Filing Annual Returns For Your Business
As a small company just starting out, filing your Annual Returns can be a somewhat precarious task. In addition, you will have to deal with other issues such as legal compliance. To make the process of filing your Annual Returns a smooth-sailing one, here are the key requirements you need to know.
Is Your Company a Public, Private or Dormant?
To begin filing your Annual Returns, it is important to first ascertain which category in ACRA your company belongs to.
In general, companies are classified into 3 broad categories: Public, Private or Dormant.
If your business has more than 50 shareholders, is limited by a guarantee and is listed on the Singapore Exchange (SGX), it is considered a Public company.
Private companies refer to non-listed companies. They are further divided into 2 categories – Exempt Private Companies (EPC) and Non-EPC companies:
- EPCs are Private companies with at most 20 shareholders.
- Non-EPC companies are Private companies with more than 20, but at most 50 shareholders.
There are also 3 kinds of EPCs – Small, Normal and Dormant EPCs:
- Small EPCs have annual revenues up to S$2.5 million or S$5 million (depending on financial year before or after 1 June 2004)
- Normal EPCs have annual revenues that exceed S$2.5 or S$5 million (depending on financial year before or after 1 June 2004)
- Dormant EPCs are EPCs that do not have any accounting transactions.
According to section 205B(2) of the Companies Act (CA), if your company has no accounting transactions for a certain period, it will be classified as a dormant company for that period.
Transactions that do not affect the dormant status of your company include appointing an auditor, maintaining a registered office and the keeping of registers and books.
Dormant companies are still required to file their Annual Returns though they are exempted from audit for any financial year beginning on or after 15 May 2003.
Is Your Company Solvent?
Once you have ascertained which category your company falls under, it is also important to determine the solvency of your company. There are different filing requirements for companies that are solvent (i.e. able to pay their debts as and when these fall due) and companies that are insolvent (i.e. unable to pay their debts as and when these fall due).
A company is considered insolvent if:
- A creditor has served a statutory demand on the company for a sum of more than S$10,000, and the company fails to pay the sum, or to secure or compound it to the creditor’s reasonable satisfaction, 21 days from the date the demand was served;
- A creditor tries to enforce a court judgment or order for a certain sum of money against the company, but is unable to recover the entire sum; or
- It is proven to the court’s satisfaction that the company is unable to pay its debts (after taking the company’s contingent and prospective liabilities into consideration).
Does Your Company Qualify for Audit Exemption?
Your company is entitled to audit exemption if it qualifies as a “small company” or if has been dormant. For more information, read our article on the requirements for audit exemption.
Filing your Financial Statements with your Annual Returns
Now that we’ve ascertained the various categories your company could belong to, and checked for any audit exemptions, we can then proceed with the procedures on filing your Annual Returns.
There are 2 types of filing of Annual Returns:
- With financial statements
- Without financial statements
All Singapore-incorporated companies, public and private, are required to submit a full set of XBRL financial statements together with their Annual Returns, with the exception of:
- Solvent EPCs
- Companies regulated by MAS
- Companies allowed by law to do otherwise
If your company is a solvent EPC (whether small, normal or dormant EPC), you are exempted from filing financial statements, though you are still encouraged to do so. Instead, you will just need to complete an online declaration of solvency.
If your company is an insolvent EPC, you are not exempted from filing financial statements but you can either submit a full set in XBRL format or FSH (Financial Statement Highlights) in XBRL format.
In summary, you will only be exempted from filing financial statements with your Annual Returns if you are a solvent EPC. If your business falls into other categories, you will have to file financial statements with your Annual Returns, albeit in different formats depending on which category your business falls under.
Simplified Process for Filing Annual Returns
As of 31 August 2018, a new simplified process for the filing of annual returns has been implemented.
Under this new simplified process, the filing process will be reduced from 24 steps to just 6, and some of the information will be “pre-filled”. Companies using this new simplified process only need to select from available options and indicated dates in the Annual Returns form, and double-check the accuracy of the information in the form before submitting it.
Who can file simplified Annual Returns?
In order to be eligible for this simplified approach, companies must meet the following requirements:
- The company’s financial year end (FYE) date must fall on or after 31 August 2018;
- The company must have declared itself as a solvent EPC or a “Private Dormant Relevant Company” in their last Annual Returns; and
- The company must not be preparing audited financial statements
- The company must not be required to file financial statements with ACRA
- The company is not making changes to information previously filed with ACRA
A “private dormant relevant company” is a private company which is dormant that is neither listed nor a subsidiary of a listed company. Its total assets should not exceed S$500,000.
When can simplified Annual Returns be filed?
