Yes, and no. While holding an Annual General Meeting (AGM) is a compulsory requirement for Singapore companies under the Companies Act, there are important exemptions and conditions that apply, particularly for private companies.
1) The General Rule For Holding AGM
All companies incorporated in Singapore are generally required to hold an AGM to present their financial statements to shareholders, address questions, and vote on key matters like the appointment of directors and auditors.
- Private Companies (Non-Listed): Must hold an AGM within 6 months after their financial year-end (FYE).
- Public Listed Companies: Must hold an AGM within 4 months after their FYE.
- First AGM: A newly incorporated company must hold its first AGM within 18 months of its incorporation date. Subsequent AGMs must be held annually, with no more than 15 months between meetings.
2) What Companies Are Not Required To Hold An AGM?
The most common reason a company might not hold an AGM is that it qualifies for an exemption. The Companies Act provides specific pathways for private companies to dispense with a formal meeting, recognizing that shareholders in these smaller, non-public entities are often actively involved in the business and do not need a formal yearly gathering to stay informed.
The Two Primary Exemption Routes for Private Companies
A. Sending Financial Statements To Members
A private company can be exempted from the AGM requirement if it sends its financial statements to all its members within five months after its financial year-end. This action serves as a substitute for the public presentation of accounts at a meeting.
B. Dormant Companies
A private dormant relevant company is exempt from holding an AGM because it is also exempt from preparing financial statements. ACRA defines a “private dormant relevant company” as a private company that is dormant, not a listed company or a subsidiary of one, and has total assets of S$500,000 or less.
A member (beneficial owner or shareholder of the company) or auditor can still request that an AGM be held even if a private company qualifies for an exemption.
If such a request is made, the company’s directors are legally required to hold the meeting within the statutory six-month timeframe. The request must be made no later than 14 days before the end of the 6-month period.
This provision ensures that the rights of shareholders are protected and that they retain the power to demand a meeting for review and discussion of the company’s affairs.
3) Dispensing With An AGM
A private company can completely dispense with the requirement to hold AGMs if all members agree to pass a resolution to do so. In this case, matters that would normally be resolved at an AGM can be handled via written resolutions.
Passing written resolutions is a practical way to conduct business that would typically be addressed at an AGM without the need for a physical meeting. This method allows shareholders to formally approve matters, such as the adoption of accounts or the re-election of directors, by signing a written document.
These resolutions can then be included in the company’s Annual Return (AR) filing with ACRA.
4) Penalties For Not Holding AGM
The penalties for non-compliance can be financial and administrative.
The most immediate penalty for failing to hold an AGM or file an AR on time is the imposition of a composition fine, which is typically a minimum of S$500 per breach. This fine is paid to ACRA to settle the offense and avoid court prosecution.
Additionally, late lodgment fees are imposed for each Annual Return filed past its due date.
Liability Of Company Directors
The responsibility for ensuring compliance rests directly with the company’s directors. Non-compliance can lead to personal liability, extending beyond the company itself to the individuals in charge.
Consequences for directors can include:
- Personal fines and court prosecution: Directors can face a fine of up to S$5,000 per offense if convicted.
- Disqualification: For persistent failure to meet filing obligations, a director can be disqualified from serving as a director for a period of up to five years if convicted of three or more filing-related offenses within five years.
A director cannot evade this liability by simply resigning after a breach has occurred. The liability for non-compliance attaches to those in office during the period of the breach.
5) Conclusion
For companies that are eligible for an AGM exemption, a professional corporate secretary can play an important role in ensuring the relevant documents are sent to all members within the five-month timeframe, thereby fulfilling the legal requirements without the need for a formal meeting
Whether a company holds an AGM or qualifies for an exemption, the underlying duty to prepare and file accurate financial statements remains. The responsibility for ensuring these obligations are met rests firmly with the company’s directors.
To understand and learn more about a director’s responsibilities to keep their company compliant, read our annual compliance checklist for company directors.
