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Acra seeking public feedback on proposed changes to Companies Act
THE Accounting and Corporate Regulatory Authority (Acra) on Monday said it is seeking public feedback on proposed amendments to the Companies Act.
The Companies Act Working Group, which was set up by Acra in 2018 to review several areas of the Companies Act, has reviewed 56 issues and recommended 36 legislative reforms.
These cover the areas of facilitating digitalisation; types of companies and financial reporting; matters relating to directors and company secretaries; safeguarding shareholders' interests; share capital and financial assistance; as well as updating outdated provisions.
Among other things, the working group considered the use of digital media and technology, and made recommendations in respect of the de-materialisation of physical share certificates and facilitating digital meetings.
The working group also suggested that the concept of a "micro" company be introduced. This may be defined as a firm with total annual revenue and total assets each being not more than S$500,000. Such companies that are non-publicly accountable could then prepare reduced or simplified financial statements, according to CAWG's recommendation.
Separately, Acra has also reviewed existing regulatory processes and is proposing changes to the Companies Act.
These proposed amendments include streamlining and clarifying financial reporting requirements for companies and foreign companies, as well as removing outdated requirements and clarifying provisions in the Act.
STREAMLINING FINANCIAL REPORTING REQUIREMENTS
The proposed legislative changes include granting the registrar the power to exempt a company from all requirements in the Accounting Standards, and granting the minister - Finance Minister Heng Swee Keat, in this case - the power to exempt classes of companies from compliance with any, or all the requirements in those standards. They can instead require a company, or classes of companies, to comply with other accounting standards, Acra said.
The current Accounting Standards are prescribed by the Accounting Standards Council, and comprise the Singapore Financial Reporting Standards (International), the Singapore Financial Reporting Standards (SFRS), and the SFRS for Small Entities.
Other proposed changes include allowing foreign companies to file financial statements in accordance with accounting standards that are "substantially similar" to Singapore's Accounting Standards so as to reduce compliance costs, the authority said.
Acra has also suggested allowing foreign companies with "insignificant operations in Singapore" to file unaudited branch accounts, instead of an audited statement of assets, liabilities and profit and loss in respect of the foreign company's operations in Singapore.
According to Acra, having "insignificant operations in Singapore" means that none of the firm's total revenue, total expenses, total assets, or total liabilities in its unaudited financial statements exceeds S$5 million. In particular, Acra is seeking comments on whether there are any concerns with allowing such foreign companies to prepare a reduced set of financial statements, and whether the proposed definition of "insignificant operations in Singapore" is appropriate.
REMOVING OUTDATED REQUIREMENTS AND CLARIFYING PROVISIONS
Additionally, Acra has proposed to remove the requirement for public companies limited by shares to hold statutory meetings and their directors to forward a statutory report to members prior to the meeting. This would reduce compliance burden, and equivalent requirements in Australia, Hong Kong, New Zealand and the UK have been abolished, Acra said.
Another suggestion includes granting the registrar the power to update changes in the appointments of directors and secretaries to maintain the accuracy of information in those registers.
Lastly, Acra said it would like to clarify the date that the registrar strikes a company off the register, or restores the company's name to the register, such that it coincides with the date indicated in Acra's BizFile+ system, instead of the date published in the government gazette. This proposed amendment would remove ambiguity over a company's legal status after Acra has struck it off from the register or restored it to the register and before such a notice is published, the authority said.
Acra is the national regulator of business entities, public accountants and corporate service providers in Singapore.
The public consultation exercise will run from July 20 to Aug 17. The public can access the consultation documents on Acra's website (www.acra.gov.sg) and the REACH consultation portal (www.reach.gov.sg).