Topic 1 Flashcards
Rationale for Company
Control “business risk”
-Allows business risk of each investor to be controlled via limited liability
Rules
-Allows many people to invest in a single business with comprehensive set of rules that govern the rights and obligations of mangers and owners
Sources of SG Law
- Companies Act
- Companies Regulations
- Companies Regulations Application for Bankruptcy Act Provisions
- Companies Winding Up Rules
Definition of “Company”
A company incorporated in accordance with Companies Act
Definition of “Foreign Company”
Company incorporated outside Singapore which carries on business in Singapore.
Definition of “Corporation”
Collective word for both company and foreign company.
Incorporation Process - Step 1
Apply for new company name
Proposed name cannot be identical to the name of another
- local company
- branch of foreign company
- business firm
Cannot be undesirable, offensive, vulgar
Submitted online via Bizfile through professional firm/service bureau/director of new company.
- $15 payable to approved name
- Reserved for 60 days. Extension for another 60 days is $10.
- 15 minutes to up to 14 working days
- Appeals allowed. 5 working days to process
Incorporation Process - Step 2
Incorporation
- After company name approved
- $300 registration fee (limited by shares)
- $600 registration fee (limited by guarantee)
- Self-incorporation cases: proposed directors and subscribers need to endorse consent online via Bizfile within 3 working days of submission for incorporation
- Minimum age to be director is 18 years
Doctrine of Separate Legal Entity
- Perpetual Succession. Life span of its own independent of members’. Company only ceases after winding up or being struck of register of companies for being defunct.
- Company is able to own property in its own name
- Company has capacity to enter into legally binding contracts
- Company is able to sue and be sued in its own name for civil wrongs
- Company has capacity to incur criminal liability if offences are committed
Exceptions to Doctrine of Separate Legal Entity
- (General Law) Where the veil is being used to avoid a legal duty or perpetuate a fraud
- (Under Statute) Where through fraudulent trading, the directors have acted in a manner that has been detrimental to creditors
- > > Where an officer knowingly causes the company to incur debts/trade on credit to defraud crediotrs
- > > Where a director or manager permits company to pay dividends to members which exceed “available profit”
Criminal penalties and fully liable to make civil compensation
Private Company
Small business whose members are actively involved in its business operations.
Private if memorandum or AA
- restricts right to transfer shares in some way
- limits membership to not more than 50
Criminal penalty if infringes any restriction. Court may convert it to public company and it would lose privileges of private company
Public Companies
- May be listed on stock exchange to allow easy issuing & trading of securities
- Prices of securities are “quoted” since public can determine prices as they fluctuate.
- Stringent control procedures as large amounts of public funds may be invested.
Exempt Private Companies
<20 members and no corporation has any interest in its shares
Dormant Company
Period in which no accounting transaction occurs
Need not prepare financial statements if
- company has been dormant from time of its formation/from end of previous FY
- directors have lodge written statement on dormancy with ACRA
- company’s total assets for relevant FY is not >$500,000
Small Company
enjoy audit exception if -private company throughout FY -fulfils 2/3: -revenue for each FY <10million -asset 10 milion less than 50 employees
Small Group
Group from a financial year if the group satisfies 2 (for 2 consecutive financial years immediately preceding FY):
-consolidated revenue <aggregate 50 employees
