If you are unable to hold your AGM or lodge your Annual Return on time, penalties will be imposed in accordance to the Companies Act.
As a recap, there are 4 sections governing the AGM and AR filing requirements for private companies:
Section 175 – Annual General Meeting (AGM)
A private company is required to hold its AGM within 6 months after its financial year end (FYE).
Section 175A – Active Companies:
A Private Company need not hold AGM if all members have approved a resolution to dispense with the holding of AGMs AND the company sends their financial statements to members within 5 months after the FYE. If the company is a private dormant relevant company that is exempt from preparing financial statements.
Section 175A – Private Dormant Relevant Companies:
A Private Company need not hold AGM if the company is a private dormant relevant company that is exempt from preparing financial statements.
Section 197 – Filing Annual Return
For private companies, the Annual Return must be filed with the Registrar within 7 months after the end of its financial year (within 5 months for Listed Companies).
Section 201 – Audited / Unaudited Accounts
The directors of every company must lay before the company at its AGM the financial statements for the financial year in respect of which the AGM is held.
With effect from 14 Jan 2022, companies that file annual returns late will be imposed with a late lodgment penalty of $300 if the lodgment is filed within 3 months after the filing due date, or $600 if the lodgment is filed more than 3 months after the filing due date.
The following table illustrates the penalty levied in accordance to the duration of non-compliance for each section:
|Late Filing of Annual Return not exceeding 3 Months after filing due date||$300|
|Late Filing of Annual Return exceeding 3 Months after filing due date||$600|
Stepped Up Enforcement Actions:
There are 3 levels of enforcement actions that can be taken by the authority. Please note that Stepped Up Enforcement Actions will result in additional composition sums to be paid and are ON TOP of the sums incurred based on the penalty table illustrated as above.
For the avoidance of doubt, ACRA has the discretion NOT to offer any offer of Compostion to the Directors and the Company.
Prior to Issuance of Summons: ACRA will contact the Directors and the Company to provide an offer of composition for breaches of any of the sections mentioned.
Issuance of Summons: ACRA will issue a Summons for the Directors and the Company to answer to the breaches. If the director and/or the company are convicted by the court, they may be fined up to a maximum of $5,000 per charge.
Warrant of Arrest: This will be issued if the Directors did not attend the Court Session to answer to the said charges.
Commencing 2016, any directors who have at least 3 companies that are struck off by ACRA (Registrar initiated strike off) within a period of 5 years will be disqualified from acting as a director or taking part in the management of any company for a period of 5 years, commencing from the date where the 3rd company is struck off. The strike off count of 3 does not apply towards voluntary strike-off initiated by the Company.
How to Prevent Late Filing:
Remember the following rules and you will generally be safe.
1. Get your Accounts done up on time! This is often the number 1 reason why AGMs cannot be held/deemed held on time!
2. Your AGM cannot be more than 6 months from the end of the financial year for which the financial statements need to be presented during the AGM.
3. Do not be confused with AGM vs Annual Return. Even if you are exempted from holding a AGM you will still need to lodge the Annual Return.
4. Engage a professional secretarial service provider to help you handle compliance filings if you are busy with business operations.
5. If your accounts need to be audited by law, ensure your accounting function is robust and timely. Get your accounts ready early for auditors to audit. Arrange for auditors to audit your books and not leave it too late. Auditors have peak periods and are often packed with work, they may not have enough time to complete your audit on time if you start late.
Option to Extend Filing Due Dates
With valid reasons, you may submit a request to extend your filing deadlines by either one month or two months, provided you have valid reasons to do so.
Please note that government fee of $200 will be applicable for all extension of deadlines. Approval can usually be obtained within 14 days BUT may take up to 1 month if clarification by ACRA is required.