If you operate a company in Singapore, you are legally required to appoint a company secretary. This article will provide an overview of the duties that a secretary performs for you, and how to choose and appoint a company secretary.
Contents:
- What is a company secretary?
- How soon do I have to appoint a company secretary?
- Who can be a company secretary?
- What duties and responsibilities does a company secretary have?
- Which company secretary is best?
- Online vs offline secretary
- How to appoint a company secretary?
- How to terminate and replace a company secretary?
What is a company secretary?
A company secretary is an individual that manages compliance with ACRA requirements. These requirements span several key areas:
- Corporate governance compliance
- Financial and legal compliance
- Shareholder administration
There is a list of compliance functions that ACRA sets out for all companies in Singapore, and you have to follow these requirements. A company secretary will take care of these administrative tasks, so that you can instead focus your energy on growing your business.
Typically, most companies in Singapore will engage corporate secretarial firms to provide these services, rather than have an in-house employee perform these admin functions. It’s usually much more cost-effective this way.
How soon do I have to appoint a company secretary?
You must appoint a company secretary within 6 months of incorporating your firm in Singapore.
You cannot operate without a company secretary for more than 6 months.
Who can (and cannot) be a company secretary?
The law sets out specific requirements for who is allowed to serve as a company secretary.
Professional Qualifications
Corporate secretaries need to possess one of the below:
- Degree in Law, or Accounting, or Public Administration, or
- Relevant professional experience in Pensions, Accounting, Personnel Management, or Credit Control
Must be residing in Singapore
The following types of individuals can serve as company secretaries:
- Singapore citizens
- Singapore PRs
- Employment Pass holders
- S-Pass holders
The company secretary must reside in Singapore. Even if you’re running a foreign company, the secretary you use must live here.
Company secretaries who are on an Employment Pass/S-Pass just need to have a Singapore residential address, and be ordinarily resident here.
Sole Directors
If you are the only director in your company, you cannot also be the company secretary. You have to appoint someone else (e.g. a secretarial services firm) to fill this role.
Company Secretary Requirements for Public Companies:
A Public Company in Singapore is any company that has more than 50 shareholders. It does not necessarily refer to companies that are publicly-traded on a stock exchange.
The requirements to serve as a company secretary for public firms are:
- You must have served as that company’s secretary for at least 3 years out of the past 5 years, OR
- You are a member of the Institute of Company Accountants in Singapore, OR
- You are a member of the Institute of Company Accountants in Singapore, OR
- You are a member of the Institute of Company Accountants in Singapore, OR
- You are a Chartered Public Accountant, OR
- You are a Qualified Person under the Legal Profession Act
You have to fulfill at least one of the above criteria to be eligible. These criteria are stricter because public companies have more shareholders, and their shares are open for investment to the public. Individuals who wish to take on these greater responsibilities must therefore possess stronger secretarial skills.
Debarred corporate secretaries
If corporate secretaries fail to fulfill their duties properly, ACRA can debar such individuals (i.e. ban them from performing secretarial duties for a period of time). These debarments can extend to company directors also. It’s thus important to pick a good corporate secretary that will be able to fulfill their duties in a timely and professional manner.
Which company secretary is best?
There’s no single “best” company secretary in Singapore. However, there are some important qualities that are helpful to have in a good company secretary.
Such qualities include:
- Speed of response: Is the company secretary able to respond quickly to your enquiries? If you need something done quickly, are they able to fulfill your request?
- Ease of use: Is the company secretary available only during limited hours? Do they communicate solely over traditional methods like email, or do they perhaps have an App or online platform that you can use?
- Use of technology: This is intertwined with the “ease of use” point above. Is your company secretary leveraging technology to provide you with more efficient service?
- Domain knowledge: Is your company secretary experienced in the various matters surrounding incorporation, corporate governance, filing requirements, shareholder issues, and more? You are going to be turning to them for a fair number of compliance/administrative tasks, so they need to know what they’re doing. Don’t accept the services of someone who tells you to go Google it yourself.
- Customer reviews: Do some research on your shortlisted company secretary. Are there unbiased customer reviews online? What do other people think about the quality of their services?
- Pricing: What are the rates being charged? Is it above market, average, or below market?
Online vs brick-and-mortar corporate secretary
As with many industries, there is a bit of a technological revolution going on in the corporate secretary space. A crop of new startups that are leveraging technology to make secretarial processes more efficient have emerged in Singapore.
These online corporate secretaries tend to provide their services more quickly, and charges prices that are lower than their brick-and-mortar competitors.
Read about Singapore’s 5 best online corporate secretaries here.
How to appoint a company secretary
Once you’ve chosen a corporate secretary, you’ll need to go through the process of officially appointing this individual (or external company).
Here are the four steps to appoint your company secretary:
1. Call for a shareholder’s general meeting
Send a written notice to all shareholders to call for a general meeting. You have to send a written notice at least 14 days in advance of the meeting. However, if your shareholders consent, you can waive this 14 day requirement and hold it on shorter notice.
