Information on the Singapore Company Law
In Singapore, companies should follow a constitution upon incorporation. If it is necessary, a company constitution should be amended later by following the correct procedure. However, Singapore companies do not prescribe rules that should be in the constitution. The provisions in the company constitution that violates regulations in the Companies Act cannot be enforced. You should be aware of everything about Singapore Company Law, so you will know how not to violate it.
The constitution puts limits on the organization’s powers of directors. They must see those confinements as part of their company obligations.
Singapore Company Registration
Under the Singapore Company Law, you must lodge the necessary documents and pay the fee according to the Accounting and Corporate Authority of Singapore (ACRA). Among them are the Memorandum and Articles of Association. Those are the constitutional documents and company regulations that contain their government provisions. The M&AA should give the company name, share capital amount, and if the company members liability is unlimited or limited. If there is a conflict between the Memorandum and Articles, the former is going to prevail.
Types of Business Ownership
The different types of companies which you can incorporate are either public or private. Usually, company formation depends on the extent of its members’ liabilities. The most common company type in Singapore is the limited liability company where the liability of members is bound by guarantee or shares. Aside from that, there are unlimited companies as well.
Effects of Registering a Company in Singapore
The main effect of company incorporation is that the company is a body corporate that can sue or others can sue them under their name. After all, the company has perpetual succession, with indefinite survival. It stops existing if it gets wound up, can have land, and the members have limited liability in case the company is wound up.
During incorporation, a company has a standout personality that the law recognizes. The existence of the company and identity is different from its members. The important consequence of this is the debts and obligations the company incurs are it’s own. Hence, the members do not have the company’s liabilities. The company creditors can only ask for company debt payments if the company does not have debts, the credits would have to bear the loss.
Power and Company Rights
The company’s power and rights are written under the Companies Act provision, the memorandum and articles, which no one may contest. The legal personality of the company will confer on specific rights. This includes owning property, to sue or be sued, keep its identity despite membership change, and to enter contracts. It also gives rights to separate from participants. The daily company management depends on the board of directors. They make sure the company follows these laws while protecting the interests of shareholders.
Corporate Veil Could be Lifted
Even if a company has its own personality, sometimes the courts will consider the company and the members as one. For instance, sometimes the courts could hold the company members liable for the debts the company incurs. That means the court can lift the incorporation veil either by common law or statute interpretation.
The Rights and Responsibilities of Shareholders
The company shareholders have specific rights given by the Companies Act. Since shareholders are not members, they may not exercise membership rights nor be subject to member liabilities. A person could become a member during incorporation or subscribe to be one. Members can make sure that the memorandum and company articles are followed. They should be able to access company finances and records, attend and vote during meetings, circulate general meeting calls, given fair treatment, and derivative actions for wrongdoings against the company.
Further, the company assets are it’s own since the company has its own legal identity. The shareholders can sue the company if there is a breach or there are unlawful activities they do.
The directors are company trustees and they owe fiduciary duties to their company. Additionally, the Act endorses specific obligations on directors that reflect their general requirements under the law. One important arrangement in section 157(1) that supports an executive continuously acting sincerely and using sensible determination in releasing office obligations. Section 157 (2) of the Act provides that an operator or officer must not make unnecessary data utilization because of their position rights as an organization specialist or officer. This aspect also covers picking up, by implication or deliberation, what he prefers or other individuals that cause an inconvenience to the organization.
Essentially, section 157 does not seem to be a thorough law proclamation that identifies the burdens executives owe their company. The impact of this section is to render that statutory commitments are obligatory and the responsibilities at custom-based law can handle prohibition by having an understanding between organizations.
Director Powers and Duties
The directors are part of the company’s daily activities. Therefore, the director or directors must be a natural person, who is at least 18 years old with a healthy mind, and Singapore resident. Their main duty is, to be honest in their actions all the time and be diligent in carrying out their duties.
Other general duties involve acting within their powers according to the company constitution. They must act for the good of the company, use independent judgment, exercise skill, avoid conflicts, show care and diligence, say ‘no’ to third-party benefits, and act in the company’s interests.
Ownership and Management Detachment
The Act expresses that the organization matter could be overseen by the chiefs. Further, the executives could practice all organization forces except any power of the act or what the company constitution requires during gatherings. This matter shows the organization law highlights that it must be specific so it can encourage a part of the possession and its administration. Those who own the organization should not associate it to the directors or organization.
While in a couple of organizations, the individuals from the company may connect with the administration. This could either be as a manager/director or another official limit in other organizations where the individuals are not part of the administration. The organizations are overseen by the sheets of executives where the significant number of directors are not those individuals from organizations.
These are the most important aspects of the Singapore Company Law that you must know about before incorporating a company. You can find incorporation specialists in Singapore; you just have to contact 3E Accounting because they are those people, and they will assist you.