Why do I need a company secretary for my Singapore startup?

singapore company secretary

If nothing else, you need a company secretary because it’s mandatory. Under Section 171 of the Companies Act, a company secretary has to be appointed within six months of incorporation. If the company secretary resigns, the company has another six months to replace the company secretary.

What do company secretaries do?

The Companies Act doesn’t specifically define the role of the company secretary. However, this doesn’t mean the role isn’t an important one or a role to be taken lightly. Company secretaries owe a fiduciary duty to the company and may be held liable for the company’s failure to comply with the law in certain situations.

Generally, company secretaries handle the bulk of the administration of the company. He or she is in charge of:

1). Lodging and filing important company documents with ACRA on time in accordance with the law.

2). Arranging for shareholder and director meetings in compliance with the Companies Act and constitution of the company.

3). Filing necessary amendments where relevant.

4). Providing other necessary legal and administrative support.

In Singapore, the company secretary usually plays quite a large role within the operations of a company.

Should you hire a company secretary or DIY?

The requirements to be a company secretary in a private company is not as stringent as that of a company secretary in a public-listed company, which requires one to have at least one particular qualification out of a number of options, such as being a qualified person under the Legal Profession Act or a public accountant registered under the Accountants Act.

In contrast, almost any Singapore resident can be the company secretary of your startup, as long as he is not the sole director of the company. Section 171(1A) of the Companies Act simply states that the secretary of the company has to be a person who the directors or the company acknowledge to have the requisite knowledge and experience to discharge the functions of the secretary.

As such, some cash-strapped startups prefer to retain this function within the company. However, this can be a big mistake if the person appointed as a company secretary is inexperienced and doesn’t have the time to study the intricacies of the requirements of the Companies Act.

For example, proper filing of the company’s annual financial statements is not a simple process and many first-time DIY company secretaries often make mistakes. Unfortunately, mistakes by a company secretary can have pretty grave consequences – if you appoint a new shareholder during a resolution and neglect to hold the mandatory Extraordinary General Meeting, the appointment of the new shareholder will be held null and void in Singapore.

While we understand the need to keep costs as low as possible, we suggest outsourcing the company secretary function for peace of mind. Just shop around and look for a corporate services firm that offers a good balance between price and experience.

We’re not discounting the DIY option completely however. The DIY option is a great one for startups with more than one director, and where the person taking on the role of company secretary is willing to go to the additional lengths required to become proficient. However, as I’ll repeat yet again, being a company secretary is not a role to be taken lightly. In addition to messing things up severely if you screw up, there are situations where the company secretary can be liable for fines/imprisonment if they are guilty of offences under the Companies Act.

If you’re planning to go DIY, we highly suggest purchasing the Singapore Company Secretary’s Practice Manual to provide guidance on the issues you’ll encounter. Of course, purchasing the Manual kind of goes against the idea of saving money for your startup.