Penalties for annual return filing breaches
Failure to comply with the requirements of the Companies Act (CA) for holding an AGM may result in penalties imposed by ACRA.
Companies and every director that breach the statutory obligations may be given a chance to compound for the breaches such as paying a composition sum of $500 per breach instead of facing prosecution.
A late lodgement fee of $300 will be imposed at the time of lodgement for each return that is lodged late.
1. Late Lodgement Fee for the Late Filing of Annual Return (AR)
Companies are required to file their ARs under s197 of the Companies Act. Those who file the AR late will have to pay a late filing penalty.
Requirements under Companies Act | Type of Breach | Type of Penalty | Imposed against | Penalty |
S197 | The AR is lodged late | Late lodgement fee for the late filing of AR | Company | $300 (Second Schedule of Companies Act) (Fees and Late Lodgement Penalties Regulations 2015) |
Applicable for FYE on or after 31 Aug 2018
2. Composition Sum
ACRA may offer composition to companies and/or directors that breach statutory obligations in lieu of prosecution. The composition sums are as follows:
Requirements | Type of Breach | Type of Penalty | Penalty |
S175 | The AGM is held late | Composition | A minimum composition sum of $500 |
S197 | The AR is lodged late | Composition | A minimum composition sum of $500 |
Applicable for FYE on or after 31 Aug 2018
3. Court Prosecution
ACRA may prosecute the companies and/or directors that breach statutory obligation in court if:-
1. Companies and/or directors do not accept the offer of composition; or
2. when ACRA decides not to offer composition for the breaches.
ACRA may also not offer composition after a summons is issued.
ACRA will serve the summons to the company’s registered office address and/or director’s residential address by registered post. The summons will state the date, time and which Court the director or the company’s representative has to appear before.
In the court, the director or the company’s representative can either decide to plead guilty or claim trial to the charges. If the director and/or the company are convicted by the court, they may be fined up to a maximum of $5,000 per charge.
The director or company’s representative must attend court even if a representations has been made to ACRA. If the director fails to attend court, a warrant of arrest will be issued by the court. If the company fails to send a representative (with a letter of authority) to attend court, the court may proceed to fix the matter for an ex parte hearing to decide whether the company is guilty of the charges.