Category: Business Insights

Singapore (2020) AGM Landscape Trends Report

Singapore_2020_AGM_Landscape_Trends_Report

Singapore (2020) AGM Landscape Trends Report

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2020 has been a year like no other with the COVID-19 pandemic disrupting the AGM market. BoardRoom’s dedicated Share Registry team conducted 188 virtual meetings covering various industries across the period of Circuit Breaker & Phase I. The teams navigated the volatility and uncertainty of the conditions and guided clients through an AGM season like never before.

BoardRoom Annual AGM Thought Leadership Paper FY2020

FY2020 saw an accelerated digital journey compressed into days and weeks in order to adapt to the new normal as a result of the pandemic.

This paper sets out our key thoughts, trends and commentary as we reflect on the past and what it means for the future ahead in a post-COVID environment.

About the Data

This section sets out the breadth and scope of our paper. The insights and analysis provided here were acquired through BoardRoom’s coverage of our clients where we provided Meeting Services.

About_the_Data
Technology

The pervasive use of technology was amplified this year as observed in the previous themes surrounding our medium of communication, dissemination of information, registration of shareholders, engagement medium etc.

Some issuers turned to web-based video conferencing software, instead of using a secure webcast.

Technology_statistic
AGM Shareholder Engagement
AGM_Shareholder_Engagement

Download the Full Singapore (2020) AGM Landscape Trends Report

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Digital Disruption & BoardRoom

Digital Disruption

Digital Disruption & BoardRoom

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Digital Disruption

We inhabit a world that is being upended by digital innovation. Organisations that have embraced digital technology are insinuating themselves into established industries and have caused sleepless nights for leaders of pioneering firms who are confounded about the response to the emerging developments.

Many view the phrase ‘digital disruption’ as a negative one and mistake it as an attack on their business and current way of life.

Really, it is only negative for those who choose to ignore or try to fight it. Those who accept it often find that it can benefit their business in various ways and enhance their growth.

What is Digital Disruption?

Digital disruption is a transformation that is caused by emerging digital technologies and business models. These innovative new technologies and models can impact the value of existing products and services offered in the industry. Hence the term ‘disruption’ is used, as the emergence of these new digital products, services and businesses revolutionised the current market and resulted in the need for re-evaluation of traditional market practices. Below are some examples of some technologies or services that have drastically changed the way we work.

Video streaming took the entertainment industry completely by surprise. Rapidly rising as a low-cost alternative for a select few internet-savvy audiences to watch shows, to eventually driving the cable industry and video rental stores into the ground. Netflix has become the largest subscription video provider in the US, outstripping cable and satellite.

Ride sharing companies like Uber and Grab have transformed and all but replaced the taxi industry as the preferred commuting choice in a significant number of countries, leaving traditional cab companies trailing in the dust as they try to match the convenience & affordability of ride sharing.

How has Digital Disruption Impacted BoardRoom?

The corporate services industry has been slow to ride the wave of digital disruption, but this does not mean it’s not happening. At BoardRoom we have been shaping the industry for years from the introduction of technology solutions like Employee Share Plans and Virtual AGMs to internal initiatives like eradicating the use of paper in our offices. By closely watching the signs as we have been, has allowed us to get ahead of the game and work with the flow rather than against it. Not only does this prevent the wave of digital disruption from driving our successes out of relevancy, it can also lead to further growth and new opportunities.

Digital disruption typically marks changes in consumer needs and therefore working with the tide allows BoardRoom to fulfil these emerging needs, keeping existing customers happy and most importantly, opening opportunities for new customers to discover what they need from our brand.

BoardRoom Embraces Digital Disruption

With the future in mind, BoardRoom has consistently been investing in the adoption of new ideas and technology to ensure that our clients and staff are well-equipped with the optimal tools for success. The nature of the Professional Services industry is the expectation of efficiency and security, both of which centre our decisions on what services we intend to roll out, and what enhances we can make to existing service offerings.

We have successfully launched several popular services as listed below in anticipation of increased demand:

Flowchart Digital Disruption

Virtual Meeting Services: This service ensured that clients can continue to host shareholder meetings with little to no disruption should there be an inability to host meetings physically.

Electronic-polling: To reduce human error and time spent on manually counting votes, we partnered with Lumi to offer electronic-polling services for optimising meetings.

Employee Share Plans: Customisation was the keyword when considering how best to assist our clients in their employee equity plans, leading to our customisable Employee Share Plan services with an intuitive branded employee portal.

Cloud-Based HRMS SaaS: Ignite was launched with the goal of empowering clients through enhanced security and customisation options to curate the ideal payroll solution for their workforce.

We have come a long way to build BoardRoom as a brand that is ahead of the game and I intend to continue to uphold our value of driving innovation through technology. Through our steadfast dedication to predicting and preparation for the future, the fruits of our labour can be observed in the results produced and through satisfaction of our clients.

 

Insights by Group Chief Technology Officer, Kelvin Wong

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Why your Business Needs a Payroll Health Check

Why your Business Needs a Payroll Health Check

Why your Business Needs a Payroll Health Check

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Why your Business Needs a Payroll Health Check

Just like human beings, businesses require regular check-ups on their processes and systems to ensure that any potential risks are promptly dealt with before any issues escalate. One such system prone to going unchecked is payroll. A regular payroll health check helps to identify and prevent the possible risks that can be resolved before they become a serious problem.

Payroll is the backbone to most companies: essential yet unnoticed, often overshadowed by revenue-generating operational and business units. Generally, low efficiency of payroll can divert precious resources in a business. This can result in the Human Resources (“HR”) department appearing as a cost centre when in reality, an efficient HR team can value add much more to a company’s growth.

We’ll explore how payroll inefficiency can cost businesses and why a health check of current systems can assist in more efficient business planning.

Effects of Payroll Inefficiency

As a business, payroll processes are often determined and then untouched for years, the mindset of “if it isn’t broke, don’t fix it” can be prevalent. In addition to this, many companies use legacy payroll systems that don’t offer the wealth of benefits technology has enabled in this space. However, as companies continue to grow and mature, what works for a small business is not necessarily suitable for larger organisations, or for those who are expanding overseas.

Some pain points of payroll that might surface as a company grows are:

  • Resource Strain – Time and talent are wasted on tedious administrative tasks instead of business generating activities such as talent management, employee engagement and strategic planning. As the business grows, the resulting increase in administrative tasks can lead to a greater burden on the HR team.
  • Compliance Risks Leading to Potential Penalties – Constantly evolving and vast differences in rules between countries can result in the difficulty of complying with legal requirements. For example; in multi-state countries like China, there are distinct sets of laws governing wage, employee tax and insurance that are specific to the respective province. HR teams need to have an in-depth awareness of the various regulation differences per state and stay up to date with the changes. This can cause an increase in workload and open your company up to risk for non-compliance.
  • Inconsistency of Reporting – Different countries might use diverse templates which could lead to unnecessary frustrations when analysing data across various offices.

