Annual return penalties are inconvenient and detrimental to a corporation’s progress. To ensure that you can avoid annual return penalties, hiring a competent Singapore corporate secretary is crucial since they will essentially be tasked with ensuring that all legal corporations are met in a timely manner. However, it is also imperative to understand what you need to avoid as well, so as to better monitor your corporation’s progress and be aware of what you may potentially risk. Here are some things to know about the penalties:
Annual returns are usually submitted electronically to ACRA, and dependent/contingent on the corporation’s AGM (Annual General Meeting) results. According to the statutory requirement, annual return filings are to be filed within one month from the date of the AGM held by corporations. This procedure is to be completed in a timely fashion each year. Only companies that are newly incorporated do not have to follow this, and instead, are offered a longer duration of 18 months from the date of their company’s incorporation to conduct their very first AGM. The filing requirements are different according to the corporation type, and the Singapore corporate secretary should be able to assist in ensuring that the corporation meets filing requirements for each different company type. They can also be responsible for the filing of annual returns and updating of any relevant changes to the authority sectors on behalf of the corporation.
Your Singapore corporate secretary should be able to help ensure that the annual filing documents are prepared and ready for submission through BizFile. Some of the required documents include information about the corporation’s full name, the corporation’s registration number as well as address, data about the principal activities, company type and information on the directors, company secretary, shareholders and auditors of the corporation. In addition, the filed documents will also have to address and include the financial periods that audited accounts are made up to, the accounts in full/partial XBRL formats, as well as the summary of both issued and paid up share capital. A responsible company secretary will take care to double check the data for any discrepancies and rectify them immediately so as to ensure that everything runs without flaw.
If the corporation is not able to file annual returns in time, date extensions can be applied for. However, penalties will be incurred with $60 charged for late lodgment if it takes less than 30 days. The maximum amount of penalties ACRA can impose on corporations is capped at $350 currently. However, business owners should take care to note that the penalty fees are imposed based on separate section charges so the total amount of penalties their corporations could be liable for can add up to rather substantial amounts. This is risky since it can severely constrain their financial budgeting and slow down overall plans for business progress.
Lodgment fees that are incurred when applying for time extensions are usually around $50 monthly, with a maximum limit of two months. Once the corporation has applied for a time extension, they cannot apply for further extensions. Failure to comply with regulatory compliance requirements can result in ACRA issuing the directors and company officers court summonses, which can impede business reputation significantly. Whenever possible, this is to be avoided at all costs.
Your Singapore corporate secretary should also play a part in ensuring that your corporation can conduct the AGM in a timely manner by not only assisting in preparations, but also preparing minutes and noting down essential business decisions. An agenda should also have been created and sent to all shareholders and directors to inform them of the meeting so that they are able to attend. The minutes that have been recorded should be safely kept, with copies delivered at the end so as to ascertain that all that has been covered in the meeting have been objectively recorded in a neutral manner.
As of late, ACRA has also taken measures in enforcing action against corporations who breach requirements by failing to hold annual general meetings and filing annual returns. Apart from issuing penalties and summons, serious non-compliance situations may require a warrant of arrest to be issued. A director or corporate secretary that defaults on requirements in the Singapore Companies Act for up to three or more months continuously can also stand to face debarment orders.
The consequences of non-compliance can be potentially damaging to business reputation and progress. Once clients and potential customers catch wind of the company’s negative reputation, they may be deterred from seeking out the corporation’s services. This in turn worsens the company’s ability to earn profit. Additionally, the ability to foster good relations with potential investors and partners may also be compromised.
Hiring the right Singapore corporate secretary can help business owners avoid running the risk of having to face such hefty penalties by being capable/responsible enough to advise the business owner of potential risks, remind them of their statutory obligations as well as prepare the necessary filing documents on time. To ensure that all the above penalties can be avoided, business owners are advised to take their time in considering their options and requirements that their Singapore corporate secretary has to meet. Alternatively, instead of manning the hiring process themselves, they can also seek out the services of reputable corporate secretarial service providers for assistance.
But one should also not simply stop after hiring the right person for the job. Business owners should take care to communicate with the corporate secretary on a regular basis to stay updated as well as be clear on what their expectations are. Great care should also be given to ensuring that the Singapore corporate secretary is perfectly updated on the current status of the corporation as well as all other essential information. Business owners are also encouraged to learn more about the process of tax and other useful legal requirements by signing up for training courses with a certified professional. This will in turn further strengthen the efficiency and ability to discuss important procedures with the corporate secretary.