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Any violation of statutory duties as enforced by the Accounting and Corporate Regulatory Authority (ACRA) or Commercial Affairs Department (CAD) will result in criminal proceedings and sanctions. Any breach of common-law obligations may result in liabilities and remedies under civil law.
As more and more Investors, suppliers, financial institutions, customers, company directors, corporate executives are looking for quality financial information to obtain a transparent and accurate picture in terms of value creation and business risks, Sections 201(2) and 201(5) of the Companies Act make company directors responsible to present the financial statement before the company during its annual general meeting that complies with the Accounting Standards issued by the Accounting Standards Council.
The directors are also responsible for maintaining a system of internal accounting controls and keeping proper accounting and other records that will enable the preparation of true and fair financial statements under sections 199(2A) and 199(1) of the Act, respectively.
The financial statements must, at all times, be easily accessible for inspection by the directors and inability to do so will render the company and the directors guilty of an offence. These financial statements must be presented to the shareholders every calendar year at the AGM. The financial statements need to be presented within 6 months of the financial year end of the Company.
The directors of a company should preferably be financially literate and discharge their duties of financial reporting through financial statement reviews, the appointment of financially competent management, internal accounting control and outsourcing professional accounting service providers.
Under section 156 of the CA, the directors need to comply with disclosure and reporting requirements. The disclosure must be made, at a directors’ meeting, if he or she is interested in a transaction or proposed transaction with the company. This disclosure is not mandatory if the interest of the director is only in being a member or creditor of a corporation that wants a transaction and interest of director regarded as without any material interest.
Besides, the director must also disclose the nature, character and extent of any conflicts with the directors’ duties that may come up with his or her holding possessing property or holding office.
Non-compliance with the disclosure may lead to a monetary penalty not exceeding SGD 5000 or imprisonment for a maximum of 12 months.
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