A prompt & regular payroll health check could uncover if your current practices are costing your business valuable time and resources.

Benefits of a Payroll Health check

A payroll health check is an assessment that should ideally be conducted by independent payroll experts to identify key risks and potential problems in a company’s payroll practices.

A professionally executed payroll health check can help to:

  • Garner an independent assessment on how your payroll can be better managed
  • Analyse what your business’s payroll is costing your company
  • Identify a high-level payroll process flow
  • Ascertain the payroll issues exposing your business to risk
  • Tailor payroll solutions to your specific needs
  • Address your concerns about payroll

Like any other health check-ups, delaying them will make the recovery process longer and more painful than necessary. Catch any risks early and engage a payroll health check right now!

BoardRoom is currently running a 100% FREE health check to help you maximise the efficiency of your payroll, sign up here now for this exclusive offer before it expires!

BoardRoom offers payroll services to businesses in Singapore in beyond to ensure your processes are optimally set up.

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4 Services that a Top Share Registrar Provides

4 Services that a Top Share Registrar Providers

4 Services that a Top Share Registrar Provides

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4 Services that a Top Share Registrar Provides

Unless you are experienced in working with the capital markets, most would be unfamiliar with the differences between the types of services provided by different Share Registry Services providers.

What Is a Share Registrar?

Some basic roles of a Share Registrar that most are aware of would be maintaining the register of shareholders for their listed and unlisted clients and ensuring that all Corporate Actions are processed according to the regulations listed by the Singapore Exchange (“SGX”). However, a top share registrar should go beyond these basic services and add value to their clients by providing a one-stop-shop approach to their service offerings. In this article, we’ll discuss the 4 important services a top share registrar should provide.

01 Share Registrar Provides Secure Process and Services for Clients’ Personal Data Protection

An excellent share registrar takes on the task of liaising with regulatory parties such as SGX to ensure important information like the shareholder registers and lists of active shareholders are actively maintained. This is a standard service offering for a share registry provider. However, what differs between service providers are their policies and procedures around personal data protection.

The information housed in the share register contains highly sensitive personal data like residential addresses and identity numbers, which are considered personal data. In Singapore, personal data is protected by law under the Personal Data Protection Act (“PDPA”). A professional Share Registrar will not only have strict policies and procedures in place to demonstrate compliance with the PDPA but will also go one step further and showcase Accountability through the appointment of and regular training of their Data Protection Officer (“DPO”). To learn more about why Accountability in Personal Data Protection is important, take a look at our joint article with the leader in Personal Data Protection governance, Straits Interactive.

02 Share Registrar Helps Shareholders Communicate with Meeting Services: AGMs/EGMs/SGMs

Under the Accounting and Corporate Regulatory Authority (“ACRA”), all companies are required to hold Annual General Meetings (“AGM”) within four months after their financial year end (“FYE”). An exceptional share registry provider will offer meeting services to ease the stress of arranging for such meetings.

Other significant shareholder meeting services that a share registrar will provide are Extraordinary General Meetings (“EGMs”) or Special General Meetings (“SGMs”). These meetings are typically irregular and usually call for issues that require immediate resolution, such as legal matters. As AGMs and EGMs are often a good gauge for shareholders to judge the company’s status, a successful shareholders’ meeting is crucial to boost stakeholders’ confidence in the company.

Given AGMs & EGMs involve important stakeholders voting on the passing of resolutions, a holistic package of meeting services should be offered to meet the needs of clients. AGMs and EGMs include several key stages: pre-meeting, during the meeting, and post-meeting, each with its own unique set of needs. We have listed the services an experienced Share Registrar would provide at each stage below.

Pre-meeting

  • Advise on event planning,including the recommendation of vendors for catering, venues, and expected timelines
  • Prepare and coordinate the printing and sending of Companies’ Annual Reports to shareholders
  • Process proxy forms and generate reports for clients to get an idea of the general sentiment regarding certain resolutions before the meeting
  • Sourcing of scrutineers if the Share Registrar is the registered Polling Agent
  • Prepare proxy summary listing based on the valid proxy forms received
  • Arrange fora site survey and dry-run at the meeting venue prior to the meeting (if necessary)

During the Meeting

  • Manage the attendees through attendance taking and ushering of shareholders

 

  • Verifythe attendee’s particulars to ascertain their identity as a valid shareholder before admission
  • Provideup-to-date attendance registration status
  • Run the pollingwith the support of relevant IT personnel
  • Provide Scrutineering services, provided the Share Registrar is not the registered Polling Agent. If they are, they are unable to provide this service
  • Compute thepolling results

Post-meeting

  • Generate an official certificate with the resolutions and polling results for the perusal of the Board of Directors and Chairman
  • Generatereports including information on shareholder attendees, audit trails on voting instructions by shareholders, to name just a few

 

 

Outside of this, an experienced share registrar should be pre-emptive and adapt quickly to changes. In a post-COVID era, hybrid AGM meeting modes have become the mainstream approach for companies embracing flexibility to navigate this new norm. This brings about unique challenges and increased responsibilities for share registrars as there is no longer a clear default mode for either physical or virtual meeting. As a result, any exemplary service provider should adapt and impartially cater to the needs of both the online and offline shareholders.

03 Share Registrar Offers a Variety of Polling Solutions and Services

There is no “one size fits all” polling service. Share registrars should anticipate the various needs of clients and advise companies on which polling solution is most suitable for them based on factors such as the number of shareholders or the company’s budget.

Detailed below are the common types of polling services in Singapore today:

  • Manual Polling/Voting– Executed through paper and pen with the share registrar manually counting the votes during a meeting. It can also be a semi-automated process where details and votes are captured electronically on a polling/voting solution. Typically used by companies with a small to medium shareholder base, the time taken can be longer due to the manual work needed as headcount increases.
  • Electronic-polling/Voting– Administrated via handsets and smart cards provided to shareholders, a card reader is used to capture information that collates and displays results instantly. Companies that usually engage this are the ones with a sizeable shareholder base where speed and real-time polling data are important.

