Every company in Singapore has a company constitution. This essentially is the “rule book” of the company. It sets out how the company does its business and how it deals with matters especially with regards to the conduct of directors and shareholders.
You can retrieve the model constitution from this link:
The model constitution for a private company limited by shares is in the First Schedule and the model constitution for a company limited by guarantee is in the Second Schedule.
When a company is incorporated, the registrar requires the company to upload its proposed constitution. This can be a constitution that has been prepared beforehand. If there is no proposed constitution, then the registrar allows the company to use the model constitution. (Many people overlook this portion when they incorporate their company but this step was a crucial step during incorporation. The option to use the Model Constitution was an option for selection during incorporation.)
Therefore, the majority of companies will be using the Model Constitution.
Here are the key features of the model constitution for companies in Singapore:
- Separation of ownership and management: The constitution sets out the roles and responsibilities of the shareholders and the board of directors, separating the ownership of the company from its management.
- Shareholder rights: The constitution defines the rights of shareholders, including the right to vote on key decisions, receive dividends, and participate in meetings.
- Board of directors: The constitution establishes the board of directors as the governing body of the company, responsible for making strategic decisions and managing its operations.
- Management of the company: The constitution outlines the responsibilities of the company’s management, including the preparation of financial statements, compliance with laws and regulations, and the administration of the company’s day-to-day operations.
- Accounting and auditing: The constitution requires companies to maintain accurate financial records, appoint an auditor, and provide annual financial statements to shareholders.
- Dividend policy: The constitution sets out the company’s policy on dividends, including the amount and timing of payments, and the criteria for their distribution.
- Transfer of shares: The constitution regulates the transfer of shares, including restrictions on the transfer of shares, procedures for transfer, and conditions for approval.
Please note that this is a summary of the key features. We will have future articles elaborating on these features individually in future articles.
If you would like any assistance with matters relating to your company’s constitution or any company matters, please contact us at [email protected].