Companies Act Singapore: 28 Key Provisions You Need to Know

The Companies Act Singapore (2016) is the primary legislation governing companies registered in Singapore. It has 28 key provisions that businesses should be aware of to ensure compliance and effective management.

28 Key Provisions of the Companies Act Singapore

1. Incorporation of a company:
   - A company can be incorporated by two or more individuals or entities.
   - The directors of the company must be at least 18 years old and have a residential address in Singapore.
   - The company must have a registered office in Singapore.

2. Share capital:
   - A company must have a share capital of at least S$1.
   - Shares can be issued as ordinary, preference, or redeemable shares.

   

3. Directors:
   - A company must have at least one director.
   - Directors must act in the best interests of the company and its shareholders.
   - Directors are personally liable for any breach of their duties.

4. Shareholders:
   - Shareholders have the right to vote at general meetings and to receive dividends.
   - Shareholders can sue the company or its directors if they believe their rights have been infringed.

5. General meetings:
   - A company must hold an annual general meeting (AGM) within six months of the end of its financial year.
   - Shareholders can propose resolutions at AGMs and vote on matters affecting the company.

   

6. Financial reporting:
   - A company must prepare and file financial statements with the Accounting and Corporate Regulatory Authority (ACRA) within six months of the end of its financial year.
   - Financial statements must be audited by a registered auditor.

7. Insolvency:
   - A company is insolvent if it is unable to pay its debts as they fall due.
   - Insolvent companies can be liquidated or placed under judicial management.

   

8. Winding up:
   - A company can be wound up voluntarily or by the court.
   - Voluntary winding up is when the shareholders agree to close the company and distribute its assets.
   - Court winding up is when a creditor or the company itself applies to the court to have the company wound up.

Key Changes in the Companies Act 2016

The Companies Act 2016 introduced several significant changes to the previous Act, including:

• Simplification of the incorporation process: It is now easier and cheaper to incorporate a company in Singapore.
• Introduction of a new class of shares: Preference shares can now be issued with different rights and privileges.
• Streamlining of the director's duties: The new Act clarifies the duties of directors and provides a defense for directors who act in the best interests of the company.
• Enhanced shareholder protection: Shareholders now have more rights to information and to sue the company or its directors.
• Modernization of the financial reporting framework: The new Act requires companies to prepare financial statements in accordance with International Financial Reporting Standards (IFRS).

Implications for Businesses

The Companies Act 2016 has a number of implications for businesses operating in Singapore, including:

• Increased compliance costs: Businesses will need to spend more time and money on compliance with the new Act.
• Greater accountability: Directors and shareholders will be held more accountable for their actions.
• Improved protection for shareholders: Shareholders will have greater protection under the new Act.
• Increased transparency: Businesses will be required to disclose more information to the public.

How to Comply with the Companies Act Singapore

Businesses can comply with the Companies Act Singapore by:

• Understanding the key provisions of the Act.
• Seeking professional advice from a lawyer or accountant.
• Keeping up to date with the latest changes to the Act.

Mistakes to Avoid

Businesses should avoid the following mistakes when dealing with the Companies Act Singapore:

• Not understanding the key provisions of the Act.
• Failing to comply with the Act's requirements.
• Providing false or misleading information to ACRA.
• Breaching their duties as directors or shareholders.

Conclusion

The Companies Act Singapore is a complex piece of legislation that has a significant impact on businesses operating in Singapore. By understanding the key provisions of the Act and taking steps to comply with its requirements, businesses can avoid the risks associated with non-compliance and ensure that they are operating in a legal and ethical manner.

FAQs

1. What is the Companies Act Singapore?
The Companies Act Singapore is the primary legislation governing companies registered in Singapore.

2. What are the key provisions of the Companies Act Singapore?
The 28 key provisions of the Companies Act Singapore include: incorporation of a company, share capital, directors, shareholders, general meetings, financial reporting, insolvency, and winding up.

3. What are the key changes in the Companies Act 2016?
The Companies Act 2016 introduced several significant changes to the previous Act, including: simplification of the incorporation process, introduction of a new class of shares, streamlining of the director's duties, enhanced shareholder protection, and modernization of the financial reporting framework.

4. What are the implications for businesses?
The Companies Act 2016 has several implications for businesses operating in Singapore, including: increased compliance costs, greater accountability, improved protection for shareholders, and increased transparency.

5. How can businesses comply with the Companies Act Singapore?
Businesses can comply with the Companies Act Singapore by: understanding the key provisions of the Act, seeking professional advice from a lawyer or accountant, keeping up to date with the latest changes to the Act,