04 Share Registrar Provides Support Services for IPO Listing

Whilst a lot of the services discussed above are post-Initial Public Offering (“IPO”), an important role of a Share Registrar should be to support clients before and throughout their IPO listing journey. A professional share registry service provider offers support through advising on the SGX requirements for a successful listing in Singapore. There are many unknowns on an IPO journey; a capable share registrar will have experience across a variety of situations to ensure they can advise on the necessary actions for a seamless experience founded on compliance and best practice governance. Some common areas an experienced share registrar can support are:

  • Backend processes such as IPO application, IPO subscriptions,and IPO administration
  • Both local and inbound overseas companies have specific requirements for IPOs;a Share Registrar experienced in regional dealings will be able to safeguard businesses from compliance risks

In Conclusion: Share Registrar Provides Diverse Services for Efficient Share Management and Regulatory Compliance

An exemplary Share Registrar should offer an astute suite of services that cater to clients’ needs. They should be proactive in all their dealings and prioritise delivering a service that alleviates administrative burdens. A good share registrar can be the make or break for maintaining valuable shareholder relations and ensuring compliance with all local regulations to avoid any potential loss of reputation or monetary fines.

BoardRoom – Share Registry Services in Singapore

As one of the leaders and pioneers in the share registry industry, BoardRoom has over 50 years of experience guiding many listed corporations in the APAC region. Our expertise is trusted by close to 50% of SGX-listed companies, helping them to save time and money by delegating time-consuming administrative tasks to our dedicated team. We have comprehensive knowledge of compliance requirements across major stock exchanges in the region, including SGX, BURSA, HKEX, and ASX, providing expert advice and seamless coordination of your share registry services regardless of where your company is listed. Contact our Share Registry Services experts for your personalised consultation and see how we can add value to your business today.

Wondering what insights and experience a seasoned share registrar can bring to the table? Explore our full report on 2023 Singapore AGM Insights Report that we observed from our vast experience in handling a wide range of clients in the 2023 AGM season.

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The Ultimate Guide to an Employee Stock Option Plan (ESOP)

The Ultimate Guide to an Employee Stock Option Plan (ESOP)

The Ultimate Guide to an Employee Stock Option Plan (ESOP)

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Introduction to Employee Stock Option Plan (ESOP)

We have all heard of an employee stock option plan or employee stock ownership plan (ESOP), but how does this scheme work in practice, and how do you determine if it is suitable for your company?

If you are considering implementing an ESOP for your organisation, you may have questions about how it works, the benefits, and the factors to consider. In this article, we will answer these questions and provide the basic guidelines of an ESOP plan, including how it works and how to set up an ESOP, so you can see if it might be a viable solution for your business. We will also show you how BoardRoom can help you with your ESOP needs in Singapore.

What is an Employee Stock Option Plan (ESOP)?

An Employee Stock Option Plan (ESOP) is one form of remuneration given to employees by means of retaining them or rewarding them based on their performance. They are usually offered in the form of company shares, which provide the employee with ownership rights as a shareholder of the company. As part of an ESOP scheme, the employee can acquire the shares at a predetermined price, or what we call an exercise price.

ESOPs are designed to align the interests of employees and shareholders, as well as to attract and retain talent. These employee share option schemes are becoming more popular in Singapore, especially among startups as well as Small and Medium Enterprises (SMEs) across multiple industries.

The Lifecycle of an ESOP Scheme

The lifecycle of an ESOP scheme can be broken down into a few events: Offer, Vesting, Exercise, Leaver, and Lapse. An employee will first accept an ESOP option offering, whereby a fixed number of options will be allotted to them. After a certain timeframe, a proportion of the allotted options will vest, meaning the employee can now exercise these options.

To exercise these vested options, the employee will pay the total exercise cost (number of options x exercise price) and receive actual company shares afterward. If they do not exercise these vested options after the expiry date, they will lapse or expire, meaning the participant can no longer exercise these options moving forward. If the employee leaves the company halfway through the ESOP’s lifecycle, in some cases, all their vested and unvested options will lapse completely. This will depend on the particular company’s employee stock option plan rules.

Why Would Companies Adopt an Employee Stock Option Plan (ESOP)?

Companies who want to grow their business whilst mitigating costs usually adopt an ESOP plan. This is driven by two primary reasons:

  • Employee performance is directly linked to company performance and, thus, employee remuneration. Employees can only benefit from their ESOP when the company’s market price is above the exercise price, which means that a company needs to grow to spur the market price of the share.
  • There is no heavy upfront cost to the company. Cost to the company, in this case, is only incurred during the exercise of the Furthermore, the employee will cover the exercise cost, so it’s a win-win for companies looking to grow whilst mitigating costs.

How Do Employees Benefit From an ESOP?

When employees are rewarded with shares of the company, they essentially become part owners of the company. In turn, this directly correlates with employee performance and investment in business performance. The employee’s actions, decisions, and work output are all focused on the greater good of the firm as this is mutually aligned with their own rewards.

What are the Advantages of an ESOP?

An ESOP is more than just a compensation scheme for employees; it is also a way to inspire them. But more than that, this scheme also brings a magnitude of advantages to the organisation.

Below are some of the notable reasons why an ESOP can be a mutually beneficial scheme for everyone.

For the company

  • Attract and retain talent: An ESOP can help the company recruit and retain high-performing employees, especially in a competitive job market like Singapore. It can also reduce employee turnover and increase employee loyalty, as employees are more likely to stay with the company until their options vest and appreciate in value.
  • Motivate and align employees: Employees are incentivised to work harder and smarter with an ESOP, as they have a stake in the company’s success. The scheme can also align the interests of employees and shareholders, considering employees share the same goal of increasing the company’s value.
  • Conserve cash and tax benefits: The company can conserve cash with an ESOP, as it does not require any upfront payment to the employees. The options are not taxable until they are exercised by the employees, which can also provide tax benefits to the company.

For the employees

  • Financial rewards: Employees can enjoy financial rewards from an ESOP as they can profit from the difference between the exercise price and the sale price of the shares. Depending on the company’s performance and dividend policy, an ESOP can also provide dividends and capital gains to the employees.
  • Sense of ownership and recognition: An ESOP can create a sense of ownership and recognition for the employees, as they own a part of the company. The scheme can also foster a sense of fairness and appreciation, with employees being rewarded for their contributions and efforts.

Employee Stock Option Plan (ESOP) Illustration

To provide an illustration, say on 1st Sept 2019, Mei San has accepted her company’s ESOP 2019 Offer for 900 options with an exercise price of S$ 1 per share. These options will vest annually across 3 years in equal proportions. The expiry date of the options will be 10 years from the offer date, which will be 1st Sept 2029.

