This article is designed to be an easy-to-understand guide on the compliance and regulatory matters surrounding dormant companies incorporated in Singapore.
What Is a Dormant Company?
Under the definition given by the Accounting and Corporate Regulatory Authority (“ACRA”), a company is considered dormant during a period in which no accounting transaction occurs. The following transactions will not affect a company’s dormant status:
- The appointment of a company secretary.
- The appointment of an auditor.
- The maintenance of a registered office.
- The keeping of registers and books.
- The payment of fees to the Registrar (ACRA), or of any fine or default penalty paid to the Registrar.
- The taking of shares in the company by a subscriber to the constitution, in pursuance of an undertaking given in it. (The memorandum and articles were merged into a single constitution with effect from 3 January 2016.)
Is a Dormant Company Required to File an Annual Return?
Yes. Dormancy does not remove the obligation to file an annual return. See our guide to annual returns and XBRL for the filing itself, and to annual general meetings for the timelines that sit alongside it.
Audit Exemption for a Dormant Company
Audit exemption applies to the financial accounts of a dormant company for financial years beginning on or after 15 May 2003.
Is a Dormant Company Required to Prepare Financial Statements?
Eligible dormant companies are exempt from preparing financial statements at all. The exemption was introduced by the Companies (Amendment) Act 2014 and has been in force since 2016.
A dormant non-listed company (other than a subsidiary of a listed company) is exempt from the requirement to prepare financial statements if:
- the company fulfils the substantial assets test, and
- the company has been dormant since the time of formation, or since the end of the previous financial year.
The substantial assets test requires that the company’s total assets, at any time within the financial year, do not exceed $500,000. For a parent company, this test is applied to the group’s consolidated total assets.
Dormant listed companies and their subsidiaries, and dormant unlisted companies that do not meet the substantial assets test, must still prepare financial statements but are exempt from audit.
Is a Dormant Company Required to File Any Documents With IRAS?
A dormant company must submit its Income Tax Return (Form C or Form C-S) unless it has been granted a waiver by IRAS.