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Singapore: Filing annual returns for your business

February 20, 2023

Filing annual returns can be risky for a small company just starting a business. Also, you will have to deal with other issues, such as compliance with the law. To simplify the process of filing annual returns, you need to know the essential requirements.

Is your company public or private?

Before filing annual returns, finding out which ACRA category your company belongs to is crucial. Generally, companies are divided into two main categories: private and public.

Public company

If your company has more than 50 shareholders, is limited by guarantee, and is listed on the Singapore Exchange (SGX), it is considered public.

Private company

Private companies are classified as unlisted companies. They are divided into two categories - exempted private companies (EPC) and non-exempted private companies (non-EPC):

• Exempted private companies are private companies with no more than 20 shareholders, none of which are corporations.

• Non- exempted private companies are private companies with more than 20 but no more than 50 shareholders.

Is your company solvent?

Once you have established which category your company falls into, it is also important to determine your company's solvency. There are different reporting requirements for companies that are solvent (able to pay their debts as they fall due) and insolvent (unable to pay their debts as they fall due).

A company is considered insolvent if:

• The creditor has satisfied a statutory claim against the company above SG $15,000, and the company has not paid that amount or secured or reached an agreement    with the creditor within three weeks from the date the claim was filed;

• The creditor is trying to enforce a judgment or order for a certain amount of money against the company but cannot recover the entire amount; or

• It is proved in court that the company cannot pay its debts (considering its due and future obligations).

Do I need to file financial statements in addition to the annual returns?

There are two types of annual reporting:

1. With financial statements.

2. Without financial statements.

All companies registered in Singapore, whether public or private, are required to file a standard complete set of financial statements in XBRL format with their annual returns, except for:

• Solvent EPC companies;

• Companies regulated by the Monetary Authority of Singapore (which must file financial statements using a specific XBRL template);

• Companies legally allowed to do otherwise (for example, companies limited by guarantee only need to provide a PDF copy of board-approved financial statements).

If your company is a solvent EPC, you are exempt from filing financial statements in addition to the annual returns, although you are still encouraged to do so. Instead, you must simply fill out an online declaration of solvency when filing your annual return.

You are not exempt from filing financial statements if your company is an insolvent EPC. Suppose your company is considered a "small and publicly unaccountable company". In that case, you must file your financial statements using a simplified XBRL template with a board-approved PDF copy of the financial statements. Otherwise, you must submit a complete set of financial statements in XBRL format.

"Small and publicly unaccountable company" refers to a company:

• whose income and total assets for the financial year each do not exceed SG $500,000, and

• that is not a listed company or financial institution like a bank.

Therefore, you will only be exempted from filing financial statements in addition to annual returns if your EPC is solvent. However, your business falls into other categories. In that case, you will need to file financial statements along with the annual returns, albeit in different formats, depending on your company's type.

Simplified process for filing annual accounts

Under the simplified annual filing process, some information that must be filed will be "pre-filled". Then, companies only need to review the pre-filled information (based on previous yearly filings) and double-check that the information is up-to-date.

What needs to be done before filing simplified annual returns?

Your company must hold an annual general meeting (AGM) before filing simplified annual returns. If your company is not required to have an annual general meeting of shareholders, its financial statements must first be sent to all company members.

For private dormant qualifying companies that are exempt from filing financial statements or that have opted out of holding an annual general meeting of shareholders, simplified annual returns may be filed after the end of the financial year.

A "qualified private dormant company" is a non-listed private dormant company and is not a subsidiary of a listed company. Its total assets also cannot exceed SG $500,000.

How to file a simplified annual return

Using the BizFile+ Website

Suppose your company is eligible for Simplified Annual Returns. In that case, you can do so by logging into BizFile+ and selecting the Local Company Annual Returns (for fiscal year 31 August 2018) transaction.

What is the deadline for the annual return to be submitted?

Annual returns must be filed within the following deadlines:

Who can file annual returns?

The company's director or other officers must file the company's annual returns through BizFile+. Alternatively, you can seek the services of corporate service providers who assist the company in fulfilling statutory obligations, such as holding a general meeting of shareholders and the subsequent filing of the company's annual returns.

Failure to file annual returns will result in late filing penalties, and therefore companies are advised to contact their corporate service providers to ensure that all requirements are met.

How many directors are required to file annual returns?

If your company has one director, he/she must sign the documents to be filed with the annual returns.

If your company has more than one director, the documents submitted with the annual returns must be signed by at least two directors.

Completion of the submission of the annual returns

Here is a short list of things to do before filing your annual return:

1. Determine which ACRA category your business belongs to.

2. Determine the format of the financial statements to be filed (if any) along with the annual returns.

3. Hold an annual general meeting or send financial statements to all company members if your company does not need to hold an annual general meeting.

4. Verify that the correct number of directors have signed the submissions.

Once these preparatory steps have been completed and all considerations have been taken into account, the company will be required to submit annual returns on the BizFile+ website.

Penalties for failure to submit annual returns

Companies and directors who fail to file annual returns may be allowed to redress violations, such as an SG $500 rebate for each violation instead of prosecution.

A separate late filing fee will be charged for each return filed late. The late filing fee is SG $300 if the return is filed within 3 months of the annual filing deadline and SG $600 otherwise.

ACRA will only consider taking directors liable in court if:

• They did not agree to replace the prosecution with financial reward when they were offered such an opportunity; or if

• ACRA does not allow monetary compensation to be substituted for prosecution.

Companies not filing annual accounts for several consecutive years may be struck off the register by the Registrar.

Filing annual returns can be a daunting task for smaller companies. However, carefully preparing before submitting documents makes the work more accessible and understandable. If you need professional assistance filing annual returns, our specialists will gladly help you. We are waiting for your requests to info@eltoma-global.com!

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