ESOP 2019 Offer Vesting Dates Options to be vested Unvested Options Vested Options
Allotment Day 1st Sept 2019 0 900 0
Vesting 1 1st Sept 2020 300 600 300
Vesting 2 1st Sept 2021 300 300 600
Vesting 3 1st Sept 2022 300 0 900

A few points to take note of in the table above:

  • On 1st Sept 2019, 900 options are allotted but remain unvested, which means Mei San cannot exercise these options
  • On 1st Sept 2020, 300 have vested meaning Mei San can exercise them by paying the exercise cost of S$ 300 (300 Options x S$ 1) to acquire 300 shares of the company
  • After 1st Sept 2029, all vested options will lapse, if Mei San has not exercised them prior to this date she will not be able to do so, they have effectively expired
  • If Mei San leaves the company to join another firm halfway through, all vested and unvested options shall expire upon notice of resignation

Other variables to consider:

The illustration above is only one of many examples. Common variables that change include:

  • Inclusion of a performance matrix, where the number of options to be vested will depend on the employee’s work performance
  • More frequent vesting (e.g. Bi-annual), to entice employees with “more” reward
  • Broad-based share option plan where all employees are offered the options plan to encourage ownership thinking across the company
  • Some companies may allow retirees to continue to hold on to their vested options until the expiry date

Depending on your company’s requirements, you will need to understand the implications of these variables, and whether they can help achieve your ultimate objective of your employee stock option plan (ESOP).

What are Factors to Consider Before Implementing an ESOP?

ESOPs can be a powerful way to attract, retain, and motivate employees, but they also come with challenges and risks that must be carefully weighed before implementation. Some of the factors to consider are:

Complexity and Cost

An ESOP is not a simple scheme to set up and manage. It involves a lot of professional advice and expertise on legal, accounting, and valuation matters. It also requires compliance with various rules and regulations and correctly reporting the employees’ ESOP income. The are initial and ongoing costs associated with an ESOP, so the benefits of an ESOP should be evaluated against the expenses and efforts involved.

Equity Dilution and Control

Offering an ESOP means giving away some of the ownership and control of the company to the employees. This setup may have consequences for the existing shareholders, who may see their share and voting power diluted. It may also affect the company’s future plans, such as raising capital, attracting investors, or merging or selling the company. The amount of equity that is comfortable to share with the employees and the rights and restrictions applied to the employee shareholders should be predetermined.

Alignment and Communication

An ESOP can be a great way to align the interests and goals of the employees and the company, but only if the participants understand and value their share options. Management must communicate the purpose, terms, and performance of the ESOP clearly and consistently to their employees. Ultimately, a culture of ownership and engagement among the employees should be created, and they should be rewarded for their contributions to the company’s growth and success.

What are the Tax Implications of an ESOP in Singapore?

Understanding the taxation of ESOPs in Singapore is crucial for both local and foreign employees. In Singapore, employees typically pay taxes on gains from their ESOPs as per the applicable tax slab for individuals, following the guidelines set by the Inland Revenue Authority of Singapore (IRAS).

For Singaporean employees, the taxation process is straightforward—gains from squaring ESOP positions are treated as regular income and taxed accordingly.

Deemed Exercise Rule for Foreign Employees

For foreign employees in Singapore who are granted ESOPs, the taxation process involves a concept known as the “deemed exercise” rule. According to this rule, employees are considered to have derived gains from unexercised or restricted ESOPs when they cease to work in the country and with the employer who granted the options.

This rule applies to ESOPs and Employee Stock Ownership (ESOW) plans issued on or after 1st Jan 2003.

The notional gain is calculated based on:

  1. Open market price of the shares

Determined on either the grant date of ESOPs or ESOWs or one month before the date when an employee ceases employment, whichever occurs later.

  1. Exercise price of the shares

This is determined based on:

  1. The exercise price of the shares under the unexercised/restricted ESOP; or
  2. The price paid or payable for the shares acquired under the ESOW with vesting/moratorium imposed.

The difference between the open market price and exercise price determines the deemed taxable amount.

Exception for Singapore Residents with Overseas Employment

It’s important to note that if a Singapore resident is granted ESOPs in respect of overseas employment, the gains are not considered income generated in Singapore. Consequently, they are not subject to taxes in Singapore.

Simplify Your ESOP Journey with BoardRoom

ESOP is a powerful tool for rewarding and motivating your employees, as well as aligning their interests with your company’s goals. However, implementing an ESOP can be complex and challenging, requiring careful planning, compliance, and communication.

If you are looking for a professional and reliable partner to help you design, implement, and manage your ESOP, consider BoardRoom as your ESOP provider. BoardRoom is a leading provider of ESOP services in Singapore and across Asia-Pacific, with over 50 years of experience and expertise.

We offer a comprehensive and customised ESOP platform that can help you streamline your ESOP processes, stay compliant with local regulatory requirements, and ensure employee engagement. Our ESOP service also includes a dedicated team of professionals who can assist you with your ESOP needs, from planning and implementation to administration and support.

So, whether you are a listed or unlisted entity, BoardRoom can help you create and administer an ESOP that suits your business objectives. Learn how to set up an ESOP from start to finish, and contact us today!

Looking for More information on Employee Share Plans in Singapore?

Check out the following Boardroom articles/resources to find out more on ESOP implementation or employee share plan services.

Or you can also learn more about our Employee Stock Option Plan (ESOP) services here.

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Two Direct Methods To Improve HR Efficiency Today

Two methods to improve HR Efficiency

Two Direct Methods To Improve HR Efficiency Today

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TWO DIRECT METHODS TO IMPROVE HR EFFICIENCY TODAY.

Since being coined in 1893 by John R. Commons, Human Resource (HR) has evolved to become a vital part of any thriving business. In a bid to ensure that the company succeeds in its growth and development, the HR department is responsible for its workforce’s productivity and contribution to the company. This means on top of traditional roles like recruitment, training, management of employee benefit programmes, processing payroll, and maintaining overall morale; the HR Department has become a core driver in shaping business success.

Optimising your HR operations is not an easy task. The continually evolving business landscape is pushing the boundaries of HR capabilities; HR as a whole finds itself in a position where they need to spend more time enhancing performance and less time on traditional administrative work such as employee record keeping or payroll processing. There are many strategies HR Departments can undertake to achieve excellence. Perhaps the most impactful would be the contributions brought about by payroll outsourcing or the adoption of an all in one Human Resource Management Software (HRMS).

01 Consider outsourcing to a payroll service provider

Of the many benefits that come with outsourcing payroll, specialised expertise would be the most notable. By outsourcing your payroll, it provides HR with the opportunity to save on time and cost as well as navigate delicate cultural, language, and regulation issues. By engaging a third-party payroll vendor, the HR department can significantly reduce risk and labour.

Payroll outsourcing reduces cost and saves time.

