In the dynamic business landscape of Singapore, maintaining good corporate governance is not just a best practice—it is a legal necessity. Corporate secretarial duties are the bedrock of a company’s compliance framework, ensuring that the organisation adheres to the standards set by the Accounting and Corporate Regulatory Authority (ACRA) and the Companies Act 1967. However, many companies, especially new startups and small to medium-sized enterprises (SMEs), often stumble over these critical responsibilities, leading to significant penalties and reputational damage.

Understanding and avoiding these common pitfalls is crucial for long-term success. This article highlights the top five corporate secretarial mistakes that companies in Singapore frequently make and offers guidance on how to navigate the complexities of corporate compliance effectively.

 

1. Missing Statutory Filing Deadlines

 

One of the most frequent and easily avoidable mistakes is failing to meet statutory deadlines. Singaporean companies are mandated to hold an Annual General Meeting (AGM) and file their Annual Returns (AR) with ACRA within specific timelines.

  • Annual General Meeting (AGM): Unless exempted, a company must hold its AGM and ensure its financial statements are tabled for shareholders’ approval.
  • Annual Return (AR) Filing: Following the AGM, the company must file its Annual Return with ACRA. For non-listed companies, this is generally within seven months after the financial year-end.

Failing to adhere to these deadlines can result in significant late filing penalties, which can escalate over time. Beyond the financial costs, consistent non-compliance can damage investor confidence and may lead to more severe enforcement actions by ACRA, including potential debarment for company directors.

 

2. Improper Management of Statutory Records

 

Singapore law requires companies to maintain accurate and up-to-date statutory registers. These are not mere administrative formalities; they are the official records of the company’s structure and governance. Key registers include:

  • Register of Members
  • Register of Directors, Secretaries, Auditors, and CEOs
  • Register of Registrable Controllers (RORC)
  • Register of Nominee Directors

Many businesses fail to update these records promptly after changes occur, such as a new director appointment, a transfer of shares, or a change in a controller’s particulars. Incomplete or inaccurate records can create significant legal and operational challenges during critical events like fundraising, due diligence for a sale, or audits.

 

3. Incorrect Handling of Board Resolutions and Meetings

 

Proper documentation of corporate decisions is fundamental to good governance. All significant company decisions, from opening a corporate bank account to allotting new shares, must be approved and documented through board or shareholder resolutions.

A common error is the failure to prepare and pass formal resolutions for such actions. Some companies may proceed based on informal agreements, which can lead to disputes and render the actions invalid. Furthermore, inadequate minute-taking for board meetings and AGMs can make it difficult to prove that directors have fulfilled their fiduciary duties, exposing them to personal liability.

 

4. Failure to Appoint a Qualified Company Secretary

 

Under Section 171 of the Companies Act 1967, every company in Singapore must appoint a company secretary within six months of its incorporation. The law also stipulates that this position cannot be left vacant for more than six months. A key requirement is that the appointed secretary must be a natural person who is ordinarily resident in Singapore.

A frequent mistake is either delaying the appointment or appointing an individual who lacks the requisite knowledge and experience to handle the complexities of the role. While a director can also be the company secretary, a sole director is prohibited from taking on this dual role. An unqualified secretary may be unaware of critical compliance deadlines or procedural requirements, putting the company at risk.

Navigating these compliance requirements can be complex. If you require assistance or tailored advice for your business, the experienced team at Raffles Corporate Services Pte Ltd is here to help.

 

5. Inadequate Management of Conflicts of Interest

 

Directors have a fiduciary duty to act in the best interests of the company. A critical part of this duty is the proper disclosure and management of any conflicts of interest. Section 156 of the Companies Act requires a director to declare the nature of their interest in any transaction or proposed transaction with the company.

A serious mistake is the failure to establish a formal process for tracking and managing these disclosures. When a director participates in a decision where they have a personal stake—for instance, approving a contract with a company owned by a family member—without proper disclosure, it constitutes a breach of their duties. This can lead to the transaction being voidable and may result in legal action against the director.

 

Conclusion: Proactive Compliance is Key

 

Staying on top of corporate secretarial duties is non-negotiable for any company operating in Singapore. The mistakes outlined above are not just administrative oversights; they carry tangible risks, including financial penalties, legal liabilities, and damage to the company’s reputation. By prioritising proactive compliance, maintaining meticulous records, and seeking professional guidance when needed, you can build a strong foundation for your business to thrive in Singapore’s regulated environment.

For further assistance or inquiries, you can contact the Raffles Corporate Services team via email at [email protected].

Yours sincerely,

The editorial team at Raffles Corporate Services