In Singapore’s dynamic business environment, maintaining a strong corporate compliance and corporate governance practices is essential for long-term success and sustainable growth. Renowned for its robust legal system, Singapore prioritises corporate governance and compliance to guarantee moral business practices, safeguard the interests of shareholders, and uphold the nation’s standing as a major international business hub.
What is Corporate Governance?
Corporate governance is the set of policies, procedures, and guidelines that govern how an organisation is run. It entails striking a balance between the needs of a business’s numerous stakeholders, including the government, the community, suppliers, consumers, shareholders, and managers.
Ensuring innovative, responsible, and efficient management is the aim of corporate governance, as it contributes to the company’s long-term prosperity and sustainability.
The Monetary Authority of Singapore’s (MAS) Code of Corporate Governance serves as the foundation for corporate governance in Singapore. Publicly traded companies are required to report their corporate governance practises on an annual basis, even though they are not required to follow the Code.
Role of the Board & CEO in Corporate Governance
Board of Directors
In terms of corporate governance, the board of directors is essential. It is in charge of managing the strategy, choices made, and general performance of the business.
The Board’s main duty is to guide the business, establishing its strategic objectives and making sure it has the resources needed to maintain its competitiveness. In addition, the Board sets policies for controls, evaluates management performance, and takes sustainability into account.
In Singapore, the board’s composition is strictly regulated to guarantee diversity and competence. Ideally, at least half of the board should consist of independent directors, particularly in cases where the CEO and chairman are related family members or the same individual. Diversity on boards has received more attention recently, especially with regard to gender representation.
CEO
The Monetary Authority’s guidelines recommend that the CEO of the company and the Board should be clearly distinguished from one another. Within the organisation, no one person should hold an excessive amount of authority or control. The CEO and Chairman should ideally be two distinct individuals with distinct roles and responsibilities.
The Chief Executive Officer bears responsibility for the organisation’s achievements and is anticipated to guide with honesty, openness, and a dedication to generating lasting value.
What is Corporate Compliance?
Adherence to legal requirements, ethical standards, and regulations that are pertinent to a business’s operations is referred to as corporate compliance. In Singapore, credibility and trust are cultivated through upholding strict corporate compliance standards. Serious fines, harm to one’s reputation, and legal implications can arise from noncompliance.
Corporate Compliance Requirements
Companies operating in Singapore need to navigate a well-established regulatory framework to ensure compliance. Among the essential prerequisites are:
Legal Requirements
Singapore law imposes a number of compliance requirements on companies that are incorporated there.
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Registered Office: Every Singaporean business is required to have a physical address in the nation that is accessible to the public for a minimum of three hours every day during regular business hours.
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Company Secretary: Singapore corporations must designate a minimum of one resident company secretary who will oversee the company’s adherence to all applicable regulations.
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Company Director: A minimum of one director in a Singaporean company needs to be a Singaporean citizen. This individual may be a foreign national with a valid employment permit, a citizen, or a permanent resident.
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Data Protection Officer: All businesses are required by the Singapore Personal Data Protection Act (PDPA) to designate a Data Protection Officer (DPO) and to have a data protection policy.
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Name and Unique Entity Number (UEN) Display: All company correspondence, including invoices, publications, official notices, and letters, must include the company’s name and UEN.
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Employment Law: Employers and employees in Singapore are subject to the Employment Act, which governs all facets of business operations and specifies their rights and obligations.
Operational Requirements:
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Licensing: Depending on the industry, a number of regulatory bodies in Singapore issue licences to operate, which are necessary for many businesses in Singapore.
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Annual General Meeting (AGM): Publicly traded companies have four months after the end of the fiscal year to hold their AGM, whereas privately held companies have six months.
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Maintaining Company Records and Registers: Singaporean businesses are required to maintain specific records and registers. While some should be kept at the company’s registered office, others should be maintained with ACRA. Among them are:
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Register of substantial shareholders
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Register of registrable controllers
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Register of Nominee Directors
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Register of members (shareholders)
Accounting Requirements
Accounting and other records that adequately explain the company’s transactions and financial situation must be kept by every business.
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Submission of Annual Returns to ACRA: Within seven months (for private companies) or five months (for public companies) following the conclusion of the fiscal year, businesses are required to submit their annual returns to ACRA through the BizFile+ portal.
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Appointment of Auditor: Unless the company is exempt as a small company, the directors of a company must appoint an auditor within three months of the company’s incorporation.
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Taxes: Every business, including foreign subsidiaries, is required to file an annual income tax return. Additionally, if a business’s taxable turnover surpasses SGD one million annually, it must register for the Goods and Services Tax (GST).
In Conclusion…
A proactive and all-encompassing strategy is needed to successfully navigate the complicated world of Singapore corporate governance and compliance. Adhering to sound corporate governance and compliance is not merely a legal requirement; rather, it is an investment in the prosperity and adaptability of the company in Singapore’s cutthroat and internationally interconnected marketplace. Businesses can prosper and enhance Singapore’s standing as a leader in moral and open business conduct by comprehending and putting these principles into practice.
You should think about collaborating with seasoned Growth Partners to help with your corporate compliance and governance requirements. To find out more, schedule a free call now.
The material / information contained above or other parts of this website is for general information purposes only and should not be relied upon for tax, legal or accounting advice. You should consult an expert in the relevant field before engaging in any transaction since applicability of the above may be different on the facts and circumstances of your situation. While we have made every attempt to ensure that the information contained on this website has been obtained from reliable sources, we are not responsible for any errors, omission or the results obtained by using the above information. We are not responsible for updating the above for changes in law, practices, or interpretation.
