The company constitution is a fundamental document that governs how a business operates. It outlines the rights of shareholders, the powers of directors, and the procedures for making key decisions. As businesses grow or change direction, the original constitution may need revision.

 

Here’s a guide on how to amend a company constitution in Singapore and the role ACRA plays in this process.

 

Understanding the Company Constitution

 

In Singapore, every company operates under a constitution. Previously known as the Memorandum and Articles of Association, it has been referred to as “the constitution” since 2014.

 

The constitution includes:

  • Shareholder rights
  • Director powers and responsibilities
  • Meeting protocols
  • Decision-making processes
 

It ensures that all stakeholders are aligned and informed.

 

Why Amend the Constitution?

 

Companies might amend their constitution for several reasons:

  • Restructuring the board
  • Modifying share classes
  • Updating meeting or voting procedures
  • Aligning with regulatory changes
  • Removing outdated clauses
 

When a business changes direction or when existing rules no longer suffice, revising the constitution becomes necessary.

 

Who Can Propose Amendments?

 

Both directors and shareholders can propose amendments. However, these changes cannot be made on a whim. A formal process must be followed, and shareholder approval is essential.

 

The company secretary plays a crucial role in ensuring compliance with legal and corporate guidelines.

 

Steps to Amend the Constitution

 

  1. Draft the Proposed Changes: The amendments must be clearly articulated. Ambiguity can lead to future complications. Many companies enlist the help of secretarial services or legal experts.

  2. Call an Extraordinary General Meeting (EGM): Shareholder involvement is crucial. An EGM must be convened, with notice given at least 14 days in advance, unless a shorter period is agreed upon by all.

  3. Obtain Shareholder Approval: A special resolution is required, needing at least 75% of the votes in favor.

  4. File the Resolution with ACRA: Once approved, the resolution must be lodged with ACRA within 14 days via BizFile+, ACRA’s online portal. Required documents include:

    • A copy of the special resolution
    • The updated constitution

  5. ACRA Records the Change: Once ACRA processes the documents, the amendment is officially recorded. There is no separate approval process; correct filing ensures recognition.

 

Avoiding Common Pitfalls

 
  • Ambiguous Language: Unclear amendments can lead to disputes or legal challenges.
  • Incorrect Resolution Type: Amendments require a special resolution, not just a board decision.
  • Missed Deadlines: Filing must occur within 14 days to avoid penalties.
  • Inadequate Record-Keeping: Proper documentation of the EGM, resolutions, and updated constitution is crucial.
 

Professional secretarial services can help avoid these common errors and ensure compliance.

 

Consequences of Non-Compliance

 

If the proper process is not followed, ACRA may reject the filing. Unauthorized changes may be contested by shareholders or deemed invalid, leading to disputes, fines, or legal repercussions.

 

The Role of the Company Secretary

 

A company secretary is not merely an administrative role. They:

  • Ensure compliance with procedures
  • Draft and file necessary resolutions
  • Prepare and lodge documents with ACRA
  • Provide compliance advice
 

In Singapore, having a company secretary is mandatory, ensuring that companies adhere to legal requirements.

 

Conclusion

 

Amending a company’s constitution requires diligence and adherence to proper procedures. Shareholder support, clear documentation, and timely filing with ACRA are essential. The company secretary plays a pivotal role in ensuring smooth and legal operations.

 

If your constitution appears outdated or if your company is undergoing changes, it’s a good time to review it. For those uncertain about the process, engaging secretarial services Singapore can offer expert guidance and support.