Processing payroll in-house is time-consuming. It is delicate work that requires a high level of attention to detail. The stress on workload only rises as the company grows and headcount increases. It is important to remember that payroll is only a subfunction of the HR department and one which is an administrative back-end function. Unlike other strategic functions of HR that can drive business performance such as management of employee benefits, recruitment, and training. Consider the benefits to the business if your HR teams were wholly focussed on these instead of scrutinising considerable amounts of data to avoid miscalculations and errors. It is important to note that the time your department saves by not burdening itself with this duty is reflected in cost savings. So, by outsourcing payroll processing, which includes anything from calculating payroll taxes and statutory filings to handling payroll enquiries and disbursement, you benefit your organisation financially too!

“Human resource isn’t a thing we do. It’s the thing that runs our business.” - Steve Wynn

The ongoing costs of the payroll software, additional headcount required for processing wages, managing paperwork, and tax liabilities can add-up to a considerable sum. So, in addition to saving time-cost, by choosing to outsource your payroll functions to a payroll vendor, you could be generating concrete savings to your bottom line.

All things considered, the actual extent to which payroll outsourcing will assist in reducing your costs depends on your current level of efficiency in administering payroll in-house and of course, the complexity of your payroll.

Payroll service providers can offer you peace-of-mind when it comes to compliance and data security.

Staying up-to-date with complicated compliance regulations is an ever-present and real risk that HR teams face when running payroll operations in-house. Even with the most experienced employees, lapses may occur when your department gets busy. Payroll vendors minimise this risk through a dedicated team of experts that operate under stringent protocols and multi-level cross-checking – a process that is often skipped when managing in-house to save on time.

Another aspect for worry other than compliance would be security. Considered the security of your HR payroll software and data is In an age when data security and personal data protection are at the forefront of conversations it is critical you have the appropriate measures in place to ensure accountability with these matters. You need to consider where your payroll software and data are stored and is this a secure location with ISO certification? Do you have the latest security updates installed and processes in place? In the event of an unfortunate lapse in security or hardware malfunction, the many hours required to recover your data along with the implication of experiencing an extremely sensitive data breach will deal a severe blow to the HR department and your company.

By contrast, when you outsource your payroll to a top payroll outsourcing company, they will offer highly secure payroll solutions. They do this by storing your data on highly secure cloud-based servers that utilise state-of-the-art encryptions that prevent any unauthorised access. Data-loss worries would also be a thing of the past with backups across multiple server locations. This essentially allows the HR department to eliminate the effort and time cost that comes with constant security monitoring and data protection—in short, peace-of-mind with minimal effort.

Boardroom payroll HRMS Architecture

Still need a reason to outsource your company payroll? Here’s 6 more!
➤ Read 6 Key Reasons to Outsource Your Company Payroll

02 Consider a well-integrated and interconnected Human Resource Management System (HRMS)

There are many reasons why your HR department would want to consider investing in a fully integrated HRMS solution. All-in-one HRMS solutions typically provide a better user experience for all staff (including HR) and swifter access to a broader array of data. According to research conducted by Software Path, it is not surprising that the most popular reason for HR to integrate an HRMS is to increase overall productivity.

Well-integrated HRMS saves time and eliminates potential human errors.

Automating your HR processes helps you save time. Having to manage every HR function efficiently is hard work. Payroll management and processing in particular can be needlessly resource-draining. However, with a well-integrated HRMS, a company with about 100 staff can complete its payroll processing in a day or less. And while some companies may already be using an HRMS to process payroll, it is important to note that the lack of a well-integrated system that automates calculation and combination of data between various HRMS modules could potentially bring about greater potential for errors leading to areas of inefficiencies.

An ideal HRMS would encompass several key modules and automate a swift data-sync process between them. Examples of modules can be: Leaves, Claims, Time and Attendance, Personnel, and Payroll. Remember to review your HR needs and ensure that your HRMS of choice offers a all the required modules. It is important to note that data from different modules are interdependent.

E.g. payroll processing is dependent on accurate claims data to ensure precise disbursement amount.

By utilising a well-integrated solution, you can ensure that that there are no lapses or variances in the records that may lead to inaccurate accounting.

Payroll outsourcing - Leave and attendance
“One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man.” – Elbert Hubbard
Payroll outsourcing - Overtime and Claims calculation

By choosing your HRMS wisely, you guarantee peace of mind for your HR department and free-up resources to focus on other functions such as improving processes and securing a strong talent pipeline. In the words of Elbert Hubbard, let your extraordinary people do extraordinary work and leave the machine to do the ordinary work.

HRMS simplifies employee services

One of the critical functions of any HR department is employee servicing. The task of supporting employees with basic services such as clarification and generation of essential documents, amongst other things, can be extremely tedious and time-consuming. This becomes exceptionally prevalent for organisations with a massive number of overheads. Needless to say, this causes a drop in the department’s productivity. Top HRMS applications can offer remote access to employees. Some of which even provide mobile solutions which increase accessibility for the modern employee who is always on-the-go. Having such a function provides quick access to general information and documents as well as facilitates an efficient enquiry process without the need to be connected to a physical intranet.

These are just a couple of ways in which you can significantly increase the efficiency of your HR department and begin moving in the direction of HR excellence. However, outsourcing a vital HR function or adopting an HRMS does not come without its challenges. The department may show signs of resistance for fear of their jobs. Decision-makers must provide clear communications on how these new efforts serve to benefit its people. Furthermore, while there is a chance that jobs and positions could be replaced, new positions will always be created to facilitate outsourcing or integration.

Have we provided you with the answers you’re looking for? If we haven’t, we’d very much like to do so. Contact our resident payroll services expert on increasing HR efficiency here!

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Register your Data Protection Officer (DPO) via ACRA’s Bizfile

Register your Data Protection Officer (DPO) via ACRA’s Bizfile

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PDPA & Data Protection Officer

Personal Data in Singapore is protected by the Personal Data Protection Act 2012 (“PDPA”) which came into effect in 2014. Essentially, the PDPA governs the collection, use and disclosure of personal data legitimately.

Most organisations in Singapore handle personal data in one way or another.  In order to ensure that such personal data is appropriately safeguarded and responsibly managed, the PDPA stipulates that it is mandatory for such organisations to appoint a Data Protection Officer (“DPO”). 

The DPO can be an individual or a team and they can be employees of the organisation or an externally appointed third-party.  The key role of the DPO will be to ascertain that the policies and practises of the organisation in relation to personal data comply with the requirements under the PDPA.

The Personal Data Protection Commission (“PDPC”) in Singapore administers and enforces the PDPA and serves as Singapore’s main authority in matters relating to personal data protection. PDPC has recently collaborated with the Accounting and Corporate Regulatory Authority (“ACRA”) to allow for organisations registered with ACRA to register and/or update their DPO’s name and contact information via ACRA’s BizFile+ using their CorpPass accounts.  With this in place, ACRA-registered organisations that wish to register their DPO details on the PDPC website will now be automatically directed to ACRA’s BizFile+ to do the registration. Non-ACRA registered organisation can continue to register details of their DPO on the PDPC website.

