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Unveiling the Often-Misunderstood Role of a Corporate Secretary in Singapore Companies

Unveiling the Often-Misunderstood Role of a Corporate Secretary in Singapore Companies - Blutrust

The Essential Role of Corporate Secretaries in Singapore Companies

Corporate secretaries play a vital role in Singapore’s business world, but many people do not fully understand what they do. Let us explore their important responsibilities and why they matter for companies of all sizes.

What Does a Corporate Secretary Do?

A corporate secretary in Singapore:

  • Ensures that the company comply with the Companies Act, regulations and the constitution of the company.
  • Advises company leaders on best practices.
  • Ensure board meetings are conducted in compliance with the entity’s constitution.
  • Helps maintain good relationships with stakeholders (like investors and partners)
  • Keeps and maintains the Statutory Records
  • Function as the point of contact for regulatory authorities, handling inquiries, inspections and ensuring timely responses to compliance matters.
  • Safeguards the company’s confidential information.

Legal Requirements

In Singapore, every pcompany must have a corporate secretary within six months of starting up. This rule shows how important this role is for all businesses, big and small.

Let us clear up some misunderstandings about corporate secretaries in Singapore companies.

Common Myths About Corporate Secretaries in Singapore

Myth 1: They are Just Office Assistants

Reality:

Corporate secretaries do much more than paperwork. They:

  • Make sure the company complies with legal and regulatory requirements.
  • Keep and maintain important company records and registers.
  • Manages communication between company leaders and stakeholders.

In fact, 78% of company directors say corporate secretaries play a vital role in company strategy in a Singapore Institute of Directors (SID) report in 2022.

Myth 2: Small Businesses Don’t Need Them

Reality:

All companies in Singapore, big or small, must have a corporate secretary. They help small businesses:

  • Follow complex laws.
  • Reduce risks.
  • Run more effectively.

Myth 3: They Don’t Influence Company Strategy

Reality:

Corporate secretaries often advise company leaders on important decisions. They:

  • Provide guidance on corporate governance and ethics.
  • Help develop and implement company policies.
  • Ensure proper procedures are followed in meetings.

A study by Institute of Chartered Secretaries and Administrators (ICSA) found in 2021 found that 65% of corporate secretaries regularly advise company boards on strategic issues.

Myth 4: The Job Never Changes

Reality:

The role of a corporate secretary is always evolving. They need to:

  • Keep up with new laws and regulations.
  • Adapt to changes in the business world.
  • Learn new skills, like data protection laws.

PDPA and subsequent amendments, for example, have required corporate secretaries to ensure compliance with data protection laws, reflecting their evolving roles.

Myth 5: Anyone Can Do the Job

Reality:

Being a corporate secretary requires unique skills and qualifications. They must:

  • Often be members of professional organizations
  • Have legal or accounting knowledge.
  • Meet strict criteria set by the government.

These requirements ensure they can effectively manage company governance and compliance.

Corporate secretaries do much more than just administrative tasks. Let us look at their wider role:

1. Strategic Advice and Governance

Corporate secretaries function as strategic advisors to the board of directors, offering insights into governance best practices and regulatory compliance. They help shape the corporate governance framework, ensuring that the company adheres to the highest standards. According to a 2021 study by the Institute of Chartered Secretaries and Administrators (ICSA) now known as The Chartered Governance Institute, 75% of corporate secretaries regularly advise boards on governance matters, reinforcing their pivotal role in strategic decision-making.

2. Managing Risks

Corporate secretaries help identify potential problems and develop strategies to avoid them. A 2022 KPMG report showed that 68% of companies improved their risk management thanks to their corporate secretaries.

3. Ensuring Legal Compliance and Ethical Standards

They make sure companies follow all necessary laws and maintain high ethical standards. This includes:

  • Keeping required records
  • Filing reports with the government
  • Developing codes of conduct
  • Creating policies to protect whistleblowers

ACRA’s Annual Report 2021/2022 emphasized the importance of corporate secretaries in maintaining compliance, noting that 85% of enforcement actions stemmed from non-compliance, further underscoring their critical role.

4. Communicating with Stakeholders

Corporate secretaries facilitate effective communication between the board, management, and stakeholders. They ensure that stakeholders receive timely and accurate information, enhancing transparency and trust. A survey by the Singapore Institute of Directors (SID) in 2022 found that 80% of directors rely on corporate secretaries for stakeholder communication, highlighting their importance in fostering positive stakeholder relationships.

5. Promoting Social Responsibility and Sustainability

In today’s business environment, corporate social responsibility and sustainability are paramount. Corporate secretaries play a key role in developing and implementing CSR initiatives and sustainability strategies. They ensure that the company’s operations align with environmental, social, and governance (ESG) criteria. A 2022 Deloitte survey revealed that 70% of corporate secretaries engage in CSR and sustainability efforts, underscoring their influence in promoting sustainable business practices.

