Dormant Company Guide

This article is designed to be an easy-to-understand guide on compliance and regulatory matters surrounding Dormant Companies incorporated in Singapore.

What Is a Dormant Company?

Under the definition given by Accounting and Corporate Regulatory Authority ("ACRA"), a company is considered dormant during a period in which no accounting transaction occurs. Transactions below will not affect the dormant status of the company:-

• The appointment of a secretary of a company;
• The appointment of an auditor;
• The maintenance of a registered office;
• The keeping of registers and books;
• The payment of fees to the Registrar or an amount of any fine or default penalty paid to the Registrar (ACRA)
• The taking of shares in the company by a subscriber to the memorandum in pursuance of an undertaking of his in the memorandum.

Is a Dormant Company Required to File Annual Return?

A dormant company is required to file Annual Return.

Audit Exemption for a Dormant Company

The audit exemption applies to the financial accounts of a dormant company for the financial year beginning on or after 15 May 2003.

Is a Dormant Company Required to Prepare Financial Statements?

The Companies (Amendment) Bill, which was passed by Parliament on 8 October 2014, contains amendments to the Company Act aimed at reducing regulatory burden on companies, providing for greater business flexibility and improving the corporate governance landscape in Singapore. The legislative change relating to new exemption of dormant companies from the preparation of financial statements take effect in the first quarter of 2016.

A dormant non-listed company (other than a subsidiary of a listed company) is exempt from requirement to prepare financial statements, if:
(a) the company fulfils the substantial assets test; and
(b) the company has been dormant from the time of formation or since the end of the previous financial year.

The substantial assets test is that the total assets of the company at any time within the financial year must not exceed $500,000. For a parent company, the consolidated total assets of group at any time within the financial year must not exceed $500,000.

Dormant listed companies and their subsidiaries, and dormant unlisted companies which do not fulfil the substantial asset test must prepare financial statements but are exempt from audit.

Is a Dormant Company Required to File Any Documents to IRAS?

A dormant company must submit its Income Tax Return (Form C/Form C-S) unless it has been granted a waiver from IRAS.