373. Financial statements Flashcards
- Financial statements
General overview
[373.01] Section 373 concerns the financial statements that a foreign company, to which Division 2 of Part XI of the Act applies, is required to lodge. Before the amendments to the Act, a foreign company was only required to lodge with the registrar a copy of its balance sheet, and any other documents that it was required under the laws of its place of registration to prepare. However, these requirements were made more stringent by Act No 36 of 2014, which now requires foreign companies to lodge similar components of their financial statements as those that are required of local companies incorporated under the Act. The financial statements that a local company incorporated under the Act must prepare on an annual basis are set out in s 201, and a local company must also comply with the relevant accounting standards (such as the Singapore Financial Reporting Standards). The increased compliance burden on foreign companies was imposed pursuant to ACRA’s recommendation that a more comprehensive disclosure regime be enacted in the interests of shareholder protection, as well as to standardise the requirements for foreign companies with those for local companies: see Consultation on the Regulatory Framework for Foreign Entities in Singapore, June 2011, Chapter 9, paras 9.1.2 and 9.1.3. As such, foreign companies must now lodge additional documents such as the income statement, statement of cash flows, and directors’ report, amongst others, with effect from January 3, 2016. These additional financial statements will provide details of the company’s financial transactions over a period of time, and will supplement the balance sheet, which illustrates an overview of the financial condition of the company.
