Annual General Meetings (AGM) in Singapore: Everything You Need to Know
The Accounting and Corporate Regulatory Authority (ACRA) is ramping up its efforts to clamp down on companies that breach the Companies’ Act. Failure to hold the company’s AGM on time is one of the things that could get you in trouble with ACRA. Under sections 175, 197, and 201 of the Companies’ Act, all publicly listed and private limited companies are required to hold their AGMs at certain set times.
It is important to know about what the set laws imply for how and when you hold your company’s AGM. It will help you to prepare well and avoid the harsh penalties meted on violators.
What are the penalties involved?
Read our article on the Penalties for Failing to Hold Annual General Meetings or File Annual Returns to learn more!
Here is everything you need to know about AGMs under Singapore’s laws.
What the Law Says
There are three sections under the Companies’ Act that outline rules and regulations about when and how companies should hold their AGMs.
Section 175: Extension of Time (EOT)
This section stipulates when companies should hold their AGMs. It stipulates that publicly listed companies should hold their AGMs within 4 months after FYE, while other companies should do it within 6 months after FYE.
Under this section, the Companies’ Act stipulates how the company should conduct its AGM. In particular, it lists the information that the company should provide. The requirements are:
- Name of company
- Registration number of company
- Address of registered office of the company
- Address of where the members’ register is kept
- Register of charges
- Summary of share capital and shares of the company
- Particulars of directors, secretaries, and auditors
- A list of shareholders and their respective shareholdings
- Date of last AGM
- Date to which accounts are made up to
- Date of current AGM
- Name of auditor who signed off on the accounts (unless the company is exempt)
- Confirmation of the companies’ principal activities
- Statement as to whether the company has more than 50 employees
This section also stipulates when the companies should lodge their annual returns. Public listed companies should lodge their annual returns within 5 months of the FYE while other companies should do it within 7 months of the FYE.
Section 201: Application for an Extension of Time (EOT)
This section also gives directions on when companies should lodge their accounts and hold their AGM. It stipulates that:
- The directors shall present the company’s profit and loss accounts no later than 18 months after the date of incorporation; or
- Once every calendar year not exceeding 15 months from the date of the last AGM
- Company’s AGM should not be held more than 6 months from the date of its financial year end
So, when should your company hold its AGM? Going by the law, there are several factors to consider. They are: the date your company was incorporated; the date your company held its last AGM; and the date of your company’s financial year end. Experts recommend that your company start preparations for its AGM within 2 to 3 months of the due AGM date.
Options for Postponing Your Company’s AGM
It may not be always possible to host your company’s AGM on time. Fortunately, there are two ways you can postpone it to avoid getting into trouble with the law. You can either apply for an extension, or change the company’s FYE.
Application for an Extension
If the due date, under both sections 175 and 201, it should file for an extension with ACRA. An extension should be filed for each date missed under either section. The maximum extension period is two months – however, some circumstances may permit you to file for an extension only once. ACRA will consider your application and, after reviewing all the factors, decide on whether or not to grant your company the extension. Experts recommend soliciting the services of a professional corporate service provider to guide your company through the process.
Changing the Company’s Financial Year End
As highlighted severally, the AGM date is dependent on the company’s FYE. A change in the FYE means that the AGM date also changes. Only companies that have completed the 18-month period since incorporation – otherwise, changing the FYE would have no effect on the first AGM date.
To change the company’s FYE, a notification should be lodged with ACRA via the Bizfile online portal. The notification can only be lodged by either a director or secretary of the company – a company’s employee recognized as a filing agent can also make the application. The applicant should also have a SingPass. Additionally, the company should present its directors with written resolutions notifying them of the change. The directors are required to note and approve the resolutions.
Is Any Company Exempt from Holding AGMs?
No company is exempt from holding its AGM. However, there are certain related exemptions for companies that are not publicly listed or limited.
For starters, an Exempt Private Company (EPC) is not required to lodge its audited accounts with ACRA when making its annual returns. Companies that fall under this category are those that meet two of the following three conditions: have a revenue not exceeding $10 million; have total assets not exceeding $10 million; have employees not exceeding 50 persons. However, these companies are still required to hold their AGMs on time.
Wholly owned companies also enjoy some level of discretion as the may choose to do away with their AGM requirements by coming up with formal resolutions. Nevertheless, these companies are required to meet certain key requirements related to AGMs. They are:
- Under Section 201 of the Companies’ Act, the company should prepare its financial statements
- The company should then issue its shareholders these statements
- It should also circulate its shareholders’ resolutions for approval
Ideally, then, every company incorporated in Singapore must hold its Annual General Meeting. Failure to do so attracts a variety of penalties, including financial fines not exceeding $5,000 for directors and secretaries as well as court summons.
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AGMs are meant to protect a company’s shareholders and ensure that companies comply with the law. Of late, ACRA has increased its efforts to rein in companies that breach this law. The authority has been issuing approximately 10,000 summonses annually in the recent years. As such, comply with the law and avoid unnecessary fines and convictions.
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