30 April 2021
Under the law, all companies, limited liability partnerships (“LLPs”) and variable capital companies (“VCCs”) are required to file their Annual Lodgements, which includes their annual returns and financial statements, with the Accounting and Corporate Regulatory Authority (“ACRA”) on a yearly basis and within a certain timeline.
Revised Penalty Framework
The penalty framework for late filing of Annual Lodgements will be soon be revised to a 2-tier framework, starting from 30 April 2021.
The maximum fine that a company, VCC and/or LLP can incur will be increased to $600 (from $300 to $350), which will be imposed as a flat rate if the Annual Lodgements are filed more than 3 months after the filing due date.
The changes to the penalty framework are set out below:
|
Entity Type |
Current late lodgement penalty |
Revised late lodgement penalty (effective from 30 April 2021) |
|
Singapore Companies |
Flat rate of $300 |
$300 for late lodgement filed within 3 months after filing due date; or $600 for late lodgement filed more than 3 months after filing due date. |
|
Variable Capital Companies |
||
|
Foreign Companies |
8-tier penalties ranging from $50 to $350 |
|
|
Limited Liability Partnerships |
The revisions to the penalty framework reflect ACRA’s ongoing commitment to ensure important financial information of companies, VCCs and LLPs are timeously filed and kept up to date.
Companies, VCCs and LLPs should be put on notice of the more stringent penalties; and preparations of their Annual Lodgements should be undertaken early so that these can be filed on time.
Company Director’s Responsibility
Directors of a company are personally responsible to ensure that the company’s Annual Lodgements are filed on time and in accordance with the statutory requirements (section 197 of the Companies Act).
Although most companies in Singapore engage corporate service providers to oversee compliance with its statutory maintenance obligations, a director is still duty-bound to ensure that the company complies with its statutory obligations. It is important that directors work closely with the company’s corporate service providers to promptly provide all relevant information and documents required for filing of the company’s Annual Lodgements. Nominee directors are not exempt from their responsibility to ensure timely filings, and should monitor the audit and filing timelines closely.
In addition to the late lodgement penalty imposed by ACRA on the company, non-compliance by the company will expose directors and officers of the company to a fine of S$5,000 and a default penalty (section 197(6) of the Companies Act).
Further, if a director fails to ensure that its Annual Lodgements are filed on time, the director may be found in breach of his/ her statutory and common law duties to act with reasonable skill, care and diligence (section 157(1) of the Companies Act). Breach of this duty may expose the director to a fine of up to S$5,000 or imprisonment or both under the Companies Act, or for damages under common law.
More information on the revised penalty framework can be found here.
For further information, please contact:
Sandra Seah, Partner, Bird & Bird
sandra.seah@twobirds.com