Though registering details of the Data Protection Officer is not mandatory, it is highly encouraged as this will help DPOs stay connected and keep abreast of relevant personal data protection developments in Singapore to ensure continued compliance with the PDPA. With the shift towards companies demonstrating Accountability towards PDPA and not just passive compliance a DPO is more important than ever. If you would like to know more about what demonstrating Accountability means for your business head over to our article written with PDPA expert Straits Interactive for more information

Register your DPO via ACRA's Bizfile Now

Registration and updating of Data Protection Officers’ (“DPOs”) details is now more convenient for Accounting and Corporate Regulatory Authority (“ACRA”) registered companies.

The recent collaboration between the Personal Data Protection Commission (“PDPC”) and ACRA enables ACRA-registered companies to enrol their DPO under ACRA’s BizFile+ platform instead of the PDPC’s website.

If you would like more information on this recent change, reach out to our Corporate Secretarial experts today.

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Personal Data Protection Part 1 – What it Means to be ‘Accountable’

Personal Data Protection - What is Accountability?

Personal Data Protection Part 1 – What it Means to be ‘Accountable’

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Accountability in Personal Data Protection

2019 was the year that the Personal Data Protection Commission (PDPC) shifted its focus from a compliance-based approach to that of accountability.  The reason for this shift is stated in the opening paragraphs from the PDPC website:

Organisations today operate in an increasingly connected and competitive digital economy where individuals’ online and real-world activities generate a burgeoning amount of data. In such a competitive and evolving business environment, a “checkbox” compliance approach towards the handling of personal data is increasingly impractical and insufficient to keep pace with the developments in data processing activities. Organisations that focus on compliance through such an approach may find themselves disadvantaged and unable to use data for innovation. 

Over time, with greater awareness of the risks surrounding the unauthorised collection, use and disclosure of personal data, consumers are increasingly cautious about how organisations are using and managing personal data, and place greater value on trust and accountability. It is thus important for organisations to shift from a compliance-based approach to an accountability-based approach in managing personal data.

But what is the meaning of “accountability”? This two-part blog by our partner, Straits Interactive, provides a clear explanation of the term and what companies need to do.

What it Means to be ‘Accountable’

The word ‘reasonable’ and other words based on it – for example, ‘reasonably’ – appears in the Personal Data Protection Act (PDPA) … a lot of times. The word ‘accountable’ and other words based on it, such as accountability, appears in the PDPA exactly zero times.

But we are hearing a lot about accountability in connection with data protection. Before we get to ‘Why?’ let’s look at a couple of examples of compliance versus accountability.

Compliance versus accountability

Traditionally, businesses are required to comply with a wide range of regulatory requirements. If they were caught not complying, they had to fix the shortfall; it they were not caught, then they did nothing much at all. So, compliance is a rather passive approach.

Accountability is different. The Cambridge Dictionary says that ‘someone who is accountable is completely responsible for what they do and must be able to give a satisfactory reason for it.’ Accountability is an active approach.

 

Vignette #1

It’s dinner time on Friday evening. Mum and Dad are chatting about their plans for the weekend.

‘Oh, tomorrow morning I have an appointment with the doctor so I can’t pick the kids up from their enrichment class that finishes at 11 o’clock. Can you do it?’

‘Yes, of course,’ says the responsible spouse.

‘Are you sure? You won’t forget, will you? You won’t be late? They’re too young to be wandering around by themselves,’ says the worried spouse.

‘Stop worrying. It will be OK.’

If the responsible spouse forgets – say they get distracted by reading the newspaper and, suddenly realise that it’s past 11 o’clock already – what happens? Yup, probably the worried spouse will scold them a lot and tell them not to let it happen again. That’s a compliance approach. The worried spouse isn’t going to think that ‘I got distracted and forgot the time’ is a satisfactory reason for the kids being left to wander around alone after their class.

But by contrast, if the responsible spouse takes an accountability approach, they will take proactive steps to make sure that they don’t forget. For example, they might set a timer on their phone that will alert them when it’s 10:30 and they have to get ready to be there before the kids come out of their class at 11 o’clock.

 

Vignette #2

It’s performance appraisal time at work. A manager and a staff are having a discussion about why the staff didn’t meet their sales targets. (Spoiler alert: this might not end well.)

Staff says, ‘It’s not my fault. A few things didn’t turn out as I expected, and these things were outside of my control.’

Manager says, ‘So, what did you do to plan for unexpected events and other things outside of your control?’

Staff says, ‘Er, well … I …’

I’m rather sure that if the staff’s answer is that they didn’t do anything, but just sat back and waited to see what would happen, they aren’t going to get a good performance appraisal.

But if the staff is able to demonstrate that they did various things to achieve their sales goals even in the face of unexpected events and other things outside of their control, they could get a good performance appraisal despite not meeting their sales goals.

We can see from both examples, that accountability is about being able to demonstrate actively taking steps with the aim of making sure that something happens. Compliance is about passively waiting to see how things turn out.

Data protection and accountability

We are hearing a lot about accountability in connection with personal data protection simply because regulators do not think that a passive compliance approach is good enough.

The concept of accountability in the context of data protection is a few years old now, but we’ve been hearing a lot more about it in the last two or three years. Part of the reason is that the General Data Protection Regulation (GDPR) specifically requires accountability.

Mr Yeong Zee Kin, Deputy Commissioner of the Personal Data Protection Commission (PDPC) of Singapore gave the Keynote Speech at the 39th International Conference of Data Protection and Privacy Commissioners in September 2017 in Hong Kong. Amongst other things, Mr Yeong spoke about ‘the pivot from compliance to accountability’. He said that:

‘Accountability is an organisation’s promise to customers that their personal data will be handled respectfully and carefully. It is about being able to demonstrate to customers that measures which pre-emptively identify and address risks to personal data have been put in place.’

This is especially applicable for companies like BoardRoom that deal with a significant amount of sensitive personal data. With a service offering focused on outsourcing critical back-end business operations like Share Registry, Payroll & Accounting, BoardRoom handles more personal data than most organisations. As a result, they cannot rely on processes tailored towards compliance, BoardRoom is expected to prove accountability around personal data protection. For any businesses interested in outsourcing, a critical evaluation factor when selecting their partner should be ensuring the organisation can demonstrate accountability surrounding personal data protection.

In practice, organisations have to do the equivalent of the responsible spouse setting a phone alert to make sure that that picking up the kids on time isn’t forgotten, or the equivalent of a staff planning to make sure sales goals are achieved in spite of unexpected events. And being able to demonstrate that they have done these things.

