Important updates for directors and company secretaries in Singapore
Singapore’s government has made important updates to the Singapore Companies Act, which include a tougher regulatory stance and new enforcement actions.
The Accounting and Corporate Regulatory Authority of Singapore (ACRA) has further toughened its regulatory stance and announced new enforcement actions which include disqualification and debarment of directors and company secretaries who don’t comply with the requirements of the relevant Sections 155, 155A and 155B of the Singapore Companies Act.
As you may be aware, there have already been a number of well-publicised cases of ACRA investigating local entities for possible offences under the Companies Act.
It is therefore crucial that directors and company secretaries operating in Singapore familiarise themselves with the updated requirements to manage their regulatory risk and stay compliant.
What should you be aware of?
Section 155: Disqualification of directors for filing breaches
- Companies and directors should note that a director who is convicted of three or more filing-related offences under the Companies Act within a period of five years will be disqualified as a director.
- Once disqualified, an individual will not be allowed to be a director in any company or take part in the management of any local or foreign company for five years, effective from the date of the conviction.
- A disqualified director also cannot take on any new appointment as a director or be in any way directly or indirectly concerned or take part in the management of a company.
Section 155A: Striking off of companies that failed to file annual returns
- ACRA has the authority to strike off a company if there is reasonable cause to believe that the company is not carrying on business or is not in operation. For example, a failure to file annual returns for consecutive years.
- ACRA will also now disqualify a director with at least three companies struck off within a period of five years. Once disqualified, an individual will not be allowed to be a director of any company or take part in the management of any local or foreign company for five years, commencing on the date on which the third company is struck off.
- A disqualified director also cannot take on any new appointment as a director or be in any way directly or indirectly concerned or take part in the management of a company. To be clear, the striking off of the three companies refers to striking off initiated by the Registrar, and does not include voluntary applications for striking off.
Section 155B: Debarment order
ACRA also has another tool to ensure that companies’ annual returns and related documents are filed in a timely manner.
- ACRA is empowered to debar any director or company secretary who has failed to lodge any documents for a continuous period of at least three months after the prescribed lodgement deadline under the Companies Act.
- The effect of debarment is that the debarred director or company secretary cannot take on any new appointments as a secretary or director.
The fiduciary duties and liabilities of directors and secretaries are increasingly complex. The consequences of not complying span financial penalties and reputational damage, both for individuals and companies. Working with the right local partner can help you to stay ahead of the compliance curve, and succeed in your ventures.
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TMF Singapore provides a one-stop shop for doing business in Southeast Asia and beyond. We help companies with incorporation and a full suite of corporate secretarial, compliance and governance services, including directorship services.
We also provide directors’ training courses to help directors and management teams better understand the importance of directors’ fiduciary duties and to create awareness, accountability and promote greater compliance with filing requirements.
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