When starting and running a business in Singapore, foreign entrepreneurs must navigate a variety of legal and regulatory requirements. Among these is the important aspect of company resolutions, a critical part of corporate governance and decision-making. Whether you’re registering a company, altering the shareholding structure, or managing business operations, company resolutions are necessary to ensure compliance with Singapore’s laws and regulations.
In this article, we will explore what company resolutions are, the types of resolutions you’ll encounter as a foreign entrepreneur in Singapore, how to draft and implement them, and why they matter for your business. We’ll also discuss best practices to ensure your company stays in line with Singapore’s corporate governance standards.
What Are Company Resolutions?
A company resolution is a formal decision made by the board of directors or the shareholders of a company. Resolutions are documented in writing, and they serve as the legal record of the decisions that were made. These resolutions can cover a wide variety of matters, from approving financial statements to appointing company officers, issuing shares, or approving mergers.
In Singapore, company resolutions are required for key business decisions that need to be documented and formally approved. These decisions may involve changes in the company’s structure, operations, or compliance with regulations.
Types of Company Resolutions in Singapore
There are two main types of resolutions in Singapore:
1. Ordinary Resolutions
An ordinary resolution is a decision passed by a simple majority of votes at a shareholder meeting. Typically, ordinary resolutions are used for routine business decisions that do not require significant changes to the company’s constitution. Examples of ordinary resolutions include:
- Approval of directors’ remuneration
- Removal of director
- Change of auditor
To pass an ordinary resolution, more than 50% of the votes cast must be in favour.
2. Special Resolutions
Special resolutions are more formal and require a higher threshold for approval. These resolutions are typically needed for decisions that make significant changes to the company’s structure or governance. Special resolutions require a two-thirds majority (or 75%) of votes cast at a shareholder meeting. Examples of matters requiring special resolutions include:
- Altering the company’s constitution
- Changing of company’s name
- Reducing the company’s share capital
Special resolutions must be filed with the Accounting and Corporate Regulatory Authority (ACRA) and are usually effective immediately after passing, unless stated otherwise.
When Are Company Resolutions Required?
Company resolutions are required for various decisions made throughout the lifecycle of a business. As a foreign entrepreneur setting up or running a company in Singapore, here are some common situations where resolutions will be necessary:
1. Company Incorporation
At the time of incorporation, several resolutions will be required, including:
- The appointment of the company’s first directors and company secretary.
- The approval of the company constitution.
- The registration of the company with ACRA.
2. Changes in Company Structure
If your business undergoes structural changes, such as issuing new shares, changing the company’s constitution, or entering into mergers or acquisitions, resolutions will need to be passed by the board of directors or shareholders.
3. Director Appointments and Removals
When a new director is appointed or an existing director is removed, a board resolution must be passed. The appointment and removal of directors also typically require shareholder approval in some cases.
4. Financial Decisions
Resolutions are required for important financial decisions, such as the declaration of dividends, approval of annual financial statements, or capital raises through issuing new shares.
5. Contracts and Agreements
Certain business contracts and agreements, such as major investments or commercial partnerships, may require approval via a board or shareholder resolution, especially if they involve significant financial commitments.
Best Practices for Company Resolutions in Singapore
To ensure your company remains compliant with Singapore’s corporate governance standards, follow these best practices for handling company resolutions:
1. Ensure Proper Documentation
Keep thorough and accurate records of all resolutions, especially for special resolutions. These documents should be stored securely in the company’s official register.
2. Meet Legal Requirements for Resolution Passing
Make sure that the appropriate quorum is met during shareholder or board meetings before passing resolutions. For special resolutions, always ensure that the required two-thirds majority is achieved.
3. File Resolutions with ACRA on Time
For resolutions that require filing with ACRA, such as changes to the company’s constitution or share structure, ensure you file them promptly within the statutory 14-day deadline.
4. Stay Informed About Changes in Legislation
Singapore’s corporate governance rules are subject to updates. Make sure to stay informed about any changes to the Companies Act and other relevant regulations that may affect the nature or requirements of resolutions.
5. Use Professional Assistance
Many foreign entrepreneurs opt to hire a corporate service provider to help with company resolutions. Engaging professionals ensures that all resolutions are drafted correctly and filed on time, mitigating the risk of non-compliance.
Why Company Resolutions Matter for Foreign Entrepreneurs in Singapore
For foreign entrepreneurs, understanding and managing company resolutions is a fundamental part of doing business in Singapore. It ensures that you are operating within the legal framework, fulfilling regulatory requirements, and maintaining good corporate governance. Moreover, well-documented resolutions help build trust with stakeholders, such as investors, employees, and regulatory authorities.
Having an organized approach to company resolutions also protects your business from legal disputes and financial penalties that can arise from failure to comply with statutory obligations.
How Premia TNC Can Help
As a foreign entrepreneur, staying compliant with Singapore’s corporate governance standards is crucial for the smooth operation and growth of your business. Company resolutions are an integral part of that process, ensuring that key decisions are made and documented in line with Singapore’s legal framework. Whether it’s for incorporating your company, appointing directors, or issuing shares, understanding the different types of resolutions and following best practices will help keep your business on track.
If you need assistance with drafting and filing company resolutions in Singapore, Premia TNC offers expert services to guide you through every step of the process. Our team can help ensure that your business remains compliant with all legal requirements while you focus on building and growing your enterprise. Reach out to us today to learn more about how we can support your company’s success in Singapore.