Everything You Need to Know About the Company Constitution of Singapore

Foreign investors setting up a company in Singapore must navigate the incorporation process to register their business according to the country’s laws and regulations. A critical component of this process is understanding how the company constitution creates the legal framework within which the enterprise operates. This ensures that Singapore-incorporated private companies remain compliant with all the rules set by the government and avoids non-compliance issues.

In this article, we have covered everything related to the company constitution of Singapore, including how to draft it and the mandatory clauses you need to consider. By the end of it, you will have a clear understanding of how a company constitution and a shareholders’ agreement differ, as well as how to purchase a company constitution from ACRA.

Key Points

• The company constitution in Singapore is a crucial legal document that outlines the relationships between a company, its members, directors, and the company secretary. It is mandatory for all companies incorporated in Singapore to comply with this document, as it ensures adherence to the Singapore Companies Act.
• Essential sections in the company constitution include the name clause, liability clause, and subscriber clause. These sections clarify the company’s structure, member liabilities, and
• operational guidelines. Additionally, the company’s registered office must be clearly defined in the constitution.
• Compliance with the company constitution is vital for maintaining the legal integrity of companies in Singapore. Amendments can be made through a special resolution, ensuring that the document evolves alongside the business needs of the company.
• While the company constitution is public and mandatory, a shareholders’ agreement is a private document that provides additional governance details, particularly on shareholders’ rights and responsibilities.

Understanding the Company Constitution in Singapore

When incorporating a company in Singapore, one of the key legal requirements is the preparation and submission of a company constitution. This document is foundational to Singapore’s corporate governance framework and plays a pivotal role in defining the relationships between the company, its members, directors, and the company secretary.

The company constitution must be submitted during the incorporation process, and it serves as a binding contract among the members of the company. This document ensures that the business operates within the legal framework established by the Singapore Companies Act, which underwent significant amendments in 2015. These amendments led to the introduction of the Model Constitution by the Accounting and Corporate Regulatory Authority (ACRA), which serves as a template for business owners.

What Does Being Compliant With the Singapore Company Constitution Mean?

Compliance with the company constitution is mandatory for all companies incorporated in Singapore. As per Section 39(1) of the Companies Act, each member of a Singapore company has the right to enforce the constitution or restrain its breach, not just the business owner. This enforcement can include ensuring that specific rights, such as voting rights at an annual general meeting, are upheld.

Failure to comply with the company constitution can result in legal consequences, including court orders to enforce compliance or compensation for losses due to the breach. However, it is essential to note that this section only applies to rights that affect the member in their capacity as a member, not in any other personal capacity.

For example, if a member’s right to vote is denied, they can seek legal redress. However, if a provision in the constitution affects a member in another capacity, like a director or business owner, enforcing that provision may be more complex.

Points to Consider When Drafting a Company Constitution

The importance of the company constitution cannot be overstated. It serves as the foundation for how a company operates and interacts with its members. Therefore, private and public companies in Singapore should carefully consider the following factors while drafting this legal document:

• Business Objectives: The company’s constitution should align with the company’s goals and objectives, ensuring that its business purpose is clearly defined.
• Decision-making Structure: This includes procedures for the election of directors and other governance-related matters, including the conduct of board and shareholder meetings. A well-defined structure helps to prevent conflicts among members and ensures that the company complies with legal regulations.
• Specific Rules and Regulations: These should be tailored to the unique needs of the company while remaining compliant with Singapore’s legal framework.
• Mandatory Sections: The company’s constitution must include mandatory sections like the Name Clause, Liability Clause, and Subscriber Clause as outlined by the Singapore Companies Act.

Mandatory Sections of the Company Constitution of Singapore

In accordance with Section 22 of the Singapore Companies Act, the company constitution must include the following mandatory sections:

• Name Clause: The company’s registered name must be clearly stated here.
• Liability Clause: If the company is limited by shares, it must include a statement that the liability of its members is limited.
• Subscriber Clause: This clause must list the full names, addresses, and occupations of the company’s members, along with their agreement to form the company and subscribe for a stated number of shares.
• Registered Office Clause: This specifies the company’s registered office, which must be located within the jurisdiction where the company is registered.

Additional terms that might be included in the constitution involve the issuance, allotment, and transfer of company shares, along with the organisation and conduct of meetings. The appointment and removal of directors and the distribution of profits can also be included in a company’s constitution.

Registering and Submitting a Company Constitution

The process of registering a company in Singapore involves submitting the company constitution along with other required documents. This can be done online through ACRA’s BizFile+ portal. The registration fee for incorporating a company is S$300.

Once the company is set up, a CorpPass is required for filing transactions in BizFile+. All the company’s directors, shareholders, and the company secretary must endorse their consent online via the portal within 60 days from the date of the email notification.

Amending the Company Constitution, Singapore

The company constitution can be amended through a special resolution passed by the company’s members. Once the resolution is passed, the amendment becomes part of the original constitution from the date of the resolution.

Additionally, the Singapore company must notify ACRA of the resolution or any court order affecting the constitution within 14 days. ACRA will then issue a notice confirming the alteration to the company’s constitution.

Company Constitution vs. Shareholders’ Agreement

While the Company Constitution is a public document, a shareholders’ agreement is a private agreement between the shareholders of a company. Both documents serve different purposes but are equally important in corporate governance.

A shareholders’ agreement typically covers matters not included in the company constitution, like the rights and obligations of shareholders, management of the company, and provisions related to company shares. It often requires a higher percentage of approval for alterations compared to a company’s constitution.

How to Buy Your Company Constitution From ACRA

If you are a Singapore company that needs to access a company’s constitution, ACRA provides a service through its BizFile+ portal. The basic company information can be viewed for free, but for more detailed information, including the company constitution, ACRA offers extracts for purchase.

The cost of purchasing these documents varies depending on whether they include attachments. For instance, forms without attachments cost S$11, while those with attachments are priced at S$26, with an additional S$1 per page for certification.

How Can InCorp Help?

The company constitution is a cornerstone of corporate governance in Singapore. It defines the rights and responsibilities of a company’s members, directors, and company secretary, ensuring that the business operates within the legal framework established by the Singapore Companies Act. Hence, compliance with the constitution is mandatory for Singapore companies, and failure to do so can result in legal consequences.

Our team at InCorp knows how critical it is to consider the company’s objectives, decision-making structure, and mandatory sections while drafting the company constitution, ensuring that they are in line with Singapore laws.

About the Author

Sharon Lim

Sharon heads a team of professionals to offer compliance, governance, and regulatory advisory at InCorp. As a qualified Practicing Chartered Secretary, she has more than 25 years of valuable experience as a company secretary for private and publicly listed companies across a multitude of sectors. Her extensive background includes assisting a diverse range of clients from various industries and backgrounds.

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