Starting a Business - Questions about Common Seals and Stamps

[toopyrehc]

Hi all,

I am planning to start an e-commerce business, but I have some burning questions about the process. To those people who have started a company or are knowledgeable about it, please give me some advice!

I understand that a common seal is necessary for all legal documents such as share certificates. Is a company rubber stamp actually necessary (especially since I'll be running an e-commerce business, I doubt I need it for my daily operations)? When you go to a bank to set up a corporate account, it is the common seal that the bank requires right? Would a rubber stamp be required at that stage as well?

Thanks in advance!

[Strong Eagle]

Are you going to register a sole proprietorship, a partnership, a LLC, or a private limited?

If opening a private limited, you will never see a share certificate. You will register shareholders and holdings with ACRA. No seal necessary for any document filed with the government. I've never seen any other contract that needed a seal or a stamp... and I signed a bunch.

Go to the nearest stationery store and order a rubber stamp. You can be fancy and add your logo, or dirt cheap with the company name and Pte Ltd if you are a private limited.

Most nobody gives a shit these days if you "chop" your documents with your company stamp... certainly the banks don't. Some other folks and businesses like it. I probably used my company stamp 10 times in 8 years.

You do not need to purchase one of those fancy embossing stamps... hell, you file virtually everything online with the gahmen.

[toopyrehc]

Thanks for your quick reply! I am indeed planning to open a private limited company. I'm planning to register and incorporate the company DIY and get a corporate secretary.

The corp sec was telling me that getting a common seal is for compliance (indirectly telling me that it is necessary I suppose?) and that I would have to pass it to them. Is that true?

Is the incorporation stage complicated? What sort of documents does ACRA need? ACRA will send a soft copy M&AA after its done right (something like the sample provided on their page)?

I reckon I will be able to qualify as a private exempt company too (as I will be a small business) and will hence not be required to file any audit docs. How/when do I gain that status...?

[Strong Eagle]

Worth asking: What is your residential status in Singapore? If you are a citizen or PR, you're good to go. Otherwise, things are more complex. You will need to rent a director until that director can apply for your EP. If you are not a citizen or PR, then I advise you to read my Entrepass article as well as associated threads so you can understand what you will need to do in order to convince the authorities you know what you are doing, and that you are not simply some scammer trying to buy a residency permit by forming a company for which you have no qualifications.

You can probably form the Pte Ltd yourself as there are sample "Memorandum and Articles of Association" available on the ACRA website. Just be sure you understand all the terms and conditions, and, the MAA is the place to make changes in what you can or cannot do as a director. For example, the shareholders must vote, by law, on compensation paid to the director... not a big deal since you are also the shareholder... but you could change the MAA to authorize the director to set his/her own salary. Google Singapore Statutes and then read the companies act if you want a clear picture of how things work.

If you are the sole director, you must engage a corporate secretary. It's probably a good idea anyway as virtually everything you do must be managed via directors resolutions. For example, opening a bank account requires a directors resolution, most often your own authoring the opening of the account, along with the boilerplate resolution that the banks all provide.

Per your MAA you will have to "officially" hold AGM's and EGM's for the passage of resolutions and other business. In order to keep the corporate liability shield in place, all documents need to be prepared and recorded in the official company minutes books. However, I've never seen a seal, I simply signed resolutions, notice of meetings, etc with my name and title, and every once in a while, I "chopped" the document with the company stamp.

The reality is that almost all required documentation is kept on a computer these days... there is no official minute book. You will never need one unless you get into a pickle where you must prove up that the company has been run according to regulatory requirements. Nobody will ever come looking for your minutes book, you just want to make sure that each and every meeting, action, and resolution can be accounted for if need be. No seal, no chop.

Your secretary will also file various regulatory reports. For example, there is the yearly report to ACRA, as well as notifying ACRA of any changes to the company... name, directors, shareholders, secretary, etc. However, all of this is done online... no stamp, no nothing... login and do the deed.

You will also have to file annual corporate tax returns with IRAS. My accountant always did these on paper which I signed and initialed... there may have been a company stamp... I forget... but no seal.

As for audited accounts, no, you don't need audited annual reports... and... if you do have audited financial reports it does make it easier to get corporate credit cards and other types of vendor credit.

[toopyrehc]

Wow thank you so much for your advice, you are very helpful. Yup I have no problems with my residency here. I will have a read through the companies act as you've suggested to see what I can amend in my M&AA. Hmm, seems like it's really not necessary to have that seal then. I wonder why my corp sec was emphasising that to me as part of 'compliance' though.

[ecureilx]

Wow thank you so much for your advice, you are very helpful. Yup I have no problems with my residency here. I will have a read through the companies act as you've suggested to see what I can amend in my M&AA. Hmm, seems like it's really not necessary to have that seal then. I wonder why my corp sec was emphasising that to me as part of 'compliance' though.

Years ago a friend opened a company

When we went to get something from Starhub , starhub insisted we need to produce the stamp to collect the stuff, despite showing the company resolution and all

Being confused, I called a friend who told me to go to the nearest rubber stamp maker, and get one done.

So we did and in an hour back to Starhub and collected everything, as long as we had the stamp.

That's how powerful the rubber stamp is

But I don't recall the seal even being required.

[sgstrait]

Singapore this year abolished any requirement for common seals for companies. You don't need one. Director signatures should be sufficient depending on the company's constitution.

