In Singapore, private companies are required to hold an Annual General Meeting (AGM) to maintain good corporate governance, engage shareholders, and comply with the Singapore Companies Act. While private companies enjoy more flexibility compared to listed companies regarding the formality and scope of these meetings, AGMs remain essential for ensuring transparency and accountability.
In this article, we will focus on the AGM for private companies in Singapore, covering legal requirements, the role of financial statements, and best practices for an effective AGM.
What is an AGM for Private Companies?
An Annual General Meeting (AGM) is a mandatory annual meeting where shareholders review the company’s performance, approve financial statements, vote on resolutions, and elect or re-elect directors. It ensures that shareholders are kept informed and involved in major decisions related to the company’s operations and governance.
For private companies in Singapore, while the formality of the AGM may be less intense than for public companies, it remains a key tool for ensuring good corporate governance and maintaining shareholder involvement in the business.
7 Legal Requirements for Private Companies
The Singapore Companies Act establishes the legal framework for holding an AGM for private companies. Below are the key requirements that private companies in Singapore must adhere to when conducting an AGM:
1. Timing of the AGM
A private company must hold its AGM within six months after the end of its financial year. For example, if the financial year ends on 31 December, the AGM must be held by 30 June of the following year.
2. Filing the Annual Return
Private companies must file their annual return with ACRA within seven months of the end of the financial year.
3. Notice of AGM
The company must send a 14-day notice to all shareholders, directors, and auditors prior to the AGM. The notice must detail the date, time, venue (or virtual meeting details), and agenda for the meeting.
4. Approval of Financial Statements
During the AGM, shareholders will approve the company’s financial statements. If required, these may be audited, depending on the company’s size and legal requirements.
5. Retirement and Reappointment of Directors
Directors are required to retire by rotation and stand for re-election at the AGM. Shareholders vote on whether to reappoint them.
6. Appointment of Auditors
Shareholders will vote on the appointment or reappointment of auditors (if applicable) and approve their remuneration.
7. Dividend Declarations and Other Resolutions
Any declarations of dividends or resolutions on major business matters, such as changes to the company’s constitution or major transactions, are voted on during the AGM.
Waiver of AGM for Private Companies with 20 or Fewer Shareholders
Private companies with 20 or fewer shareholders have the option to waive the AGM requirement by passing a unanimous resolution. If this option is chosen, shareholders may pass resolutions in writing, without needing to hold a formal AGM.
This waiver helps streamline the AGM process for smaller companies, making it more flexible and less formal. However, this option is only available if all shareholders agree. The company must still file the annual return with ACRA.
Procedures for Conducting an AGM for Private Companies
While private companies have fewer formalities when holding an AGM, they must still adhere to key procedures to ensure the AGM is compliant. Here’s a brief overview of the typical steps involved in conducting an AGM for a private company:
1. Pre-AGM Preparations
The company must prepare and circulate key documents to shareholders, including:
- Financial statements (audited or unaudited, as applicable).
- Annual report (if applicable).
- Proxy forms (if shareholders are not attending in person).
- Resolutions to be voted on, such as the appointment of directors, approval of dividends, and appointment of auditors.
2. Issuing the Notice
A 14-day notice must be issued to all shareholders, directors, and auditors, specifying the time, date, venue, and agenda. If the AGM is to be held virtually, the company must provide instructions on how shareholders can attend online.
3. Conducting the Meeting
- The AGM is typically chaired by the chairman of the board or another designated person. During the AGM:
- Shareholders will review the company’s financial performance and financial statements.
- The directors will present an update on the company’s strategy and operations.
- Shareholders will be invited to ask questions and engage in discussions regarding the company’s performance.
- Resolutions will be discussed and voted on, such as the appointment of directors, the declaration of dividends, or the appointment of auditors.
The Voting is typically by show of hands, though other methods may be allowed depending on the company’s constitution.
4. Post-AGM Actions
- After the AGM, the company must record the minutes of the meeting, which will document all resolutions passed, votes, and any key shareholder discussions. These minutes should be kept as part of the company’s official records.
- Filing the Annual Return: The company must file its annual return with ACRA within seven months after the financial year-end, including the approved financial statements if required.
5 Best Practices for Conducting an AGM for Private Companies
Here are some best practices to ensure the AGM is effective and compliant:
1. Transparency
Ensure that shareholders have clear, timely, and comprehensive information about the company’s performance, resolutions, and other key matters.
2. Well-Structured Agenda
Organize the AGM with a clear agenda, ensuring that all key items are covered, and shareholders have time to ask questions.
3. Shareholder Engagement
Actively engage shareholders by allowing them to ask questions and provide feedback during the meeting.
4. Virtual or Hybrid AGMs
Consider holding a virtual or hybrid AGM to accommodate shareholders who cannot attend in person, especially if they are geographically dispersed.
5. Compliance
Adhere to legal requirements, including filing the annual return and holding the AGM within the prescribed time.
Conclusion
The AGM is a crucial aspect of corporate governance for private companies in Singapore. It provides shareholders with the opportunity to review financial performance, vote on important decisions, and stay involved in the company’s direction. By adhering to legal requirements and best practices, private companies can ensure their AGMs are transparent, compliant, and foster effective shareholder engagement and strong governance.