2. Hold a vote to pass an ordinary resolution
You must receive above 50% of the votes. This will allow you to pass an ordinary resolution appointing your secretary.
3. Have the company secretary fill out Form 45B
The chosen secretary must complete ACRA Form 45B. This form provides for the written consent of the secretary to provide their services to you.
4. Update ACRA
You must update ACRA within 14 days of appointing your company secretary.
How do I update ACRA on my new company secretary?
To officially appoint your chosen company secretary with ACRA, follow the steps below:
- Go to BizFile+
- Log in using your CorpPass
- Click “Appointing secretary”
How long does ACRA take to update records showing your company secretary?
It usually takes 1-2 days for updates to be processed and reflected.
How to terminate and replace a company secretary?
Maybe your company secretary’s services are too slow or expensive, and you’re thinking of replacing them with another firm or individual.
The steps to remove a company secretary are almost exactly the same as the steps you took to appoint one.
In summary, to remove a company secretary, you must:
- Call for a shareholder’s meeting
- Pass an ordinary resolution (i.e. receive at least 50% of the shareholder vote)
- Update ACRA on the change in company secretary
The appointment process requires written consent from the secretary before the appointment can be concluded. However, when terminating a secretary’s services, you don’t require written consent from them (that would quite defeat the point of removing someone’s services).
Do remember that you cannot operate for longer than 6 months without a secretary. If you terminate your current one, find a replacement quickly. Otherwise, with all the humdrum of daily business, you might forget and end up scrambling at the last minute to appoint a secretary, or you may even breach this 6-month maximum timeline and face potential penalties.
Duties and responsibilities of a company secretary
Company secretaries handle important administrative and compliance functions for your firm.
Statutory Filings
Ensure that statutory registers contain accurate, and up-to-date information.
- Register of Controllers
- Register of Debenture Holders
- Register of Nominee Directors
- Register of Directors’ Interest in Shares & Debentures
- Register of Directors, Secretaries, Auditors, CEO
- Register of Company Charges
- Register of Substantial Shareholders (shareholders with >5% stake)
ACRA Filings
- Filing appointments and changes to directors
- Filing annual returns
- Changing the company name
- Filing share allotments/transfers
Board Director Meetings: GMs, AGMs, EGMs, etc.
- Send required written notices to shareholders of meetings, within required timeframe
- Prepare any ordinary and special resolutions to be passed during meetings
- Distribute any necessary material, like financial or legal reports
- Take attendance of shareholders/directors
- Maintain proper voting procedures
- Ensure no miscounting of votes
- Record the meeting minutes
- Certify the meeting minutes
General Duties
- Advising the firm on business insurance requirements
- Ensuring the company’s letterhead is properly administered on all official external company communications (e.g. letters, quotations, invoices, etc.)
- Keeping the corporate seal safe
- Advising directors on general compliance issues
- Maintaining proper communication between officers/directors and shareholders
The key roles and responsibilities of a company secretary
Providing compliance advice to the Board of Directors: A good company secretary will be well-versed in the various laws and compliance requirements that companies must abide by. They will know the correct processes that need to be carried out for important decisions that affect the Board.
For instance, let’s say the Board of a company wishes to pay a company director a termination fee. Paying this “golden handshake’ to a director who’s leaving the Board might seem like a good decision to maintain amicable ties to a member who’s made admirable contributions to the company. However, such a payment is actually illegal, unless consent is first sought from the firm’s shareholders. A good secretary would be able to advise the Board that they would have to hold a shareholder vote first. Otherwise, it the directors involved would be guilty of an offence under the Companies Act. Our guide on director’s fees explains such laws, and more, in greater detail.
A good corporate secretary will be able to provide quick and decisive advice in such situations, that could save the Board not just from public embarrassment, but potentially even jail terms or fines.
Acting as a communication channel between the Board and shareholders: If a company is small, then shareholders can often just approach the directors with questions. However, in a larger company, such interactions might be distracting. As such, corporate secretaries can act as a filter for shareholders. They can answer common questions that shareholders have, and escalate more important questions to the Board. They can also take note of which issues are most pressing for shareholders.
Directors can the take this feedback to formulate appropriate responses at the next General Meeting. This helps directors maintain better relationships with shareholders. It also helps shareholders gain more transparency into the company’s functioning.
Serving as a Compliance Officer: Large companies can easily afford to staff compliance units that have dozens or hundreds (or maybe even thousands) of staff. However, for SMEs, compliance units need to be lean so that limited resources can be maximised for growth. An company secretary can be a cost-effective way for SMEs to have an outsourced compliance function. This way, smaller business owners don’t need to worry about falling afoul of compliance requirements, and they can concentrate on running their business.
Performing a Fiduciary Duty: Company secretaries owe a fiduciary duty to all their clients. This means they must put your interests first, above theirs. A company secretary must:
- Not enter into any conflict of interest with you
- Not use their position to profit for themselves (e.g. taking confidential info from you and selling it to competitors)
- Act only within the powers granted to them and agreed between your firm and them
- Carry out their duties with reasonable skill, care, and diligence
