There are several reasons as to why a company may contemplate changing its corporate secretary, such as:
- Existing secretary’s inability to articulate or communicate clearly
- Failure of the secretary to provide proper guidance and advice in relation to ongoing compliance regulatory requirements
- Excessive additional fees charged by the secretary (besides the annual retainer fee)
- Inability of the secretary to provide ancillary services required by the company, such as registered office, or nominee director services
Certainly, the company’s choice to release its existing secretary and engage a new secretary may be due to any of these reasons. This article provides a guide on the important things a company should note before commencing with the change of its corporate secretary in Singapore.
Does my new corporate secretary fulfil the necessary requirements?
With regards to the secretary of a private limited company, there are no stringent requirements and there are only two requirements to be fulfilled:
- He or she should be residing locally in Singapore
- He or she is not the sole director of the company
However, to ensure that the corporate secretary is an individual who fully understands the roles and responsibilities of a corporate secretary, companies should ideally seek individuals who meet any one of the following requirements:
- Is a qualified person under the Legal Profession Act; or
- A public accountant registered under the Accountants Act; or
- A Member of the Institute of Certified Public Accountants of Singapore; or
- A Member of the Singapore Association of the Institute of Chartered Secretaries and Administrators (“SAICSA”).
Due to the nature of the corporate secretary’s responsibilities, it is ideal that someone bearing knowledge of the Companies’ Act and accounting principles is appointed. In addition, he or she should have sufficient experience in the industry. Generally speaking, SAICSA is the main body that governs corporate secretaries in Singapore and is arguably the most relevant qualification for a corporate secretary.
What are the roles and responsibilities of a corporate secretary?
For companies that currently engage a corporate secretary but are unsure if their corporate secretary is indeed fulfilling and performing the role that all corporate secretaries should. Depending on the needs of a company, a corporate secretary’s basic routine duties would comprise the following:
- Maintain and update the company’s registers and minutes books;
- Administer, attend and prepare minutes of meetings of directors and shareholders;
- Assist the Chairman of the meeting in the conduct of the meeting;
- Ensure compliance with statutory requirements under the Companies Act;
- Ensure compliance with the company’s Memorandum and Articles of Association (“M&AA”);
- Advise the company on and attend to the appropriate electronic filings with the ACRA for changes within the company within the prescribed timeframes as set out by the ACRA;
- Certify the company’s records at the auditors’ request for their annual statutory audits
- Ensure safe custody and proper use of the company seal, if applicable; and
- Communicate to the company and its directors any relevant changes in statutory law on a timely basis
In addition, a good company secretary will also provide the following additional services to the company:
- Disseminate timely reminders to the company and its directors to ensure that they are aware of the deadlines for annual returns and any other returns that should be filed with ACRA;
- Function as an intermediary between the Company and the relevant Authority for specific needs of the company. For example, ACRA, Stock Exchange and IRAS;
- Assist in drafting Directors’ Resolutions in Writing for non-routine matters, such as instances where the company enters into a corporate guarantee, or tenancy agreements etc.
How do I go about changing my corporate secretary?
The new corporate secretary whom you will be appointing should be able to assist you to prepare the necessary documentation, which will include the following:
- Directors’ Resolutions in Writing (“DRIW”) to note the appointment of the new secretary and resignation of the previous secretary
- Letter of Resignation for the previous secretary
- Form 45B for the new secretary to indicate his or her consent to act as secretary
- Lodgment to notify ACRA of the appointment and resignation of secretary
While the existing secretary may remain in office, the DRIW mentioned above can authorise the new company secretary to make the lodgment with ACRA on the company’s behalf. In addition, the new corporate secretary can also assist you to prepare the letter of termination and arrange for the collection of files from the existing corporate secretary.
For companies that may be in doubt about their previous corporate secretary’s competency in terms of keeping the registers of the company updated and ensuring that the relevant filings have been made, it may request the new corporate secretary to perform a due diligence exercise to ensure that the company’s statutory records are in proper order.
Certainly, the hardest hurdle that the company may face is the lack of co-operation from the existing secretary, particularly for companies who do not have a good relationship with, or have persistently experienced issues with obtaining a timely response from their existing secretary.
In situations such as the above, the company should be aware of the possible implications that such delays may result in, such as late filings with ACRA or IRAS, which may result in penalties imposed upon the company by the respective government authorities. Companies therefore should avoid changing their corporate secretary near statutory deadlines, or target to complete the entire process before such deadlines. Examples of such deadlines that the company should be aware of are:
- Deadline to prepare and finalise its audited or unaudited accounts
- Deadline to hold its Annual General Meeting (“AGM”)
- Deadline to submit its Annual Return with ACRA
Why is it important to have a good corporate secretary?
Undeniably, the corporate secretary’s main role and function is to ensure that the company is compliant with all the relevant laws under the Companies’ Act. In the unfortunate event where a corporate secretary is remiss in his or her duties, the victims who will suffer will be the company and its directors, who will have to make payment for penalties imposed and in the worst case scenario, answer to a court summons.
This in fact, is fairly common. In its news release on 14 April 2014, ACRA estimated that approximately 10,000 summonses had been issued in that year alone to companies and their directors who were found to be in default of the statutory requirements under the Companies’ Act.
Indeed, ACRA has stated clearly that it considers it to be the duty of the directors of the company to ensure that the corporate secretary appointed by the company is competent and possesses the requisite knowledge and experience. Hence, even if the company does fail to meet its statutory obligations, the directors will be unable to claim ignorance or point the finger at the corporate secretary, because the responsibility lies with the directors to ensure the corporate secretary has fulfilled all of his or her duties. Essentially, if a company has a good corporate secretary, it can rest assured that the advice provided by the corporate secretary is sound and will not needlessly worry about whether it can meet its ongoing compliance regulatory requirements.