Author

Lyn Boxall (CIPM, CIPP/A, CIPP/E, FIP, GRCP, GRCA) is an Advocate and Solicitor in Singapore and co-author of the book “99 Privacy Breaches to Beware of: Practical Data Protection Tips from Real-Life Experiences”.

She practices law in Singapore as Lyn Boxall LLC and is a consultant with Straits Interactive Pte Ltd, a leading specialist in personal data protection and Do-Not-Call (DNC) solutions.

Looking For an Accountable Outsourcing Provider In Singapore?

With the wealth of our experience as outsourcing experts in areas such as payroll outsourcing, corporate secretarial and accounting services, BoardRoom handles a significant amount of our clients personal data. We do not take this responsibility lightly and have been working closely with Straits Interactive for years to ensure that BoardRoom is able to prove accountability.

A key piece towards demonstrating Accountability is the appointment of a Data Protection Officer (DPO) within your organisation. It’s now easier than ever to appoint a DPO with the Personal Data Protection Commission (PDPC) collaborating with the Accounting and Corporate Regulatory Authority (ACRA) to allow for organisations registered with ACRA to register and/or update their DPO’s name and contact information via ACRA’s BizFile+ using their CorpPass accounts. Head to our article on this to find out more.

Interested in learning more about our accountability measures regarding personal data? Get in touch with one of our outsourcing experts who will explore in detail how BoardRoom ensures more than just compliance when it comes to personal data protection.

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Why you should be considering an Employee Share Plan amidst Covid-19

Employee Share Plan Amid Covid-19

Why you should be considering an Employee Share Plan amidst Covid-19

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Market Outlook

In this article, we will be exploring the implementation an Employee Equity Plan as a viable option for companies looking for solutions to survive the economic downturn & long-term employee retention post Covid-19.  As the spread of the Coronavirus curbs we seem to be facing another crisis, a global economic downturn, one in which we are already seeing companies making job/pay cuts across the board. In Singapore specifically Gross Domestic Product (GDP) is expected to shrink by 7% in 2020.

The news has been dominated by stories of blue-chip companies like HSBC who introduced pay cuts to their executives for the next 6 months. Coworking space giant, WeWork, has laid off 2,400 of its employees. Devastating as these stories are, the actions taken are not new measures for coping with an economic downturn. Similar actions were taken both in the 2008 Financial Crisis and the 2000 Dot-com bubble.

We should ask ourselves, are these actions ideal given we’re now 10+ years on and still adopting the same measures for navigating through an economic downturn?

Covid-19 Pandemic Response Consequences

History tells us that taking these cost-cutting measures to keep businesses afloat during times of financial difficulty comes with severe consequences.

Some of these consequences include:

  • Voluntary resignations as a result of reducing your current workforce. A 1% reduction in your current workforce can result in a voluntary resignation increase of 31% the following year
  • Drops in job satisfaction and performance. When you impose a layoff, survivors will experience a 41% drop in job satisfaction and a 20% drop in job performance
  • When you introduce a pay cut, it will adversely affect job performance

The driving factor for these consequences is that it causes employees to lose control over their employment and any survivors will be stretched to fulfil business requirements. This will only further impact job performance and increase voluntary resignation due to plummeting job satisfaction.

Why an Employee Share Plan Incentive Scheme could be a viable solution

So, if we know the current solutions are not having positive long-term effects on businesses then what can be done? An effective solution could be the implementation of an Employee Share Plan.

We’ve detailed below some options and their benefits to companies:

  1. Introduce long term incentive schemes. To replace short term cash bonus with an employee equity plan or share option scheme, allowing financial liquidity.
  2. Revise current employee share plan. To increase rewards to employees who enhance (or reduce) company’s cost structure and increase operational efficiency during an economic downturn.
  3. Revise current performance metrics. Lower the Total Shareholder Returns (TSR) to an achievable level and increase time frame for performance evaluation.
  4. Bottom-Up approach. To offer long term employee incentive schemes to lower management people.
  5. Adopt a bonus reserve, to fund incentive schemes.
  6. For start-ups who are looking to drive company growth an Employee Share Option Plan would be an effective way to incentivise staff towards a common goal and subsequently drive growth.
  7. For start-ups with an existing Employee Share Option Plan (ESOP) but are looking to offload administrative burden and maximise the workforce on revenue generating initiatives, should outsourcing their ESOP.

The overarching objective for each of these is to incentivise critical business units to perform at a high level in order to weather any economic downturn.

Key to Success for Share Incentive Schemes

Like any challenging situation key to success is being razor sharp in everything you do. In the face of an economic downturn it’s not always every sector that is impacted. Industries like Healthcare Services, Technology Equipment, Software and IT Services are expected to benefit from this current pandemic and will continue to perform well.

Don’t get swept up in the emotion of sensationalised media headlines showcasing devastating job losses and pay cuts globally. Stick to the facts. A recent study conducted by AON has shown that only 10% of companies across Asia have implemented pay cuts amid the COVID-19 pandemic.

If you are in a sector that has been impacted and you need to make changes, don’t default to traditional measures (think job/pay cuts) consider your motivations for the changes you need to make and then evaluate if an employee share plan could be a solution for you.

Some key questions to consider when evaluate if and what type of share plan is suitable for you are:

  • Is your company looking into rewarding employees based on long-term achievements?
  • Are you looking into instilling ownership thinking into your employees?
  • Is your company looking into replacing short term cash rewards, with long term equity rewards?
  • Are you looking into driving different employees into achieving specific outcomes (i.e. TSR, ROE, Client Retention etc.)?

Remember that an employee equity plan scheme is not a short-term win but a long-term business strategy. Surveys conducted by AON have shown that 75% of companies who adopt a long-term incentive scheme will continue to utilise it. Be Open Minded. Realise the potential from your existing workforce and seek solutions to capitalise their performance and secure a business future.

Looking For A Trusted Employee Share Plan Firm In Singapore?

We have designed an all-rounded encompassing solution comprising of an experienced Share Plan team of practitioners and a digital solution to help you manage your strategic initiative.

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Contact us today to find out more about our class-leading solution.

Or you can also learn more about our Employee Stock Option Plan (ESOP) services here.

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Planning to close a company in Singapore? Here are the three options you have:

Closing down a company in Singapore

Planning to close a company in Singapore? Here are the three options you have:

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Closing a Company / Cessation of Business

Companies of all shapes and sizes go through constant change throughout their life cycle to ensure they remain competitive. Sometimes, change can lead to the closing down of a company, a subsidiary, or just a local branch. These changes could be driven by a wider clean-up and restructuring exercise or are measures to save on compliance and maintenance costs, or the business is simply no longer commercially viable in the operating county.

