2012 - September
COMPANY DIRECTORS GO BACK TO SCHOOL FOR LESSONS ON DIRECTORS DUTIES AND RESPONSIBILITIES
25 Sep 2012 Category: Media Releases
Singapore, 25 September 2012 – 50 company directors are going back to ‘school’ today to brush up on their knowledge of the statutory duties and responsibilities of a company director. This is part of a new initiative by the Accounting and Corporate Regulatory Authority (ACRA), which aims to raise the competency of directors in complying with corporate regulatory requirements and promote a culture of voluntary compliance.
Presently there are more than 241,000 ‘live’ companies on ACRA’s register. All such companies are required to comply with annual filing requirements related to holding of Annual General Meetings and filing of annual Returns. Annually, about 10,000 summonses are issued against directors for failure to comply with such requirements. Most of these offences are committed by directors of small and medium enterprises. An oft cited reason for their non-compliance is ignorance of statutory requirements, and lack of awareness of their duties and responsibilities.
To plug this gap, ACRA has developed the Directors Proficiency Programme (DPP) in partnership with the Institute of Certified Public Accountants of Singapore (ICPAS), the Singapore Institute of Directors (SID), and the Singapore Association of the Institute of Chartered Secretaries & Administrators (SAICSA). The one day course has trainers from ACRA, ICPAS, SID and SAICSA teaching company directors essential statutory requirements under the Companies Act and providing e-filing guidance. Using case studies, participants in the workshop-style course will participate in interactive discussions through the sharing of best practices and common mistakes to avoid. The training is provided on a pro-bono basis as part of the partners’ Corporate Social Responsibility (CSR) initiative. Participants are selected by ACRA based on considerations that include previous offence records, level of knowledge on regulatory requirements, and financial constraints.
ACRA has attempted to weave training into its composition framework for offences committed and will continue to work with these directors to have them rectify the defaults of their companies. The DPP is slated to be held once every quarter. (More details on the DPP are at Annex A)
A pilot run held earlier this year indicates that the training does effectively raise the competency level and corporate compliance awareness of company directors. Out of 14 directors who attended the pilot run, all but one rectified their defaults within one month from the training.
Ms Juthika Ramanathan, Chief Executive of ACRA, encourages directors to adopt a mindset change regarding regulatory compliance. “ Instead of viewing compliance as an administrative and regulatory burden, companies have much to benefit from complying with regulatory requirements,” said Ms Ramanathan. “A good compliance record enhances a company’s brand equity and also strengthens investors confidence. More then ever, shareholders and interested parties are also looking at corporate and financial information provided by companies and their compliance records to make better informed decisions when dealing with the company concerned. So whether it’s the lodging of up-to-date corporate and financial information, timely holding of AGMs and filing Annual Returns, companies directors should take their duties and responsibilities seriously.”
The DPP is part of ACRA’s on-going efforts to promote a high level of corporate compliance in Singapore. In the pipeline is the development of a separate training programme for new and aspiring directors. ACRA is also exploring developing an e-Training platform for directors.
Previous initiatives include introducing a colour-coded compliance rating for companies in 2010 and the production of ACRA’s handbook for directors titled ‘ACRA & I: Being an Effective Director” in 2011 (See Annex B for full list and details). Since the launch of such initiatives, there have been improvements in corporate compliance. Companies that are compliant in the filing of their Annual Returns increased from 78% in 2009 to 87% this year.
Ensuring a high level of corporate compliance would not be possible without strong support from the business community and key professional bodies.
“Compliance is an important integral part of business. The DPP aims to equip directors with an understanding of their role and especially their obligations to comply with the Companies Act. Directors can raise their competency and knowledge in statutory compliance by participating in the DPP,” said Mrs Grace Tan, Chief Executive of SAICSA. “As one of the partners of this initiative, SAICSA advocates that compliance makes business sense. Directors can be better directors through education, training and peer networking.”