Under this new process, a simplified Annual Return can only be filed after:
- The company has held its annual general meeting (AGM) (if required to);
- The company’s financial statements have been sent to its members (if the company need not hold an AGM); or
- The date of the FYE for a private dormant relevant company that is exempted from preparing financial statements.
How to file simplified Annual Returns
There are 2 ways that companies can file simplified Annual Returns:
1. Using the BizFile+ website
If your company is eligible for filing simplified Annual Returns, you will be given the option to do so upon logging into BizFile+ and selecting the “Annual Return by Local Company (For FYE from 31 August 2018)” transaction.
2. Using the ACRA On the Go mobile app
By When Must Annual Returns be Filed?
Annual Returns must be filed within the following timelines:
|Type of Company||When Must Annual Returns be Filed By?|
|Public-listed||If the public-listed company has a share capital and keeps a branch register outside of Singapore: Within 6 months after FYE|
|For other public-listed companies: Within 5 months after FYE|
|Non-listed||If the non-listed company has a share capital and keeps a branch register outside of Singapore: Within 8 months after FYE|
|For other non-listed companies: Within 7 months after FYE|
Who Can Submit the Annual Returns?
The director or officer of the company is required to submit the company’s Annual Returns via BizFile+. Alternatively, professional corporate service firms also offer services that assist the company with statutory obligations like the holding of an AGM and the subsequent filing of the company’s Annual Returns.
Failure to submit the Annual Returns will incur late lodgement fees and companies are therefore advised to hire a lawyer to ensure that they are not penalised for such breaches.
How many directors need to be present before filing your Annual Returns?
If your company has one director, he/she is required to sign the documents to be submitted with the Annual Returns.
If your company has more than one director, ACRA’s default position is that at least 2 directors have to sign the documents to be submitted with the Annual Returns.
Should your company have more than one director and you won’t be able to fulfil the requirement of at least 2 directors to sign the documents, you will have to make a separate application to ACRA to have one director sign the documents. This procedure is similar to submitting your Annual Returns without an AGM, in the event that one of your directors is uncontactable, adjudicated or deceased.
ACRA has also reiterated that this is only a temporary solution for the company, and repeat applications are approved or rejected at ACRA’s discretion depending on the circumstances.
Again, do note that the filing of the “one director’s signature” application is not the same as filing the Annual Returns, which will have to be done once the application has been approved.
Do You Need to Have an AGM Before Filing Your Annual Returns?
Another key step in the filing of your Annual Returns would be the holding of your AGM. Refer to our article on holding annual general meetings for more information on this.
If your company intends to file its Annual Returns without an AGM, you will have to make a separate application to ACRA to do so. This is in the event of uncontactable, adjudicated or deceased shareholders, which results in a failure to meet the quorum of the AGM.
Do note that this “Annual Returns without an AGM” application is not the same as filing the Annual Returns, which will have to be done once the application has been approved.
Finalising the Filing of Your Annual Returns
Once preparation steps have been finalised and all considerations have been accounted for, companies will have to file their Annual Returns on BizFile+.
Here are the 5 takeaways and a summary of how you can make filing your Annual Returns for your business a much simpler task:
- Determine which category in ACRA your business falls into
- Check if your company’s category qualifies for an audit exemption
- Determine the format of financial statements to be filed (if they need to be filed) with your Annual Returns
- Finalise your AGM prior to the filing, or apply separately to ACRA if you intend to file your Annual Returns without an AGM
- Ensure that the correct no. of directors is present to sign the documents for the filing, or apply separately to ACRA if you do not meet that requirement
Penalties for Failing to File Annual Returns
Companies and every director that fail to file annual returns may be given a chance to compound for the breaches such as paying a composition sum of $300 per breach instead of facing prosecution.
Separately, a late lodgement fee will be imposed at the time of lodgement, for each return that is lodged late.
ACRA will only consider prosecuting the directors in Court if they fail to register and attend the Directors Compliance Programme (DCP) offered to them by ACRA (applicable only for first time offenders); or if they failed to compound the offence when offered a chance to compound; or if ACRA is not prepared to let the directors compound the offence.
There is a 3-tier composition for failures to file Annual Returns:
- At stage 1: before summons is issued, ACRA has the discretion to offer a composition fine of $300 per breach.
- At stage 2: after summons is issued, ACRA has the discretion to offer a composition fine of $600 per breach.
- At stage 3: if a Warrant of Arrest is issued, ACRA has the discretion to offer a composition fine of $900 per breach.
Filing your Annual Returns can be daunting for small companies. However, with a thorough preparation process prior to the filing, the job becomes easier and more straightforward. You may also consult a corporate lawyer if you need legal advice on filing your Annual Returns.
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