Changes to Companies Act Cap 50
- Posted by admin
- 05 October 2012
- Company Secretarial
Overhaul of the Companies Act, Cap 50
The Companies Act Cap 50 will be going through a major overhaul since the Ministry of Finance has accepted most of the recommendations put forward to it by the Steering Committee. The Ministry will however seek public feedback on the draft amendment sometime next year before implementing the changes.
We set out below the brief summary of the changes to the Companies Act Cap 50 affecting private limited companies:-
Private limited companies are allowed to specify in their Memorandum & Articles of Association with regards to the mode of electronic transmission of documents to be used. However, the Ministry will impose safeguards for standards on such use. Liberalising such modes will help out companies reduce cost and increase efficiency.
Directors’ Disclosure of Interest Extended to Chief Executive Office (CEO)
CEOs of private limited companies are required to disclose any conflict of interests in transactions, shareholdings in the other companies and related corporations. This move will ensure consistency with disclosures under the Securities and Futures Act.
Exempt Private Companies (EPC) still exempt
An EPC is a private company which has not more than twenty (20) shareholders and the shares are not directly or indirectly held by a Corporation.
EPCs will still be exempted from filing the annual financial statements.
Small Companies – Audit Exemption
A new concept for small private limited companies will be introduced in determining the requirement for statutory audit. So long as two of the three criteria below are fulfilled, they will be exempted from audit:-
(i) Annual revenue totaling not more than S$10million;
(ii) Gross assets totaling not more than S$10million;
(iii) Employees totaling not more than 50.
These criteria will be consistent with the Singapore Financial Reporting Standard. All existing rules, regulations and safeguards will be maintained as well.
Dormant Companies – Audit Exemption
A private limited company which is a subsidiary and whose main corporate shareholder is not publicly listed, will be exempted from preparing the annual financial statements.
Address of Company Directors
All company Directors are allowed to provide ACRA with an alternate address (such as company registered address) during filing of applications instead of the residential address. This will provide the directors with some measure of privacy. However, rules and safeguards will be imposed to prevent any abuses.
The Ministry of Finance has decided that there is no need to codify the duties of directors in the Companies Act Cap 50 similiar to the UK Companies Act 2006 as this may result in a loss of flexibility and reduce business efficacy.