Changes In Statutory Requirements for AGM and Filing of Annual Return with ACRA – Effect on 31 August 2018

Recently, the Accounting and Corporate Regulatory Authority (“ACRA”) of Singapore has announced new changes regarding the statutory requirements of Annual General Meetings (“AGM”) and filing of Annual Returns (“AR”) that will take effect on 31 August 2018.

What are the new changes to the requirements?

The timelines for holding AGM and filing AR – according to new changes, both AGM and AR now have to be aligned with the Financial Year End (“FYE”).
Exemption for private companies from holding AGMs due to specific safeguards.
Simplified process of filing AR for the solvent Exempt Private Companies (“EP”) and Dormant Companies.

1. Alignment of timelines of holding AGM and AR filing with the FYE

a. AGM
Before the amendment
Each Singaporean company (locally incorporated company) need to hold its first AGM within 18 months of incorporation and subsequently at intervals of not more than 15 months, according to Section 175 of the Companies Act. Under Section 201 of the Companies Act, all financial statements tabled at AGMs to be made up to a date within 4 months for listed companies or 6 months for not-listed companies before the date of AGM.

After the amendment
The new change has mandated the alignment of the timeline (provided in section 201) with the FYE of the filing company. In relation to this, the new requirement requires listed companies to hold their AGMs within 4 months after the FYE while other companies have to hold their AGMs within 6 months after the FYE.

b. AR
Before the amendment
Under the Section 197 of the Companies Act,

each and every locally-incorporated company in Singapore needs to file the AR within the timeline of 30 days after its AGM, while
Companies with a share capital and having a branch registered outside Singapore have to file the AR within 60 days after its AGM.

After the amendment

With the new rule, listed locally incorporated companies are mandated to file the AR within 5 months after their FYE while a 7-month window after the FYE is given to not-listed companies.

For companies with a share capital and having a branch registered outside Singapore, listed companies are given the timeline of 6 months to file their AR after the FYE while not-listed companies will have the timeline of 8-month after the FYE.

Do note that AR can only be filed in the case that:

after an AGM has been held; or
companies have been exempted from AGM (after financial statements have been sent); or
Private dormant companies have been exempted from preparing financial statements, after the FYE.

c. What is good about this new rule?

The alignment of the timelines (with the FYE) has simplified the compliance procedure for the companies. Previously the due dates for holding AGMs as well as filing ARs were unclear because the notification of FYE was not a mandatory requirement. The new rule spells out alignment and clarity for companies.

The following safeguards stipulate measurements that prevent companies from arbitrarily changing their FYE to comply with new requirements.

Upon incorporation, companies have to notify the Registrar of their FYE. In the event of any subsequent change, companies must also notify the Registrar.
The approval from the Registrar is a must for companies who have previously changed the FYE within the last 5 years, and they wish to change their FYE again, or if the changes of FYE would lead a longer financial year to more than 18 months.
The duration of the financial year cannot be any longer than 18 months in the year of incorporation or any year in which there is a change in FY, unless the Registrar allows the case.
Only FYE of the current and immediate previous financial year may be affected (with the condition that there is no lapse in the statutory deadlines for AGM, AR and Financial Statements).

d. A closer look at different cases:

For the newly incorporated companies (before 31 August 2018)
The anniversary of the notified date (notification of their FYE to the Registrar) will be the FYE. In the case without a FYE notification, the date on incorporation will be legally the FYE. Companies who wish to change their FYE may apply to the registrar through the transaction ‘Change of Financial Year End” to change the FYE. Companies with abnormal FYEs also can notify the Registrar of the same so that they do not have to seek approval from the Registrar every year.
For the newly incorporated companies (after 31 August 2018)
- The company is mandated to notify the Registrar of its FYE upon incorporation.
- The due date for AGM is 6 months after FYE.
- The due date for AR is 7 months after FYE.

2. Exemption for private companies from holding AGMs due to specific safeguards.

Prior to the new rule, private companies are allowed to dispense with holding AGMs upon the approval of all members according to the section 175A of the Companies Act. To newly introduced requirements have played a role to reduce the compliance burden on private companies as well as prevent companies from disobeying the regulations.

a. Companies can dispense with holding AGMs if

It submits its financial statements to its members within a 5-month window after the FYE( the dormant relevant companies that are exempted from laying financial statements under Section 201 for a financial year pursuant to Section 201A is exempted from this requirement), and
There are no requests for an AGM to be held (requests from members) at least 14 days before the end of the sixth month after the FYE.
exceptions:
- The director of the company must hold an AGM within 6 months after the FYE, if the company receives the member’s notification to hold an AGM not later than 14 days before the end of the sixth month after the FYE.
- The director is allowed to request for an extension of time to hold an AGM upon the approval of the Registrar – in the case the director cannot meet the deadline.
- An AGM must be held if any member or auditor has requested for an AGM within 14 days after sending the financial statement where the Registrar has to be notified of the AGM held.

b. For companies which have decided to dispense with holding the AGM can move on with their decision but the timelines for filing AR and holding AGM must be realigned with the FYE.

The following changes have to be put into consideration:

Companies must file the AR within 7 months after the FYE.
A member can notify the company to request for an AGM at least 14 days before the end of the 6-month period after the FYE, instead of 3 months before the FYE
According to the new requirement, the AGM must be held if at least 3 months remain to the AGM due date if the dispensation resolution of the members ceases to be in force.

3. Simplified process of filing AR for the solvent Exempt Private Companies (“EP”) and Dormant Companies

Companies are eligible to file Simplified Annual Returns if:

Their FYE falls on or after 31 August 2018 and,
They have declared themselves as “Solvent Exempt Private Company” or “Private Dormant Relevant Company” in their last Annual Return
No audited financial statements will be prepared; and
They do not need to file financial statements with ACRA.

Under the new rules, the filing process for the solvent EPCs and Dormant Relevant Companies have been simplified because ACRA will pre-fill most of the information in the AR Form. In other words, they only need to verify the accuracy of the information and select the available options and dates as indicated, right before the submission.

What is the process of filing Simplified Annual Returns?

In Singapore, companies can choose to file Simplified Annual Returns via:

BizFile+ portal
Step 1: After logging in to BizFile+ portal, select “Filing of Annual Return by Local Company” transaction,
Step 2: Enter the Company UEN.
The system will validate to see the company’s eligibility in filing a Simplified Annual Return.
ACRA-On-The-Go mobile app (from 31 August 2018).
ACRA-On-The-Go mobile app allows appointed company officers to file their annual returns even when they are on the move.