What is Singapore’s Company Constitution?

A Singaporean business’s structure and governance are described in a legal document called the company constitution. It ensures adherence to Singapore’s corporate governance rules by outlining the connections between the firm, its directors, members, and the company secretary. Singapore’s efforts to keep its reputation as a top location for business establishment and operation are reflected in the Constitution.

If you’re planning to register your business, our Singapore company incorporation services can guide you through drafting and filing the Company Constitution.

Companies must abide by several legal requirements under the Companies Act of Singapore. The Act was revised in 2015, and a Model Constitution for corporations was presented by the Accounting and Corporate Regulatory Authority (ACRA). All newly incorporated companies in Singapore are required to have a Company Constitution as of January 3, 2016.

The following must be included in the Constitution of every company created after this date:

• The business type and name of the company
• The members’ obligation
• The capital structure of the business
• The primary goal of the business and its methods of operation
• The directors’ obligations and privileges

Before this modification, businesses required two distinct documents: the articles of association and the memorandum of association. These have now been merged into a single constitution for the company.

Businesses can either draft their own Constitution or use the ACRA Model Constitution, which must be submitted during the company establishment procedure. The model can simplify administrative needs and lower setup expenses.

What Is Meant by Adhering to the Company Constitution?

In essence, the business’s Constitution establishes a contract between all of its members and the firm itself.

Every member of the firm has the individual right to file a lawsuit to uphold a constitutional regulation or prevent its violation under Section 39  of the Companies Act.

The court may mandate that the Constitution be followed or that the innocent parties’ losses be made up for if it determines that there has been a violation.

But only the rights that impact the member in his role as a member—not in his personal capacity—are covered by section 39.

Furthermore, every member of a private business limited by shares must notify ACRA of their desire to purchase shares in the company, as well as the quantity of shares they plan to buy.

Members must sign the company’s Constitution, which is then stored in the registered office.

What Are the Most Important Things to Take Into Account When Writing a Company Constitution?

A company’s Constitution is essential. Consequently, when drafting one, we must take into account these factors:

• Business objectives are the goals you and your organization have set. It complies with the Company Constitution’s Objects Clause.
• Making decisions: Structure. This is crucial to make sure your business conforms with legal and compliance requirements, to prevent possible conflicts among members, and if you have a specific structure in mind (such as procedures for the election of directors).
• Particular Guidelines & Policies: Your company’s specific clauses should also adhere to legal and compliance requirements.
• Mandatory Sections: Several sections are required by Section 22 of the Companies Act. We go into further detail below—for example, the Company Constitution’s Name Clause, Liability Clause, and Subscriber Clause.

Which Parts of the Company Constitution Are Required?

The following must be included in the company’s Constitution:

1. The name of the business (Name Clause);
2. If the business is a corporation limited by guarantee, mention that its members will be required to pay a certain sum if the company is wound up.
3. If the business is a share-limited company, mention that its members’ liability is restricted (Liability Clause);
4. A declaration that the members’ liability is unlimited if the business is an unlimited corporation;
5. The members’ complete names, addresses, and jobs; (Subscriber Clause); and
6. Declaring their desire to establish a company in accordance with the conditions of the Constitution and agreeing to subscribe for a specific number of shares in the company’s capital, if one is to be formed.
7. The Registered Office Clause states that the company’s registered office must be located in the jurisdiction where it is registered and where specific statutory records and documents are maintained.

The requirements above must be included in a company’s Constitution.

Additional terms could be added as well, like:

1. Issuance, distribution, and transfer of shares (private firms with a share limit must have a constitution that restricts the ability to transfer company shares and caps the number of members at 50);
2. Setting up and running shareholder and board meetings;
3. Selection and dismissal of directors;
4. Responsibilities and authority of directors;
5. Share capital, which comprises the entire amount of capital as well as its partition into fixed-amount shares; profit distribution and capitalization; and
6. Allocation of excess assets in the case of winding up.
7. Profit distribution and capitalization.

The good news is that you don’t have to start from scratch when creating a company constitution. Business owners can consult a Model Constitution on ACRA’s website, which is outlined in the Companies (Model Constitutions) Regulations 2015, as defined by the Companies Act.

How Can a Company Constitution Be Registered and Submitted?

A copy of your company’s Constitution must be included with your application to incorporate. Here’s how: To complete the online transaction, sign in to BizFile+ with your SingPass (for Singaporeans; for first-time registration).

To file transactions in Bizfile+ after you have established the business, you will require a CorpPass.

Appointed officers will receive an email notification for their endorsement. You can also view this email from the Bizfile+ dashboard.

Within 60 days of the email notification date, all of the company’s directors, shareholders, and secretary must electronically sign off using Bizfile+.

It costs $300 to register a business.

How Can a Company Constitution Be Amended?

A special resolution can be used to amend a company’s Constitution. As soon as the special resolution is passed, the amendment will become a part of the original Constitution.

The company must notify the Registrar of any court order or resolution that impacts the Constitution within 14 days of the resolution or order.

A notice that serves as confirmation of the constitutional amendment is issued by the Registrar.

Company Constitution versus Agreement of Shareholders

A formalized agreement between a company’s shareholders to add to the private limited company’s Constitution is called a shareholders’ agreement.

The shareholders’ agreement outlines the parties’ understanding and the management of the business. Additionally, it outlines the parties’ connections, rights, and responsibilities. The agreement’s scope changes according to its objective.

It might outline, for instance, what happens if a shareholder passes away or how one shareholder can buy out another in the event of a disagreement. The shareholders’ agreement may also include clauses about share capital and the distribution or allocation of shares among shareholders, as well as circumstances, rules, and laws governing the company’s management and policies or the shareholders’ right to purchase or sell shares.

The following are some ways that the shareholders’ agreement and the company constitution differ:

• A larger percentage of the incumbent shareholders must approve any changes to the shareholders’ agreement (i.e., 90%). On the other side, voters can change a company’s Constitution.
• A shareholders’ agreement is not subject to public examination, in contrast to the company’s Constitution.
• Rules for regulating topics not covered by the company’s Constitution can be specified in the shareholder agreement.

How Can I Purchase a Business Constitution From ACRA?

To guarantee that businesses follow local laws, all companies operating in Singapore are required to register with the Accounting and Corporate Regulatory Authority (ACRA) and submit their Company Constitution to the ACRA. Transparency for all firms and the establishment of an open environment for data sharing are further benefits of ACRA’s Company Constitution and business registration system.

Through the Bizfile+ portal or the ACRA mobile app, you can examine the basic company registration information of any Singaporean company for free (without having to buy the firm’s Memorandum and Articles of Association or Company Constitution). ACRA’s Application Programming Interface (API) provides direct access to its extensive collection of company data, including the Company Constitution.

Enterprises may look for more detailed information on other enterprises for market research, decision-making, or collaborations.

The Company Constitution, financial statements, incorporation of local firms, and yearly returns are among the papers that commercial entities file with ACRA. ACRA provides PDF copies of these forms, with or without attachments, for purchase. If you’re wondering how to purchase the company’s articles of association, memorandum, and other documents from ACRA, you can do so by using ACRA’s BizFile+.

The extract costs the following: Forms without attachments cost $11.00, while forms with attachments cost $26.00, plus an extra $1 per page for certification.

The certified document has an authentication number, an ACRA entity stamp, and the Assistant Registrar of ACRA’s endorsement.

If you have any questions, please do not hesitate to contact us.