Setting Up a Company: How to Prepare your Company Constitution
You have to have a company constitution ready at the time of registering your company. It is one of the legal requirements that you need to comply with to incorporate a company in Singapore.
What is the Company Constitution in Singapore?
Company constitution is a legal document that states how a company will be governed and will carry out its business activities. Singapore companies formed after 3 January 2016 need to have it. The document provides information on a company’s:
- Primary purpose
- Business activities
- Shareholders’ liability
- Capital amount
- Responsibilities & rights of the directors
- Mode of operation
Singapore authorities merged info covered by Memorandum of Association and Articles of Association (M&AA) into the Company Constitution. The company has to follow this document to the letter. You need to submit this document with the application to incorporate your company.
You could either:
- Create a customized constitution to fit your needs; or
- Use the Model Constitution provided by ACRA
The latter option will keep the cost of forming a new company down.
What Does the Company Constitution Mean?
The Company Constitution creates a contract between the private limited company and its shareholders, and between these shareholders.
Each shareholder of the company has a right to initiate an action to enforce regulation of the constitution or to prevent its violation.
A breach of the constitution may prompt a court to order compliance with the constitution or order compensation for the losses suffered by the innocent parties.
The shareholders need to declare to ACRA of their intention to take shares (& a number of shares) in the company. They need to sign the Company Constitution, which must be maintained at the company’s registered address.
Key Points of Company Constitution
At the time of drafting a company constitution, you need to pay attention to the following key points:
- Business Objectives: State the goals for the company. Confirm with the Objects Clause in the Company Constitution.
- Decision-making Structure: Set up procedures to implement in your company. Doing so will ensure the company’s compliance with legal and regulations. It will avoid potential conflicts among shareholders.
- Specific Clauses: Clauses that are unique to your company, should also be confirmed with the prescribed legal and regulations.
Mandatory Sections of the Company Constitution?
- Company name
- A statement detailing the limited liability of the shareholders of a company limited by shares
- A statement detailing the liability of shareholders’ of a company limited by guarantee towards contributing a specified amount at the time of company wind up.
- For an unlimited company, a statement stating the unlimited liability of its members
- For an unlimited company or a company limited by guarantee; number of its shareholders at the time of registration application, their names, addresses and occupations
- A statement stating shareholders’ wish to form a company as per the constitution
- For the company having a share capital, their agreement to subscribe for a stated number of shares in its capital
Registration and Submission of Company Constitution
You need to log on BizFile+ portal to incorporate your company. You also need to submit a copy of your company’s constitution at this time.
After setting up your company, use your CorpPass to transact in BizFile+. You can access email notification for endorsement from the dashboard in BizFile+. Company directors, shareholders, and company secretary have 60 days to endorse their consent online using BizFile+. ACRA’s company registration fees come to S$300.
Buying a Company Constitution from ACRA
In Singapore, investors can access a company’s data using BizFile+ portal. It helps them in market research and decision-making. You can even buy a company’s constitution by paying:
- S$11 for PDF extracts without attachment
- S$26.00 for PDF extracts with attachment; and
- S$1/page for certification (ACRA entity stamp, an authentication number and the document is endorsed by Assistant Registrar)
This is all about Company Constitution for your Singapore company. You should not confuse it with a shareholders’ agreement which is an agreement between the shareholders and supplements the details in the company constitution.
You can draft a company constitution yourself or hire a reliable provider of company secretary services in Singapore like SBS Consulting. Contact us on +65-6536 0036 or email us at email@example.com for expert assistance.