ACRA updates practice on (1) annual filing for foreign companies and (2) applications for reliefs under the Companies Act for local and foreign companies

12 March 2021

The Accounting and Corporate Regulatory Authority (“ACRA”) has updated its practice on its webpages “Annual Filing for Foreign Companies” and “Applications for reliefs under the Companies Act”, following the repeal of Practice Direction 6 of 2015 on 25 February 2021. Legal requirements for annual filing of accounts such as preparing a balance sheet and lodging audited accounts for branches of foreign companies, as well as applications for reliefs under the Companies Act for local and foreign companies, are set out below.

Annual filing for foreign companies
Accounts for head office

Head office

All foreign companies are required to lodge their financial statements as well as those of their Singapore branches when filing annual returns with ACRA.

• If a foreign company has prepared financial statements in accordance with the International Financial Reporting Standards (“IFRS”) and/or the accounting standards as required in the law of its country of incorporation/formation (previously only United States’ Generally Accepted Accounting Principles and those standards that have converged with the IFRS were allowed), that foreign company can lodge the same set of financial statements in its annual filing without the need to apply to ACRA. Where the financial statements are not presented in English, they must be translated to English in its entirety and both financial statements in the original language and the English translation are to be filed as part of the annual filing; and 
• Other foreign companies that had not prepared a set of financial statements in accordance to IFRS or accounting standards as required in the law of its country of incorporation/formation are required to prepare and lodge their financial statements prepared in accordance with the Singapore Financial Accounting Standards (“Accounting Standards”), unless they have obtained approval from ACRA under section 373(13) of the Companies Act, for relief from requirements relating to audit or form and content of the financial statements and other documents.
• There is no waiver of filing of foreign companies’ financial statements.

Relief application

For an application under section 373(13) of the Companies Act, the foreign company must provide the following documents:

• Balance sheet and income statement (including the financials of all its branches); 
• Significant accounting policies (including basis of measurement) prepared in accordance with the accounting standards required in the law of the foreign company’s country of incorporation/formation; and 
• Statement by directors in the same format (i.e. whether the financial information is true and fair, whether the foreign company is able to pay its debts as and when it falls due and the list of directors in office at the date of the statement) as those of local Singapore companies.

The statement by directors must be signed by two of the foreign company’s directors registered with ACRA, unless it has only one director registered with ACRA, in which case, the statement can be signed by that director.

Foreign companies are required to lodge a list of its directors with ACRA at the time of registration and any change in directors must be lodged with ACRA within 30 days of change.

Singapore branch accounts 

All Singapore branches are required to prepare audited profit and loss account which complies with the Accounting Standards and give a true and fair view of the profit or loss arising out of their operations in Singapore, and audited statement showing their assets used in and liabilities arising out of their operations in Singapore, and lodge these documents with ACRA, except under the following circumstances:

• If the Singapore branch is dormant according to section 373(9) of the Companies Act, it may lodge with ACRA, an unaudited profit and loss account with respect to its operations in Singapore and an unaudited statement showing its assets used in and liabilities arising out of its operations in Singapore.
  
  A Singapore branch is considered as dormant when there is no accounting transaction arising out of its operations in Singapore. The following are disregarded as transactions arising out of the operations of a Singapore branch:
  •  the appointment of a secretarial agent
  •  the appointment of an auditor
  •  the maintenance of books and other records
  • the payment of any fee specified in the Second Schedule of the Companies Act or an amount of any fine or default penalty paid to the Registrar under section 409B of the Companies Act.
• If the Singapore branch has obtained approval from ACRA under section 373(12) of the Companies Act for a waiver from filing of the documents; or
• If the Singapore branch has obtained approval from ACRA under section 373(13) of the Act for a relief from requirements as to audit or form and content of the documents.

In maintaining transparency, ACRA strongly urges Singapore branches to seek relief under section 373(13) of the Companies Act, instead of a waiver under section 373(12) of the Companies Act.

For applications under sections 373(12) and 373(13)(b) of the Companies Act, the foreign company must provide the following documents for the Singapore branch, unless the following documents cannot be prepared:

• Balance sheet and income statement; 
• Significant accounting policies (including basis of measurement) prepared in accordance with the Accounting Standards; and 
• Statement by authorised representative(s) or director(s) declaring that the balance sheet and income statement give a true and fair view, in lieu of the auditor’s report.

ACRA cautions that information provided/filed with the Registrar should be the finalised/signed version, with all balances (including movements in retained earnings) properly accounted for. Draft filings/information should not be provided.

To apply

To apply, foreign companies must fill in the section 373 application form and attach the completed application form as part of the transaction filed in Bizfile⁺ portal. The statement of declaration required in the application form need not be notarised. It has to be signed by at least one foreign director registered with ACRA and the authorised representative in Singapore. A non-refundable application fee of S$200 is payable to ACRA.

Extension of time to file annual return  

ACRA states that it is prepared to grant a one-off extension of up to two months for a foreign company which is required to prepare head office financial statements under the laws of its place of incorporation or origin, but not required to table its financial statements at an annual general meeting.

The authorised representative(s) of the foreign company is/are to make the application within six months and 30 days from the financial year end of the foreign company. The online form to apply for extension of time for filing of financial statements by a foreign company is available in BizFile⁺. The application has to be submitted before the deadline of the annual filing. An application fee of S$200 is payable to ACRA.

Applications for reliefs under the Companies Act

ACRA has also provided a summary of the following applications and an update of Practice Direction 6 of 2015 which was repealed on 25 February 2021.

• Local companies seeking reliefs from financial reporting requirements under sections 23(2), 29(1), 29(2), 29(4), 201(12), 202 and 202A of the Companies Act; and 
• Foreign companies seeking reliefs from financial reporting requirements under sections 373(12) and 373(13) of the Companies Act. 

Local companies unlimited/limited by shares and foreign companies 

(Source: ACRA website www.acra.gov.sg)

Local companies limited by guarantee under sections 23(2), 29(1)/29(2) and 29(4)

(Source: ACRA website www.acra.gov.sg)

Reference materials

The following materials are available on the ACRA website www.acra.gov.sg:

• ACRA webpage: Annual Filing for Foreign Companies
  
• ACRA webpage: Applications for reliefs under the Companies Act