Regulators in Singapore are changing how businesses – and individuals working in them – behave. In this article, Jacqueline Low, chief operating officer at Janus Corporate Solutions, examines recent developments.

Regulators in Singapore are changing how businesses – and individuals working in them – behave. In this article, Jacqueline Low, chief operating officer at Janus Corporate Solutions, examines recent developments. The views expressed here aren’t necessarily endorsed by the editors of this publication but we are very pleased to share these expert, and detailed, insights.

The Singapore company regulator and the other relevant authorities constantly review the regulatory regime in order to remain relevant to evolving business needs. This has helped the city-state to retain its dominance in the region as a business and financial hub. Such proactive measures have helped to guard Singapore’s reputation and competitiveness while ensuring the ease of doing business. The following is an overview of the impending changes that will soon be incorporated into the regulatory regime.

Enhanced regulatory framework for corporate service providers
The Accounting and Corporate Regulatory Authority (ACRA) (Amendment) Bill 2014 was passed in parliament in April 2014. The bill requires Corporate Service Providers (CSPs) that provide statutory filing services to their clients using ACRA’s electronic filing service, to be registered as Filing Agents. The employees of the CSP who perform such transactions must also be registered as Qualified Individuals. Both the Registered Filing Agents and the Qualified Individuals must be fit and proper persons who meet experience and qualification requirements.

The registered Filing Agents are obliged to perform customer due diligence and transaction monitoring, and where necessary must report suspicious transactions. With increasing surveillance on cross-border entities and capital transactions to prevent tax evasion, money laundering and terrorist financing, the CSP sector has come under scrutiny. The CSPs face a potential risk of abuse by criminals who could set up complex business structures concealing beneficial ownership and illegal transactions.

Registered Filing Agents and Qualified Individuals who fail to fulfill the obligations would face censures and sanctions from the ACRA. The details of the requirements are yet to be revealed and there will be a transition period for the CSPs that choose to register as Filing Agents until 2015. There will be orientation programmes to enable familiarisation with the requirements of the enhanced regime. The registered Filing Agents and Qualified Individuals must renew their license annually. The ACRA has set up a new Corporate Service Providers Enforcement & Regulation Department to administer the new regime.

Registration requirements
The ACRA has proposed the repeal of the Business Registration Act and its reenactment as Business Names Registration Act to reflect the scope of the act after the proposed amendments. The proposal has now been put forward for public consultation. Some of the key amendments proposed are:

o    Individuals who carry out trade or business in their own names to be exempt from registration (individuals engaged in the business of freelance services, tutors, plumbers etc).

o    To provide the option to register/renew business names for a period of one year or three years to individuals who have fully paid their Medisave, or stay on a regular installment plan with good Medisave contribution records.

o    To extend criminal and civil penalty to business owners who carry on business after the ACRA has cancelled the registration or the registrant has notified the ACRA that he has ceased business.

o    It has been proposed to extend the maximum penalty for criminal offences to be in line with the other Acts administered by the ACRA.

The waiver of registration requirement for small business people will relieve them from compliance burden and cost. Likewise, the extended registration option will reduce the hassle of the annual renewing process and penalties associated with renewal beyond the validity period.

Presently business owners are required to notify any change in particulars to the ACRA within 14 days and failure to do so is a criminal offence. Engaging in business activities without registering the business is also deemed a criminal offence. Such offence will attract a penalty of up to S$5000 ($3,990) or a jail term of twelve months or both. Also it has civil implications whereby any contractual rights arising out of the business can be enforced only upon the court’s approval. The proposed extension of penalty will ensure prompt renewals and registration and maintenance of accurate registers. The alignment of the maximum penalty, in line with other ACRA administered Acts, will ensure consistency in the regulatory regime.

Statutory audit exemption threshold to be raised  

In his speech at the ACRA’s 10th Anniversary Dinner, DPM and Minister for Finance, Tharman Shanmugaratnam, highlighted that when the proposed amendments are enacted in the Companies Act, an increased number of small companies will benefit from relaxed compliance and exemption from annual audit requirements. This will reduce the compliance burden and costs associated with statutory audit for nearly 25,000 companies.  The proposed amendment is as follows:

A company will be exempt from statutory annual audit if it fulfills the following new small company criteria:

•    it is a private company throughout the financial year
•    it satisfies any two of the following criteria for each of the two financial years immediately preceding the financial year

i.    the revenue of the company for a financial year does not exceed $10 million
ii.     the value of the company’s gross assets at the end of a financial year does not exceed $10 million

iii.    it has at the end of a financial year not more than 50 employees
In case of a group of entities, it will qualify as a small group if the group of entities satisfies any two of the following criteria for each of the two financial years immediately preceding the financial year:
i.    the consolidated revenue of the group of entities for a financial year does not exceed $10 million
ii.    the value of the consolidated gross assets of the group of entities at the end of a financial year does not exceed $10 million
iii.    the group of entities has at the end of a financial year not more than an aggregate of 50 employees

ACRA website revamped
The ACRA launched its revamped customer-centric website earlier last month. The new website has an improved home page that is well organised for easy navigation and quick access to information that is categorised according to types of business entities. The infographics, intuitive navigation and the improved design are sure to enhance user experience. The frequently accessed services are provided with quick links in the home page. The How to Guides in the home page are organised according to the business life cycle. The revamped website will further facilitate the ease of doing business for Singapore entities.

The ACRA constantly reinvents its service platforms and leverages technology to ensure seamless governance while facilitating easy IT enabled compliance platforms. One such recent revamp is the launch of BizFinx filing system in March. This enables companies to file their financial statements in XBRL in accordance with the revised XBRL filing requirements. It replaced the old FS Manager. The system incorporates a BizFinx preparation tool, which is a free offline software application. Using the software, companies can prepare XBRL financial statements in accordance with the revised XBRL filing requirements.