Guidebook for Singapore Directors and Directors Compliance Programme (DCP) in Singapore
ACRA launched its first handbook for directors titled “ACRA & I – Being an Effective Director” on 28 July 2011. The handbook is written for new or aspiring directors to better understand their responsibilities and duties. It also serves as a practical hands-on guide for these directors on the know-how in performing their statutory duties and meeting their legal and compliance requirements. The director’s handbook is launched as a part of ACRA’s suite of initiatives in the promotion of voluntary compliance among companies.
All private limited companies in Singapore must appoint at least one local resident director. Understand the Role, risk and Responsibilities of a Singapore Company Resident Director.
When the director of a company in Singapore resigns, there are several matters which must be attended to. The Accounting and Corporate Regulatory Authority (ACRA), who is the Registrar of Companies in Singapore, must be notified. ACRA must be informed within 14 days from the date the director resigned.
A Singapore company local resident director has a major role to play, and they are largely responsible for the overall success that is achieved by the company. As such, the responsibilities of a Singapore company director should not be taken lightly.
Director’s Requirement
Under the Companies Act, the minimum number of directors required is one. The maximum number of directors will usually be stated in the company’s Articles. In addition, there must be at least one director of the company who is ordinarily resident in Singapore.
There are various circumstances where a director may face disqualification. Once a person is disqualified, he will not be allowed to be a director or take part in the management of any local or foreign company unless he seeks permission from the High Court or Official Assignee, if applicable.
The circumstances which disqualify a person from being a director include the following:
Being an undischarged bankrupt.
Conviction for certain criminal offences which involve fraud or dishonesty.
Where a disqualification order has been made against him by a court.
Has been convicted for 3 or more filing related offences under the Companies Act within a period of 5 years.
Has 3 or more High Court Orders made against him compelling compliance with the relevant requirements of the Act, within a period of 5 years.
Company being wound up for reasons of national security or interest.
Under certain circumstances, the High Court or the Official Assignee may grant the disqualified person permission to continue to be a director of a company. The disqualified director must notify ACRA via Bizfile if this is the case.
Director’s duty and responsibility
As a director, you are responsible for ensuring that your company complies with all of its statutory requirements on time. Two important ones would be holding of the company’s Annual General Meeting (AGM) and the subsequent filing of Annual Return (AR) by the specified due dates. Even though it is not obliged to do so, ACRA sends out reminders to companies and their directors to fulfill these obligations.
To carry out your duties as a director well, it is necessary for you to be fully aware of the duties and responsibilities expected of directors. Directors are fiduciaries of the company which appoints them. A fiduciary is a person who is expected to act in the interests of another person. Hence, as a director, you have a duty to act in the way you honestly believe to be in the best interest and benefit of the company.
Directors are also agents of the company. This means that you are acting for the company and in turn, the company is bound by your acts. Thus, it is important for you to exercise reasonable skill, care and diligence when carrying out your duties as a director. The duties owed by directors to a company are found in the common law and the Companies Act. The following are some key duties which will be discussed in greater detail:
To act honestly and in good faith in the interest of the company
To avoid conflict of interest
To exercise care, skill and diligence
To not misuse power and information
Directors Compliance Programme (DCP)
The Directors Compliance Programme (DCP) is a new training programme organised by the Institute of Corporate Law for directors who have been in default for the first time for failing to comply with key and basic statutory requirements under the Companies Act (Cap. 50). These include holding the Annual General Meeting and the timely filing of Annual Returns.
An internal study by ACRA showed that many directors are unaware of the basic statutory requirements under the Companies Act and what their duties and responsibilities are. To address this, ACRA will offer these directors the option of attending the training and the chance to rectify their defaults thereafter, in lieu of prosecution.
Why have I been asked to attend the Directors Compliance Programme?
If ACRA has sent a letter stating that you are required to attend the DCP (the “Letter”), it is because you have not fulfilled your statutory obligations of:
conducting an AGM within 15 months from end of your last financial year (18 months from the date of incorporation in the case of a new company); and/or
filling your company’s annual returns,
and you have never been prosecuted by ACRA previously.
Significance of the Directors Compliance Programme
Your attendance at the DCP is compulsory and failure to attend will result in you facing financial penalties for the default of your statutory obligations.
The course fee of $250 is generally lower than the late lodgement fee or composition fine that is typically imposed by ACRA on directors for failing to comply with the filing requirements under the Companies Act. ACRA may waive the penalties for these directors, upon their successful completion of the training, and, subject to their filing all the necessary documents under the Companies Act within a revised deadline stipulated by ACRA.
In general, Directors who attend and complete the DCP will be given an extension of 60 days to hold their AGMs, lay their accounts at the AGMs and file their annual returns without having to pay any late filing penalty.
However, if such directors choose not to register the DCP or after attending the DCP, they still fail to rectify their defaults, ACRA will proceed to prosecute them accordingly. No Composition will be offered to such directors once a court summons has been issued to them.
Pay the S$250 registration fee that includes GST, course materials and light refreshments. Kindly remind that the DCP does not qualify for Singapore Workforce Development Agency disbursement.
Attend the session in person (representatives are not allowed) and ensure you arrive punctually – you will be deemed absent if you arrive more than an hour late from the registration time for the session you have selected.
In cases where you have fulfilled your statutory obligations within the statutory time limits and the Letter was mistakenly sent to you, ACRA will not require you to attend the DCP and no financial penalties will be imposed against you.
In cases where you only complied with your statutory obligations between the time you received the Letter and before the deadline for registration, ACRA will consider the individual circumstances of your case when deciding whether you are still required to attend the DCP.
If they decide that your attendance is not required, no further action is required from you. If they decide otherwise, please refer to the steps under Option 1.
Option 3: Striking off your company
Attendance at the DCP is not required under option 3. However, the striking off application must be made by the due date stipulated in the letter inviting the director to the DCP and subject to ACRA’s approval.
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