“Often people start a company without realizing or understanding the duties and responsibilities of being a company director. The DPP is an excellent programme for new directors to understand their role and is a good complement to other SID training programmes which are tailored for large or listed companies’” said Mr Sovann Giang, Executive Director of SID.
“ICPAS works closely with stakeholders to promote the highest standards of financial reporting, which are crucial in protecting investors’ interests and maintaining public confidence. The Institute is therefore pleased to be as a key partner in the DPP to raise the awareness of directors about their roles and responsibilities in financial reporting and how they can better fulfill them,” says Mr Lee Fook Chiew, Chief Executive Officer, ICPAS.
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The Accounting and Corporate Regulatory Authority (ACRA) is the national regulator of business entities and public accountants in Singapore. ACRA also plays the role of a facilitator for the development of business entities and the public accountancy profession.
The mission of ACRA is to provide a responsive and trusted regulatory environment for businesses and public accountants. As at 31 August 2012, 404,187 business entities and 984 public accountants practising in public accounting firms, accounting limited liability partnerships and accounting corporations are registered with ACRA.
For more information, please visit www.acra.gov.sg
Directors Proficiency Programme (DPP)
Launched on 25 Sep 12, this one day programme is conducted in collaboration with ACRA’s professional partners including the Singapore Institute of Directors (SID), Institute of Certified Public Accountants of Singapore (ICPAS) and The Singapore Association of the Institute of Chartered Secretaries & Administrators (SAICSA), who have volunteered their support for this pro bono as part of Corporate Social Responsibility (CSR).
To ensure that directors get the fundamentals right, the course modules developed by ACRA cover a wide range of topics such as common statutory requirements, directors’ duties, preparing of financial statements, corporate governance and social responsibility. The course modules also draw from ACRA’s Directors’ Handbook including the regulator’s experiences in dealing with defaulters and case studies to bring out learning points to increase awareness of common defaults committed by directors.
Outline of topics covered by the training programme:
- ACRA: Compliance from a Regulator’s Perspective
- SID: Office of a Director, Duties and Liabilities of directors, Corporate Governance
- ICPAS: Understanding Financial Statements, Keeping of Accounting and Other Records
- SAICSA: Common Statutory Requirements under the Companies Act, Resolutions, Filing of Annual Return, Closing a Local Company, Role of Company Secretary
Directors Development Programme
Apart from the DPP, a separate training programme targeted at new and aspiring directors, the Directors Development Programme (DDP) is schedule to be launched in 2013. The DDP aims to help new directors get the fundamentals of corporate compliance right from the start. More details will be made known in due course.
ACRA’s initiatives to promote corporate compliance
Since 2010, ACRA has launched a number of initiatives aimed at inculcating a culture of voluntary compliance among companies, these include:
- Colour-coded Compliance Rating and Certificate of Compliance to recognise companies with a good record for holding its AGM on time, tabling and filing up-to-date financial statements and AR for the year in question. Companies which are compliant in their filing will receive a positive compliance rating (in the form of a green tick) which makes them eligible for a Certificate of Compliance; while those which were non-compliant in their filing would be given a negative rating (in the form of a red cross).
- End of Financial Year (FY) Reminder Letters are issued to private and non-listed public companies to remind them of the actions required to meet the regulatory requirements. The FY reminder was introduced in addition to the existing reminders sent one month before the deadline for AGM and after the deadline has passed. This is sent immediately after the closing of the company’s FY and therefore acts as an early reminder for companies to prepare their financial statements early and thus comply with the necessary requirements.
- In 2011, ACRA launched an iPhone app which includes an offline AGM calculator that helps companies plan when to hold their AGMs.
- The Directors’ Handbook was launched in 2011 to serve as a guide to help new directors better understand and perform their statutory duties and thus meet the legal and statutory requirements. Specifically tailored to help new or aspiring directors who may not be able to afford professional advice on compliance matters, it is freely available online at ACRA’s website while hard copy versions are available for sale at local bookstore.