About Holding Annual Meetings
When you hold an annual meeting, you are complying with the Companies Act of Singapore. This compliance requirement is issued by the Accounting and Corporate Regulatory Authority (ACRA). The shareholders and its directors are accountable if their company fails to hold an annual meeting. It is strictly mandatory and there is a consequence if the company does not comply. There are situations when the ACRA imposes a penalty and you would have to go to court and settle it. The court summons and penalty could cause a big hurdle to your business operations.
It is very important that the annual meeting schedule is on time so the participants will know in advance. They could send their proxies if they are unable to make it. This way, the annual meeting will push through with enough people and a number of voters. In addition, you can be sure that you can fulfil this requirement without delays.
What is an Annual Meeting?
Based on the Singapore Companies Act, a new company should have its first annual meeting within 18 months from the date it was formed. After that, the next meetings must take place once every fiscal year. The company just needs to make sure it happens within 15 months from the first one. All the companies that are incorporated in Singapore must follow this law.
In the meeting, they must present financial statements to the shareholders so they can have an idea of their company’s financial health.
FYE, AGMs, and the Annual Returns
Importance of the FYE
The financial year-end is at the end of the accounting period, and it happens every 12 months. The deadlines of the FYE are set for the filings needed for AGMs. Even if you dispense AGMs, you must prepare documents for the annual returns. You must not worry because it is the job of the company secretary alone.
Every company with an exemption from conducting AGMs should send a copy to all shareholders within 5 months of the FYE. Depending on what type of company you own, you must either submit it to ACRA with the Annual Return or not.
If there are less than 20 shareholders and none is a corporation, you are not obliged to send a financial statement to ACRA. Businesses that other businesses partially own must turn in their financial statements. Even insolvent companies must do it.
These are documents that indicate the company’s status and financial health. The AR filing must only take place after all shareholders sign the resolution to approve the financial statements. ACRA requires you to lodge it within 7 months of the FYE.
Annual General Meeting Dispensation
Private limited companies have a choice to not hold annual meetings if all the members and shareholders submit their written resolution. After the dispensation decision is set, all matters which are supposed to be discussed during the AGM can rely on the written resolutions that shareholders will pass to its members. A meeting is no longer necessary.
There are a couple of obligations that must be done after dispensation:
- Preparation of the financial statements after the FYE.
- Sending financial statements and other documents, including a Directors’ Report and Statements to members and shareholders.
- The resolutions will circulate after the shareholders pass them.
In Case Your Company Needs an Extension
If your company cannot hold an AGM within a specific time-frame, you may file an application for an Extension of Time (EOT) at ACRA. According to the rule, the company’s officer or firm can file an application for EOT. Similar to all other transactions with ACRA, this application is also sent through the Bizfile portal. ACRA is going to grant a maximum of 2 months extension and it costs S$200 to apply for it.
How Soon Can You Apply for an Extension?
You should apply for the EOT before the deadline for your next AGM.
ACRA could take up to 14 days for processing the application. Sometimes, it could take longer, if you need to make further clarifications. Therefore, it is best to submit the application and payment more than 14 days before the deadline.
There Are Now Hybrid AGMs
A virtual AGM is not for all companies and could be a hurdle that is too big for the company to be able to convince all shareholders to go virtual.
Companies with a lot of shareholders that want to increase the access of their shareholders to AGMs can opt for the virtual format. Here, the AGM is conducted virtually in a room at the same time. This might be a better option for listed companies in another country but that is not their base. By doing this, they can accommodate shareholders from both countries.
Aside from considering the different geographic locations of shareholders, hybrid AGMs appeal to both young and old shareholders because they have options.
Other Guidelines When Holding an AGM
The meeting’s quorum must have at least two persons for it to be valid. A proxy can attend for the member who cannot be present during the meeting.
AGMs are led by the chairman, who is normally the chairman of the board of directors. The chairman will govern the meeting to make sure it runs properly.
- Annual General Meeting proceedings
- Formation and quorum meeting (they can appoint a proxy if necessary)
- Chairman conducts a meeting
- Minutes of the meeting must be recorded
- Laying the year’s account
- Discussion of matters that are in the AGM notice
The minutes of the meeting must include resolutions because it is subsequent to the AGM. It should also have the appointments of officers, and it must include the declaration of their interest to transactions. The chairman will sign the minutes of the meeting after the meeting.
These are the important things you must know about AGMs. You must contact 3E Accounting for Singapore company incorporation services. They can help you set up a company in Singapore.