Information on Company Constitutions in Singapore
You will find comprehensive information here that is helpful when it comes to forming company constitutions in Singapore. You must know how to start a business, register your company as an individual, and if you are a foreigner. Singapore has one of the highest economies in Asia, which is why they have a couple of requirements that you must compile so your company can be registered. Once you have done this, you can start operations.
A company constitution must contain the basic framework of how the company is organized. It will outline the company’s objects and it governs the powers, rights, obligations, and duties of a company. This also applies to shareholders and a board of directors.
What is the Company Constitution?
The company constitution is a legal document that becomes part of the good corporate governance of Singapore. This is to make sure the country continues to be an ideal place so they can set up and operate a business easily regardless of where they are from. The Singapore Companies Act is the law that all companies and businesses should comply with. The CA was updated in 2015. The Company Constitution became mandatory for the new companies that will be incorporated after that.
If the company incorporation was done after January 3, 2016, the Company Constitution is a document that:
- Says the company name, the kind of business it will offer, the members’ liability, and the company’s capital amount.
- It also outlines the company’s main purpose, the responsibilities and rights to directors and how the company should operate.
A company should follow the constitution rules. The Company Constitution should be given when you are applying for company incorporation.
As someone who owns a business, you could create a constitution of your own, or choose to adopt the model constitution. It comes from the Singapore Accounting and Corporate Regulatory Authority (ACRA). This reduces the cost of how much it is to set up a company and streamline the company’s administration requirements.
Company Constitution Clauses
There are a lot of clauses that are part of the company constitution in Singapore. These clauses have to provide complete information about the company and statutory requirements. The name clause is one of them, which defines the company name that is registered at the Company Registrar. The company must use the name all the time, especially when they execute official duties. The name should be in the official documents. The office clause will state the company’s physical location or address.
Another one is the liability clause that ensures the extent of their liabilities, and it should be written. The information about liabilities is important during the company dissolution and members’ position clarification. The capital clause indicates how much capital is in the company and how it is divided.
The subscriber clause is about the subscribers’ position when it comes to the constitution. This includes their full names, addresses, and occupations. It also states how many shares each subscriber must claim.
The objective clause states that the business objectives of a company can be said within the constitution. The main ancillary objectives should be written. Other matters that are related to the company must also be included. However, this clause is mandatory in the constitution.
The Terms and Conditions
These conditions are what you need for a company constitution. Other terms may also be:
- Issue, allotment, and shares transfer. For private companies that are limited by shares, the constitution must limit the right company shares transfer, and its members must not be more than 50.
- Organization and conduct of board and meetings of shareholders.
- Removal of directors and appointment.
- Distributing and capitalizing profits.
- Distributing surplus assets in case they get wound up.
The good thing is that there is no need to draft a company constitution from scratch. There is a model constitution that can be referred to.
Registration and Submission of a Company Constitution
When you want to do company incorporation, a copy of the company’s constitution should be given as well. You have to log in to your BizFile+ account.
After setting up your company, you will need to get a CorpPass so you can file a transaction in BizFile+.
You will receive an email notification for your endorsement and the appointed officers will receive it. You can also access this email from BizFile+.
The company directors, company shareholders, and company secretaries should endorse their consent through BizFile+ not longer than 60 days from when the email notification was sent.
The company registration fee is $300.
Shareholders’ Agreement Vs. Company Constitution
The shareholders’ agreement is a formal agreement between the company shareholders to support the private limited company constitution.
The agreement details of shareholders details how parties understand it and the way the company is handled. It also states the powers, rights, relationships, and obligations of the parties. The scope of the agreement depends on the purpose.
For instance, it might say about the consequence of when a shareholder dies, or how they can buy out the other if there is a dispute. The agreement of shareholders may also talk about circumstances, regulations, and rules about company management and policies. The company or rights of shareholders to acquire or dispose of shares.
- Altering the shareholders’ agreement needs a higher approval percentage rate. While a company constitution alteration can be based on votes.
- Unlike the company constitution, the shareholders’ agreement cannot be scrutinized by the public.
- The shareholder’s agreement may detail rules for matters governing that are not part of the company constitution.
How to Amend Your Company Constitution
There are several procedures that must be followed when you are amending the company constitution. The rules are:
- Fix errors.
- Replace the old English terms to modern.
Renumbering object clauses without changing the language are not considered as changing the company objects. However, this change considers an amendment to constitutions that require certain procedure compliance.
This is what you need to follow when forming a company constitution in Singapore. You need a company to help you with this in Singapore, especially if it is your first time. You can contact 3E Accounting for their Singapore Incorporation Service Package. They will assist you in every step, even when it comes to forming the correct company constitution that you can use for your business.