What a company secretary in Singapore is useful for — besides eating startup money
August 10, 2012 by Guest Contributor
Comparing the four major stakeholders that make up a private limited company — the shareholders, directors, auditors and company secretary — the company secretary has the least liability.
However, company secretaries do have a fiduciary responsibility to ensure that directors and shareholders are informed when their annual filing and AGM needs to take place. If ACRA does not receive a company’s annual financial reports, it is the company secretary they contact.
The company secretary is also responsible for paper filing important company documents in the company register folder, as well as online with ACRA, and holding an up-to-date Bizfile. The company register is normally kept at the registered mailing address, and can be cited by ACRA officials should they visit.
Important documents include incorporation papers, director’s resolutions (such as change of address, appointing new directors and change of shareholders), shareholder agreements and filed annual financials.
If you have engaged lawyers to draft shareholder agreements to bring in new investors, the company secretary is responsible for filing amended M+AA and Allotment of Shares.
So company secretaries do more than just appear as a name on the ACRA Bizfile.
Who can act as company secretary?
The qualifications are low for private limited companies. The definition is “a person who appears to have the requisite knowledge and experience to discharge the functions of the secretary of the company.”
Almost any Singapore resident can act as a company secretary. A citizen, a permanent resident or a person who has been issued an employment pass or dependant pass can act as a company secretary. A director is allowed to be a company secretary, unless he or she is the sole director of the company.
Only public companies are required to appoint a properly qualified person as a company secretary. This is often a full-time, in-house role that involves more legal and company knowledge.
Outsource or DIY?
It is advisable to outsource the company secretary role for a few reasons.
Firstly, filing online with ACRA is not easy and requires the user to have a ‘professional PIN’ to file properly. Without this PIN, it is not possible to appoint for instance a foreign shareholder. To get a PIN, you will need to have industry acknowledged qualifications.
Here are some other common mistakes made by DIY company secretaries:
- Filing online but failing to make a requisite resolution. For example, using SingPass to file a change to the registered office address, but not passing and holding a paper resolution.
- It is easy to make mistakes which later invalidate a change. For example, if you appoint a new shareholder using a resolution and forget to hold the mandatory Extraordinary General Meeting, the additional shareholder is null and void in a court of law.
- Incorrect year-end. A company secretary will make sure you establish a correct year-end so your company maximises tax benefits.
Company secretaries in recent years have been cast as a group who charge a fee but provide little value. A good company secretary however will protect the directors and shareholders in the company, by ensuring they follow the Companies Act.
Compliance with the Companies Act is a serious issue. Mistakes can mean that changes later become invalid in the court of law. Worse still, a secretary who is guilty of an offence under the Companies Act is liable for fines and even imprisonment.
For an annual fee of approximately SGD 700 (USD 560), a company secretary service includes a name registered on the company’s ACRA Bizfile, an annual filing and annual general meeting. Extraordinary general meetings and director’s resolutions are normally charged as an additional fee per piece.
All Singapore-registered private limited companies need to appoint a company secretary within 6 months of incorporation. If a company secretary resigns, the organisation has another 6 months to replace the company secretary.
Company secretaries are not required for a sole proprietorship or limited liability partnership (LLP) structures. This is one reason why the cost of compliance of sole proprietorship and LLP is less than private limited companies.
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About the author
Anthony Coundouris is the founder of an accounting and analytics firm Futurebooks Pte Ltd. Anthony is obsessed with helping start-up companies incorporate, conduct industry analysis and develop positioning. He has ten years experience in media and marketing, and was founder of Firestarter, a digital marketing agency.
Firestarter was acquired by Novus Media in 2010.
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