Navigating compliance pitfalls in Singapore’s asset and wealth management industry
Staying compliant in Singapore’s asset and wealth management sector is getting tougher. Without strong internal controls, firms risk falling behind their competitors. To grow long-term, you need to fix common regulatory gaps before they become problems. Here are some practical strategies to help you stay ahead.
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Non-compliance with statutory requirements under the Companies Act 1967 (the Act) and relevant regulations
Companies must hold AGMs, file annual returns with ACRA (unless exempted), and maintain private records, including the non-publicly available Register of Registrable Controllers (RORC), will result in breaches of the Act and lead to serious consequences for a company.
Failing to do so breaches the Companies Act and carries heavy penalties. These lapses often happen in smaller firms or family offices with limited staff. Beyond fines, poor record-keeping can delay deals, damage your reputation, and erode stakeholder trust.
Strategies to implement:
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Engage an external and experienced company secretary to provide guidance on complex regulations and solutions to local statutory compliance requirements.
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Develop a compliance framework to streamline tracking and ensure timely and complete filings.
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Perform periodic checks proactively to identify potential compliance issues and discrepancies before they escalate.
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Paying dividends without sufficient profits
In Singapore, private companies can only pay dividends from actual profits, not from share capital. Before distributing funds, keep these points in mind:
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Check the Constitution: Ensure the payment follows your company’s specific rules.
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Focus on Local Profit: Use the company’s own earnings, not the performance of the wider group.
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Incorrect application of the audit exemption criteria
While some small companies may qualify for an audit exemption, misinterpreting the criteria can lead to serious consequences, including court summons, heavy fines, and the costly and cumbersome process of correcting past filings.
It is critical to recognise that Variable Capital Companies (VCCs) are almost always required to be audited, as they are governed by the VCC Act rather than standard company law. Furthermore, a company’s "small" status may be overridden if it is part of a larger consolidated group that triggers an audit requirement. Because the compliance landscape for VCCs and private limited companies is so different, firms without a local advisor often struggle to identify which rules apply to them, leading to unintentional but serious non-compliance.
Strategies to implement:
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Partner with a professional specialist who is well-versed in ACRA requirements, to help businesses understand and navigate the nuanced criteria for audit exemptions.
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Maintain accurate and up-to-date financial records to facilitate eligibility assessment for audit exemption and ensure compliance.
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Conclusion
By diligently complying with statutory requirements and understanding exemption criteria, companies can significantly mitigate risks such as penalties, reputational damage, and operational inefficiencies. In addition, a robust governance framework that facilitates effective decision-making, audits, and regulatory reviews can enhance investor confidence and foster a culture of compliance and integrity within the organisation, driving sustainability and enduring success in a dynamic business landscape.
How can we help?
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Corporate accounting and bookkeeping
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Corporate secretarial support
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Ensure all necessary statutory registers and records are properly maintained, and timely annual filings with ACRA.
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Support entity formation, board activities, statutory filings and shareholder communications.
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Corporate accounting and bookkeeping
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Offer comprehensive accounting and bookkeeping services, including periodic bookkeeping, preparation of annual statutory financial statements, audit coordination, and eXtensible Business Reporting Language (XBRL) conversion services tailored to meet the company’s compliance requirements.
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Provide guidance and support on local accounting and bookkeeping matters to address client queries.
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communications.
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Fund office support services
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Deliver comprehensive fund accounting and financial reporting, including bookkeeping, Net Asset Value (NAV) calculations, and preparation of financial statements tailored to your requirements.
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Prepare and support your annual returns filing to relevant authorities (Singapore or other countries).
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