6. Continuous Learning

The role of a corporate secretary is always evolving. They need to keep learning and updating their skills to stay effective in their job.

Why This Matters for Business Owners and the Public

Understanding the role of corporate secretaries is important because:

1. For business owners: Corporate secretaries can help your company run smoothly, avoid legal problems, and make better decisions. This is especially appreciated when the company expands, and it requires increased funding or when there are disputes among its investors.

2. For the public: Knowing what corporate secretaries do helps you understand how companies are managed and held accountable.

3. For investors: Corporate secretaries play a key role in ensuring companies operate ethically and transparently, which can affect your investments.

Corporate secretaries are essential for helping companies in Singapore operate legally, ethically, and successfully. Their wide-ranging responsibilities in legal compliance, strategic advice, and ethical leadership make them key players in today’s complex business world.

Capital Allowances

Deductions for the decline in value of depreciating assets are available under the Uniform capital allowance (UCA) system. In addition to the rules for depreciating assets, deductions are allowed for certain other capital expenditure.

Small business entities have the option of choosing simplified depreciation rules. Under these rules, small business entities can claim an immediate deduction if the cost is below the relevant threshold or else add the asset to the small business depreciation pool.

Land, trading stock and most intangible assets (excluding exceptions such as intellectual property and in-house software) are not depreciating assets.

The decline in value is generally calculated by spreading the cost of the asset over its effective life, using one of two methods:

Prime cost method – decline in value each year is calculated as a percentage of the initial cost of the asset
Diminishing value method – decline in value each year is calculated as a percentage of the opening depreciated value of the asset
MORE: Australian Taxation Office (ATO) Decline in value calculator.

For most depreciating assets, taxpayers can either self-assess the effective life, or use estimates published by the ATO. Taxpayers can recalculate, either up or down, the effective life of an asset if the circumstances of use change and the effective life initially chosen is no longer accurate. An improvement to an asset that increases its cost by 10% or more in a year may result in an obligation to recalculate the effective life of the asset.

Decline in value of cars is restricted to the car limit. From 1 July 2022, the luxury car tax threshold for luxury cars is $64,741 (it was $60,733 for the year commencing 1 July 2021). Luxury car leases are treated as a notional sale and purchase, with decline in value restricted to the car limit.

The decline in value of certain depreciating assets with a cost or opening adjustable value of less than $1,000 can be calculated through a low-value pool. The decline in value for depreciating assets in the pool is calculated at an annual diminishing value rate of 37.5%.

Changes for 2022 and 2023

From 12 March 2020 until 31 December 2020, the asset cost threshold for the instant asset write-off (which is usually only available to small business entities) has increased from $30,000 to $150,000 and the eligibility criteria expended to cover entities with an aggregated turnover threshold of less than $500 million (up from $50 million).

Further, from 12 March 2020 until 30 June 2021 the Backing business investment measure applied to businesses with aggregated turnover below $500 million and provides either:

A deduction of 50% of the cost or opening adjustable value of an eligible asset on installation (existing depreciation rules apply to the balance of the asset's cost), or
For businesses using a small business depreciation pool, a deduction of 57.5% of the cost of the asset in the first year, with the balance added the asset to the small business pool
In addition, from 6 October 2020 to 30 June 2023, full expensing applies to allow eligible businesses with an aggregated turnover of less than $5 billion to deduct the full cost of new eligible depreciating assets. For businesses with aggregated turnover of less than $50 million, full expensing also applies to eligible second-hand assets.

Activity Statement

Businesses use activity statements to report and pay a number of tax obligations, including GST, pay as you go (PAYG) instalments, PAYG withholding and fringe benefits tax. Non-business taxpayers who need to pay quarterly PAYG instalments also use activity statements.

Activity statements are personalised to each taxpayer to support reporting against identified obligations.

Activity statements for businesses may be due either quarterly or monthly. Generally, businesses can lodge and pay quarterly if annual turnover is less than $20 million, and total annual PAYG withholding is $25,000 or less. Businesses that exceed one or both of those thresholds will have at least some monthly obligations. Non-business taxpayers are generally required to lodge and pay quarterly.

Taxpayers with small obligations may be able to lodge and pay annually. Some taxpayers may receive an instalment notice for GST and/or PAYG instalments, instead of an activity statement.

The Australian Taxation Office (ATO) web site provides instructions on lodging and paying activity statements. Detailed instructions are provided for each of the different tax obligations:

GST (Goods and Services Tax)
PAYG (Pay As You Go) Instalments
PAYG (Pay As You Go) Withholding
FBT (Fringe Benefit Tax)
LCT (Luxury Car Tax)
WET (Wine Equalisation Tax)
Fuel Tax Credits