can reduce the learning time significantly.
You should obtain general liability insurance, workers compensation insurance, and any business specific insurance that may be applicable to you. A good insurance broker can be a great help during this process. Your insurance needs will expand as your business grows.
A Singapore company is required to hold a certain number of legally mandatory meetings. The Company Law in Singapore and the Constitution of the Company govern the conduct of these meetings. The meetings of the company are broadly divided into two main categories: a) Shareholders’ Meetings and b) Directors’ Meetings.
The shareholders’ first meeting
The shareholder’s first meeting, known as the “statutory meeting” is a mandatory meeting of the shareholders of a public company. The company has to conduct this meeting within a specified period from the commencement of business. A company can conduct this meeting only once in its lifetime. The directors of the company will send a report (the “statutory report”) which consists of company details to all its members 7 days prior to the meeting date. The company also has to submit a copy of this report to the Registrar 7 days before the date of the meeting.
This meeting purpose is to discuss with the shareholders matters such as:
- The progress of the company from its incorporation date
- The company’s expectation towards its growth
- The contracts that the company has entered into
- The future plan and prospects of the company
- To discuss the Statutory Report which provides details such as name of company directors, CEO, company secretary, auditors etc.
While, as for Directors’ Meetings the Constitution of a Singapore company outlines the proceedings of them. The company law in Singapore does not have any specific regulation for Board meetings. However, the company law authorizes the board of directors to meet and execute business decisions at meetings. The Constitution states the requirements such as quorum, notice, etc. and the company will have to comply with the rules and regulations as set out in the Constitution. Any director of a company can summon a meeting. The decision of matters discussed in the meeting are based on the majority of votes of the directors. In the case of equal votes, the chairman of the meeting will have a casting vote. A director cannot vote on any matter wherein he has any personal interest. Avoidance of any conflict of interest is a very important duty of a director.
Attaching audited financial statements with annual return
The Financial Reporting Standards of Singapore require all companies to prepare year-end Financial Statements that provide a summary of its financial activities during the accounting year. However, only larger companies are required to submit audited financial statements as part of their Annual Return submission. The financial statements must be submitted in extensible Business Reporting Language (XBRL) format. XBRL is an XML-based format for financial documents that businesses use to exchange financial information.
Estimate of company’s income
IRAS requires all companies to report estimated taxable income also known as Estimated Chargeable Income (ECI) for each financial year. The company has to report the ECI within a period of 3 months from the end of the Financial Year by submitting the ECI Form. IRAS regulation exempts companies from reporting ECI if:
- The ECI is Nil
- Annual revenue does not exceed S$1 million