Review of the Companies Act

The MOF and ACRA is currently inviting public feedback on the review of the Companies Act and the Regulatory Framework for Foreign Entities. One potential recommendation of interest is the introduction of a small company criteria. This will be used to determine whether a company is required to be audited.

As a result of this, small companies will be exempted from audit. In order to qualify for this, 2 of 3 criteria need to be fulfilled, as per follows:-

1) Annual turnover not more than $10 million (currently it is $5 million)
2) Total gross assets not more than $10 million
3) Total employees not more than 50.

If passed, it will be very welcome news for most small companies out there ! Nowadays, many small companies can easily hit an annual turnover of $5 million, though this can be attributed to rising inflation. Sigh ! 

So, if recommendation is passed, small companies can save valuable time, money and resources which can better used to expand their business. As most small companies are privately held and most banks require collateral for loans anyway, this is definitely a step in the right direction!

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ACRA Cancels Registration of Filing Agent and Qualified Individual for AML/CFT Breaches

The Accounting and Corporate Regulatory Authority (ACRA) had cancelled the registrations of filing agent (RFA) and qualified individual (RQI) on 18 January 2024. The registrations were cancelled in view of breaches of anti-money laundering and countering the financing of terrorism (AML/CFT) controls under the ACRA (Filing Agents and Qualified Individuals) Regulations 2015 (the “ACRA Regulations”).

Some of the basic AMT/CFT controls that a RFA and RQI are required to exercise are as follows:

(a) perform additional customer due diligence measures when a customer is not physically present during onboarding;

(b) inquiring if there exists any beneficial owner in relation to some of its customers; and

(c) perform risk assessments i

RQIs and RFAs provide corporate secretarial services for business entities, such as helping customers to incorporate companies, file annual returns and fulfil other filing requirements under the Companies Act 1967 or other Acts under ACRA’s purview. RQIs and RFAs are required to perform customer due diligence measures in accordance with the ACRA Regulations, and conduct their business in such a manner as to guard against the facilitation of money laundering and the financing of terrorism. RQIs and RFAs must also satisfy statutory requirements such as being fit and proper persons, to be registered or continue to be registered.

RQIs and RFAs who breach their statutory obligations may be subject to enforcement actions, such as financial penalties of up to $10,000 or $25,000 per breach respectively or have their registrations with ACRA suspended or cancelled.

Therefore, RQIs and RFAs play an important role in helping to detect and combat illicit activities.

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