How do you know it is time to close down your company?

Deciding to close down a company is a difficult and important decision that should not be taken lightly. In Singapore, there are several reasons why a company may need to be closed down, including financial difficulties, strategic changes in the business, or a lack of profitability. Here are some signs that it might be time to close your company:

  1. Financial difficulties: If your company is experiencing persistent financial problems, such as cash flow issues, inability to pay debts, or mounting losses, it may be time to consider shutting down.
  2. Lack of profitability: If your company has been struggling to make a profit for an extended period of time, despite your best efforts, it may be time to cut your losses and close down.
  3. Changes in the market: If your company’s products or services are no longer in demand, or if there have been significant changes in the market that make it difficult for you to compete, it may be time to consider shutting down.
  4. Legal issues: If your company is facing legal issues, such as lawsuits, fines, or regulatory challenges that are difficult to resolve, it may be time to consider closing down.
  5. Strategic changes: If you have decided to pivot your business in a new direction that is fundamentally different from your current operations, it may make more sense to close down your current company and start fresh.

How to close a company in Singapore

There are three main options for closing a business entity in Singapore and we have set them out below to assist you with determining which is the most effective course of action for your business.

01 Striking Off a Company

Pursuant to Section 344 of the Companies Act (Cap. 50) (the “Companies Act”), a company may apply to the Accounting and Corporate Regulatory Authority (“ACRA”) to strike off in Singapore if it is not carrying on business or is not in operation and is able to satisfy the following conditions:

  • The company has not commenced business since incorporation or has ceased trading.
  • The company has no outstanding debts owed to Inland Revenue Authority of Singapore (“IRAS”), Central Provident Fund (“CPF”) Board and any other government agency including ACRA.
  • There are no outstanding charges in the charge register.
  • The company is not involved in any legal proceedings (within or outside Singapore).
  • The company is not subject to any ongoing or pending regulatory action or disciplinary proceeding.
  • The company has no existing assets and liabilities as at the date of application and no contingent asset and liabilities that may arise in the future.
  • All/majority of the director(s) approve the submission of the online application for striking off on behalf of the company.

It is also important to ensure that there is no outstanding tax credit owing to the company before applying to strike off as and when the company is dissolved, any tax credit due to the company will be paid over to the Insolvency and Public Trustee’s Office.

An application to strike off a company in Singapore can be carried out directly by the company director. However, companies will usually engage their appointed company secretary or a registered filing agent to save time and hassle. Here are some for your company. Processing time once the application is submitted to the Accounting and Corporate Regulatory Authority is estimated to be approximately four months.

Any person aggrieved by the striking off can submit an objection against a striking-off application. If ACRA receives any objection, ACRA will inform the company of the objection, and the company is required by ACRA to resolve the matter within two months. Otherwise, the striking off application will lapse.

A company can be restored within six years after the company’s name has been struck off by a Court Order.

Closing down a company by striking it off is a straightforward and expeditious process relative to the procedures of winding-up a Singapore company, or liquidation of a business which is discussed below. However, this option is only viable mainly for local companies that are dormant and do not have any assets or liabilities.

02 Winding up a Company or Liquidation of a Business

When a Singapore company is wound up or liquidated, the debtor company’s assets are collected and sold off in order to pay its debts. Any monies remaining after all debts, expenses and costs have been paid off are then distributed amongst the shareholders of the company. Upon completion of the winding up process and all related business tractions, the company will then be formally dissolved and cease to exist.

A members’ voluntary winding up in Singapore may be carried out if the company directors believe that the company will be able to settle its debts in full within 12 months from the commencement of the winding-up. Where a company is unable to pay its debts and wishes to be wound up, it may do so by way of a creditors’ voluntary winding up. In both instances, a liquidator will need to be appointed to carry out all acts required to wind up the company.

We will only be addressing a members’ voluntary or self-imposed winding up in this article.

A solvent entity may consider closing down a company by embarking on a members’ voluntary winding up if the company has ceased its business activities, or if the company is not able to generate enough profit to sustain itself, or its existence is no longer required pursuant to a restructuring of the group which the company belongs.

In a members’ voluntary winding up, the directors of the Singapore company need to lodge a declaration with the Registrar of Companies that the company cannot by virtue of its liabilities continue its business (the “Declaration of Solvency”). An Extraordinary General Meeting (“EGM”) will then need to be convened to, among others, seek shareholder approval to wind up the company and appoint the liquidator.

A members’ voluntary winding up may commence upon the passing of a special resolution by the members of the company or on the day of lodgment of the Declaration of Solvency with ACRA (where a provisional liquidator has been appointed before the special resolution for voluntary winding up was passed), whichever is earlier.

Once the affairs of the company are fully wound up, the liquidator will draw up an account of how the winding up had been conducted, including, how the company’s assets had been disposed of and present this to the shareholders at an EGM. Thereafter, the liquidator will need to lodge with ACRA and the Official Receiver a return stating that the meeting has been held with a copy of the account attached.

The company will be dissolved three months after the lodgement. However, the court has the power to declare the dissolution of a company to be void at any time within two years after the date of dissolution if an application is made by the liquidator or any other interested person.

Even though closing down a company is a fairly long process, it will ensure a fair and equitable distribution of the company’s assets amongst its creditors and contributories.

03 Closing the local branch of a Foreign Company in Singapore

A foreign company’s local branch has to cease its operations in Singapore if the foreign company has been dissolved or is undergoing liquidation by filing the necessary notification with ACRA.

If a foreign company’s local branch in Singapore has ceased business, the foreign company may apply to ACRA for winding up a company if it is able to satisfy the following criteria:

  • The sole authorised representative is unable to resign because the company has not appointed a replacement.
  • The authorised representative has received no instructions from the company for at least 12 months after a request has been made regarding whether the foreign company intends to continue operations in Singapore.
  • The foreign company has no authorised representative (can be filed only by registered filing agent).

If the foreign company’s local branch in Singapore is GST-registered, it has to apply for cancellation of the GST registration with IRAS.

Conclusion

Singapore provides a range of options for the closing of business entities and companies, from choosing to strike off or winding up. The option you choose would depend on the state of affairs of the business entity and your business strategy.

We hope this note is useful to you as a starting point for your discussions on the options to close a business entity in Singapore.

Looking For A Trusted Corporate Secretarial Firm In Singapore?

Boardroom has over 50 years of experience guiding companies of all shapes and sizes through the various options available within Singapore. Boardroom’s experienced team can not only advise you on the best course of action on how to close a company in Singapore but also take care of the formalities and ensure all statutory requirements are met. Should you require any further information or professional corporate secretarial services and advice, please do not hesitate to get in touch with your usual contact at BoardRoom or contact [email protected].

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