Following the incorporation of a company, the first Board of Directors’ (the “Board”) meeting should be convened and a series of directors’ resolutions should be passed at that meeting in order to set up the basic structure of a functioning company. These resolutions may be contained in the same directors’ resolution document, or they may be contained in separate documents.
Appointment of Directors
The Companies Act (CA) requires a company to have at least 1 director who is “ordinarily resident” (i.e. has his usual place of residence) in Singapore. Persons who are ordinarily resident would include Singapore Citizens and Permanent Residents.
Accordingly, there has to be a directors’ resolution appointing at least 1 such individual to the Board. The individual must also meet various criteria before he or she can be appointed as a director.
For more information, please see our other article on appointing company directors in Singapore.
A company must also have a registered office within Singapore to which all communications and notices may be addressed. This office must be open and accessible to the public for not less than 3 hours during ordinary business hours on each business day. There would have to be a directors’ resolution designating a particular address as the registered office of the company.
It is not a requirement to have a common seal (i.e. an official seal used to endorse company documents), but the company may choose to have one. Should the directors of the company choose to have a common seal, a resolution should be passed stating that a particular impression (usually appended to the resolution) is deemed to be the common seal of the company.
Corporate Bank Account
It is not a requirement to open a corporate bank account for the company, but doing so would separate your personal and business finances, which can then be independently managed.
Drawing a clear distinction between personal and business finances can also help to protect your personal finances from any corporate liabilities that may arise.
For example, say that your company owes creditors money. You use a single bank account to manage personal as well as business funds, and the business funds are insufficient to repay the creditors. In this case, the creditors may seek to be repaid from your personal funds by holding you personally liable for the company’s debts.
This would be on the basis that the company should not be regarded as a separate entity from yourself, because you have been treating the company’s finances like your personal finances. In this case, the creditors may obtain an enforcement order for attachment of a debt (Previously known as a “garnishee order”) against the bank, to claim the debt from your “corporate account”.
Should the directors of the company choose to open a corporate bank account, there would have to be a resolution authorising that a bank account be opened in the name of the company. This resolution would also typically specify the bank and type of account to be opened.
The bank’s corporate account opening form would also typically contain a set of resolutions that go into detail about the facilities offered by the bank to the company. Such resolutions would state, for instance, that the bank is instructed to honour all cheques, promissory notes and other orders drawn by the company.
Accordingly, there would be some wording in the directors’ resolution to effect the resolutions stated in the bank’s corporate account opening form as resolutions passed by the Board.
Financial Year End (FYE)
When completing the application to register a new company, one of the details that must be provided to the Accounting and Corporate Regulatory Authority (ACRA) is the date of the last day of the company’s first financial year. The company’s first financial year should not be longer than 18 months.
The CA has provided that, generally:
- The company’s first financial year starts on the company’s date of incorporation and ends on the last day of the company’s first financial year; and
- Each of the company’s subsequent financial years starts immediately after the end of the previous financial year and ends on the last day of a period of 12 months.
Accordingly, there would have to be a directors’ resolution specifying the start and end of the company’s first financial period and the subsequent financial years.
The dates on which the company’s financial year starts and ends would determine, for example, when the company has to:
- Hold its Annual General Meeting (within 6 months for private companies, and within 4 months for public companies, after the financial year end (FYE) of the company).
- File its annual returns with ACRA (within 7 months for private companies, and within 5 months for public companies, after the FYE of the company).
Allotment and Issuance of Shares
As a company limited by shares, the company must have share capital. Accordingly, the shares in the company must be allotted, and the share certificates must be issued, to the shareholder(s).
This is done by way of a directors’ resolution, which would specify the name of the shareholder(s) receiving the shares and the quantity and type of shares being allotted to him.
For more information, please see our article on how to issue shares in a Singapore private company.
Template for Resolutions Passed at a First Directors’ Meeting
Need a template for resolutions passed at a first directors’ meeting? You can get one here.