Sent from my D5833 using Tapatalk

[Strong Eagle]

Years ago a friend opened a company

When we went to get something from Starhub , starhub insisted we need to produce the stamp to collect the stuff, despite showing the company resolution and all

Being confused, I called a friend who told me to go to the nearest rubber stamp maker, and get one done.

So we did and in an hour back to Starhub and collected everything, as long as we had the stamp.

That's how powerful the rubber stamp is

But I don't recall the seal even being required.

If your secretary wants a seal get one made... they don't cost that much. In a similar vein my company auditor always put a footnote in my audited books that I didn't have the paper receipts for expense items.

Indeed, that was true. I'd tape my taxi and food receipts to a piece of paper and scan them... a permanent computer record. But, she insisted that without paper records, she had to make the footnote, even when I showed her that the ink on the receipts faded to invisibility after just a few weeks.

[toopyrehc]

Thanks everyone, really appreciate your advice!

Speaking of auditors, as an exempt private limited company, would you still need to appoint an auditor? I know I will have to file a declaration of solvency and my unaudited FS (albeit in the right format) *if* I want to. If that's the case, I can do it myself right? (I have an accounting background - not from SG though hence the unfamiliarity with how things work here)

[Strong Eagle]

You don't need an auditor or audited books. I had enough transactions that my accountant handled monthly books via one accountant and performed the end year audit with another (I wanted audited financial statements).

Financial statements are part of the IRAS Pte Ltd tax forms and don't need to be audited for exempt companies. Even when unaudited, I think most secretaries and accountants will call for a resolution at an AGM or EGM to approve the content of your financial statements. You must file this annually.

You must file an annual return online with ACRA Bizfile and I think you also file your declaration of solvency at the same time. If you have an accounting background and know how to deal with amortization, depreciation, retained earnings, and rules for recognition of income and expenses, you shouldn't have a problem. MYOB has a software package that handles CPF and GST.

You will have to determine how much of your pay will be via directors fees, how much in salary, and how much you will take in dividends. Because Singapore tax law is quite generous, you pay no tax on the first $100,000 of corporate profits (it's actually more), it is possible to pay yourself dividends only and pay no personal or corporate income tax. However, I know of a PR who did this and his REP was not renewed when it came time, and I judge that IRAS might require that certain minimum salaries be paid. Directors fees are taxable but not subject to CPF, whereas salaries are subject to both.

[ecureilx]

Indeed, that was true. I'd tape my taxi and food receipts to a piece of paper and scan them... a permanent computer record. But, she insisted that without paper records, she had to make the footnote, even when I showed her that the ink on the receipts faded to invisibility after just a few weeks.

well, since there is a possibility that you could have scammed the system, you must submit originals, and she is right

however, with thermal paper for everything nowadays, that logic doesn't fly

I had the honor of submitting taxi receipts for a volunteer project I did some time ago, and after few months, the claims were being disbursed. And I sent the taxi receipts as retrieved from the Comfort Taxi app. The accountant came back and said, no, need original, so I sent her the originals, which had faded next to nothing after few months.

I got my money, but I am still curious to know if she filed the nearly blank papers as proof of spend.

[JR8]

Hmm, seems like it's really not necessary to have that seal then. I wonder why my corp sec was emphasising that to me as part of 'compliance' though.

It could be that they're not up to date on the requirements. Or, they could be the sort who like to be 110% sure everything is 'done right' even if it's no longer required*. Or, it could also be that the CoSec earns a useful side-commission from getting company stamps made up...

In the scheme of things it's probably no big deal, and you're getting some A1 advice from others. But if it were me and I was just starting out I'd like to know what is causing (per the 3/+ possibilities above) the CoSec to provide incorrect advice. It could prove useful for the future in a 'forewarned is forearmed' kind of way. So I'd ask in a totally non-confrontational way for a reference to the current legislation/rules where it's listed as a requirement, 'Since a friend (or X/Y/Z) told me that as of this year they're no longer required'. That might bring a 2nd benefit of the CoSec realising you're up to date and informed, not solely reliant upon them for advice, (and are unlikely to fall for any fee-churning tricks, if that is what this is).


Just my un-chopped 2c

* Like people who file employment/PR/etc pass applications and attach waaay more back-up documentation than is actually asked for or required.

[Michelle Lai]

Singapore this year abolished any requirement for common seals for companies. You don't need one. Director signatures should be sufficient depending on the company's constitution.

Sent from my D5833 using Tapatalk

Hi, Can I check where can get confirmation link for the abolished of requirement for common seal ? Because I requested to do one...

[Strong Eagle]

Singapore this year abolished any requirement for common seals for companies. You don't need one. Director signatures should be sufficient depending on the company's constitution.

Sent from my D5833 using Tapatalk

Hi, Can I check where can get confirmation link for the abolished of requirement for common seal ? Because I requested to do one...

From the Singapore Companies Act, Division 2, Section 41, Paragraph 4:

(4) A document or proceeding requiring authentication by a corporation may be signed by an authorised officer of the corporation and need not be under its common seal.

I believe the change was made in 2011, perhaps earlier.

[Michelle Lai]

Thanks so much... can I further confirm does this apply on share certificate ? Because our share certificate have big red colour which stated common seal affixed here ....