When a company in Singapore decides to pivot its core operations to a new industry, it must pass a Change of Business Activity Resolution. This critical step ensures compliance with the Accounting and Corporate Regulatory Authority (ACRA) and keeps company records up to date.
In this comprehensive guide, we explain what this resolution entails, why it is necessary, and how to go about implementing it step by step.
Key Takeaways
- A Change of Business Activity Resolution is required when a company shifts its primary operations to a new business sector.
- You must notify ACRA within 14 days of the change to avoid late penalties (up to S$5,000).
- Selecting the correct SSIC code is crucial for legal compliance and licensing.
- Engaging a corporate service provider can simplify the process and reduce risk.
What is a Change of Business Activity Resolution?
A Change of Business Activity Resolution is a formal decision passed by the shareholders or board of directors to acknowledge a shift in the company’s primary revenue-generating activity. This is not just an administrative update, but a strategic realignment that can significantly impact licensing, taxation, and regulatory obligations.
In Singapore, your company’s principal business activity is identified using the Singapore Standard Industrial Classification (SSIC) code. It should represent the activity contributing more than 50% of your gross revenue. This means, if a retail business, for example, is pivoting to digital consulting post-COVID-19, it must update its SSIC code to reflect its new core service and complete the change of business activity resolution.
Why Change Your Company’s Business Activity?
There are multiple reasons a company might change its primary business focus:
Market Adaptation
Shifts in market conditions – like during the COVID-19 pandemic – have forced companies to evolve. Zouk Singapore, once a popular nightclub, transitioned into the F&B space due to changes in consumer behaviour and safety regulations.
Revenue Realignment
If another division of your company starts contributing a higher percentage of revenue, your primary activity must be updated accordingly.
Regulatory Requirements
To remain compliant with local regulations and avoid licensing or tax issues, the registered business activity must align with actual operations.
How to Pass a Change of Business Activity Resolution in Singapore
Step 1: Obtain Shareholder or Board Approval
For private limited companies, this resolution must be passed via special resolution, requiring at least 75% shareholder approval (unless otherwise specified in the constitution).
Step 2: Prepare the Resolution Document
The resolution should include:
- Company name
- Existing and new business activity
- SSIC codes (old and new)
- Reason for the change
Attach supporting documents like updated business plans or financial reports to validate the rationale.
Step 3: Submit the Changes to ACRA via BizFile+
Update your principal business activity via the BizFile+ (called BizFile before 2016) portal within 14 days of passing the resolution. Late submissions incur penalties up to S$5,000, with additional daily fines possible.
The Role of SSIC Codes in Business Activity Changes
The Singapore Standard Industrial Classification (SSIC) codes play a pivotal role in identifying, classifying, and reporting your company’s business activities. When changing your principal business activity, selecting the correct SSIC code is not merely an administrative step—it has far-reaching implications for your legal, tax, and licensing status.
Related Read: Selecting the Right SSIC Code for Your Business in SingaporeEach SSIC code corresponds to a specific type of economic activity and helps Singapore’s government agencies—from ACRA to IRAS, Enterprise Singapore, and MTI—categorise businesses accurately. This classification impacts:
- Eligibility for government grants
- Permits or regulatory licenses
- GST obligations
- Sector-specific tax benefits or exemptions
- Statistical reporting and economic analysis
For instance, if your company transitions from software development to e-commerce retail, you must update your SSIC code accordingly. Using an outdated or incorrect SSIC code can lead to mismatches in data, affecting things like:
- Wrong tax treatment by IRAS
- Ineligibility for business sector grants
- Errors during annual return filings or when applying for new permits
You are allowed to register up to two SSIC codes—a primary and a secondary. However, the one contributing the majority share of revenue (typically >50%) should be listed as the principal business activity. If you operate multiple revenue streams, it is critical to evaluate revenue distribution periodically to ensure your SSIC code remains accurate. In certain industries, the SSIC code also determines whether mandatory registrations (e.g., under the Employment Agencies Act or F&B licensing) apply. Choosing the wrong code might lead to your business inadvertently operating without a required license – an offence in Singapore.
Given the complexity and impact of SSIC codes, many companies consult professional advisors or use official SSIC search tools to select the most accurate code. ACRA also updates SSIC codes periodically, so it is important to ensure you are using the latest version when updating your business activity.
Tax and Regulatory Considerations
Informing IRAS
Besides ACRA, your new activity must be updated with the Inland Revenue Authority of Singapore (IRAS). This ensures accurate tax assessment and Goods and Services Tax (GST) obligations.
If using a tax agent, ensure they are authorised via Corppass under the appropriate “Preparer” or “Approver” role.
GST Registration
If your company’s revenue exceeds S$1 million, GST registration is mandatory. The nature of your activity also determines eligibility for zero-rated or exempt supplies, especially in sectors like finance or exports.
Penalties for Late Notification
Failing to notify ACRA about a change in your principal business activity within the required 14-day window can result in significant repercussions. According to the Companies Act, companies that delay the submission may face late lodgement penalties, with fines of up to S$5,000, depending on the length of the delay and the severity of non-compliance.
In addition to the base penalty, ACRA may impose daily default fines if the violation continues over an extended period. This can quickly accumulate, becoming a financial and reputational risk for the business.
Furthermore, companies that consistently fail to maintain updated business particulars, including changes in business activity, may be flagged for further compliance reviews. This could lead to increased scrutiny by regulators or even enforcement action, especially in sectors that are heavily regulated such as finance, healthcare, or education. A delayed update may also have downstream consequences. For example:
- Your company may be applying for a government grant or license based on outdated business information, which could lead to application rejection.
- IRAS may issue tax assessments or exemptions based on the previous business activity, which may no longer be valid.
To avoid these legal and operational risks, it is vital to ensure the change is not only recorded via resolution but also promptly submitted to ACRA via the BizFile+ portal. Maintaining a compliance calendar or assigning responsibility to a company secretary or corporate service provider can help prevent such oversights.
Why Hire a Professional for Your Change of Business Activity Resolution
Engaging a seasoned corporate services provider like InCorp brings strategic benefits beyond just resolution drafting – offering a full suite of secretarial, compliance, and business advisory support tailored to your industry pivot. Our corporate secretarial team ensures that your board or shareholder resolution is legally sound, the correct SSIC codes are selected, and all filings with ACRA and IRAS are completed accurately and on time – minimising delays, penalties, or compliance gaps.
InCorp also provides end-to-end consulting services, helping you assess the broader regulatory impact of your new business activity, identify tax or licensing obligations, and realign internal operations such as payroll and accounting to match your revised business structure.
FAQs about Business Activity Resolution in Singapore
Why is it important to notify ACRA within 14 days?
- Timely notification to ACRA is a legal obligation under the Companies Act. Failure to do so within 14 calendar days can lead to financial penalties, legal consequences, and potential compliance issues. Prompt updates also help maintain accurate public records, which are often reviewed by investors, financial institutions, and government agencies.
How do SSIC codes impact business activity changes?
- SSIC codes are essential for correctly classifying your company’s business activity. They determine your eligibility for sector-specific grants, licensing, and tax treatment. Using an incorrect SSIC code could result in errors in tax filings, denied permits, or misalignment with your business operations—potentially causing regulatory delays or fines.
What should be included in a board resolution for changing business activity?
- A well-drafted resolution should include the company’s legal name, current and proposed business activities (along with their respective SSIC codes), the rationale for the change, and a statement authorising a director or company secretary to file the necessary updates with ACRA. It must be signed and recorded as part of the company’s official documents.
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