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The last thing a noble cause needs is the stumbling block of court summonses for failing to meet its statutory requirements.
Similar to a private limited company in Singapore, there are several statutory obligations that Non-Profit Organisations (NPOs) must comply with.
They include preparing audited accounts, holding shareholders’ meetings such as the Annual General Meeting (AGM) and Extraordinary General Meetings (EGM), and filing annual returns.
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Choosing Singapore to Start Your Non-Profit Organisation
Given Singapore’s goal to be a key financial services hub in the Asia Pacific, rules governing the use of the public’s money are stringent to protect members of the public.
Hence, when an NPO decides to receive donations from the public or receives income from a source and disburses it out to those who meet its eligibility criteria, it is deemed accountable to the public.
They are required to prepare their audited accounts, which have to be submitted annually to the Accounting and Corporate Regulatory Authority (“ACRA”) for its review.
In addition, depending on the sector that the NPO focuses on, there may be additional reviews by government bodies.
Certainly, it would be wise to engage a professional service firm to advise you on the statutory obligations. These obligations differ based on the type of NPO and the kind of exemptions you can apply for, such as tax exemptions.
A good professional firm can keep you organised, on track, and have the peace of mind to focus on the core purpose of your NPO.
With So Many Statutory Obligations, Why Choose Singapore?
With its multi-racial community, global connectivity, pro-business environment and neutrality, Singapore has been recognised as an ideal destination where NPOs can headquarter themselves to reach out to the region.
To date, Singapore has an estimated 2,360 charities and 626 Institutions of Public Character (IPCs).
They have been able to leverage and benefit from partnerships with 38,000 international corporations, of which 7,000 are multinational organisations (MNCs) that call Singapore home.
The government broadly supports NPOs and has various funding programmes and grants to assist NPOs in their cause. Ministries and government bodies that support and provide funding and grants include:
- The National Volunteer & Philanthropy Centre (NVPC)
- The Ministry of Culture, Community and Youth (MCCY)
- The Ministry of Social and Family Development (MSF)
The type of support that NPOs can expect to receive includes:
- Professional services
- Subsidies on consultancy fees
- Start-up costs or investment costs that fall within a range of pre-determined criteria
Singapore is Ideal for NPOs
In addition to government support, other MNCs based in Singapore also provide support to locally-based NPOs.
For example, Google has publicly offered to subsidise search marketing costs of up to US$10,000 for NPOs through its Google Ad Grants programme.
Furthermore, a growing spirit of philanthropy has resulted in more and more volunteers who can actively commit their time and resources to NPOs.
A study by the National Volunteer & Philanthropy Centre in 2018 found that the volunteerism rate has increased to 29% since 2014, with active volunteers coming from all ages, education, and income levels.
Although the pandemic caused the number to dip to 22% in 2022, it also shifted how people do good. It resulted in a hike in virtual and skills-based volunteering, with online volunteering increasing by 29% in 2021.
In tandem with the increase in volunteers, donor participation has also increased, with a rise in donation rate to 79% since 2016. Online donations also rose 37% in 2021 compared to pre-pandemic levels.
As a tech-savvy nation with a high internet penetration rate, Singapore, has sufficient IT infrastructure and digital adoption to support this change.
Incorporating a Non-Profit Organisation in Singapore
As the name suggests, an NPO is an organisation that does not earn profit or disseminate residual monies from its activities to its members.
There are a few different types of NPOs whose statutory obligations would differ accordingly.
Specific criteria, however, such as the requirement to have at least one employee who is a Singapore Citizen or Permanent Resident, are common across all types of NPOs.
Generally, the incorporation process of a Non-Profit Organisation in Singapore is the same as that of a private limited company in Singapore.
The main difference is the absence of the requirement to have an issued and paid-up share capital, as an NPO is usually incorporated as a public company limited by guarantee.
Related Read: Types of Companies or Business Entities in Singapore »
Members of the company guarantee they will pay a sum of the money when the company winds up. The minimum number of guarantors required is one.
The basic requirements to set up a public company limited by guarantee are as follows:
Name Reservation
Making an early application with the ACRA to reserve your company’s name is a great idea, especially since the name can be reserved for up to 90 days.
The application for a name can be made through ACRA’s online portal, which requires SingPass to access. If you do not have SingPass, there are professional firms you can approach to assist you with the application for a nominal fee.
To make the name application, you must determine the desired name and the proposed principal activities.
A comprehensive list of principal activities set out under the Singapore Standard Industrial Classification (SSIC) can be obtained from ACRA. Alternatively, consult us to recommend the most appropriate principal activity, as the SSIC list is relatively extensive.
Certain considerations that ACRA takes into account are the proposed principal activities of the company and the words contained within the company’s proposed name.
It may require review or approval by government bodies or governing boards of particular industries. For example, an NPO that wishes to provide pro-bono legal services may require approval from the Singapore Academy of Law.
Members
A minimum of one member is required.
Directors or Trustees
At least one director is required for a public company limited by guarantee. Similar to a private limited company, at least one of your directors must be a natural person who is an ordinary resident of Singapore.
For a more comprehensive definition of the requirements to fulfil the role of a local resident director, take a look at our article on local resident directors.
Company Secretary
As with the requirement for a local resident director, appointing a company secretary is mandatory for an NPO.
Generally, the company secretary ensures the company stays compliant with Singapore law and advises the directors, members, auditors and tax agents on the relevant statutory deadlines.
Single-Document Constitution
Companies incorporated after 3 January 2016 no longer need a Memorandum of Association and its Articles of Association (M&AA).
They only need to produce a single-document constitution that should include these details:
- The company name
- A statement that the company members must contribute up to a certain specified amount if the company winds up (for companies limited by guarantee only)
- The full names, addresses, and respective occupations of the company members
- A statement that the members want to create a company on the constitution terms and they agree to subscribe for a specified number of shares in the company’s capital
These are basic terms, and there may be additional terms like:
- The appointment and removal of directors
- The duties and powers of directors
Auditors
Given that NPOs are mostly for public interest, an NPO is accountable to the public, and it is a requirement for audited accounts to be prepared. Auditors should be appointed within three months of the company’s incorporation.
Registered Office
A registered office is required, but since NPOs may not have day-to-day operations similar to that of a private limited company, the registered office address provided need not be the place of business.
However, the registered office must be open and publicly accessible for a minimum of 3 hours during regular business hours on each business day, which excludes Saturdays, Sundays, and Public Holidays.
Registration with the Relevant Government Bodies
Particularly for NPOs, there are certain timelines and registration requirements to be aware of. A good professional services firm should be able to advise you accordingly.
For example, suppose your NPO is a charity and wishes to carry out activities for fundraising. In that case, it is required to register with the Commissioner of Charities within three months from the date of incorporation.
Likewise, if you want your donors to give tax-deductible donations, the NPO must apply for the Institutions of a Public Character (IPC) status.
Typically, a charity that is awarded IPC status is also required to disclose its fund-raising information.
Engaging an excellent professional services firm to advise you on the various registrations and applications and their corresponding statutory obligations will help you keep track and get organised.
While all these may sound daunting initially, the professional services firm will significantly help ease the process.
On average, the entire incorporation process can be completed within a day if all documents are in order.
The Perfect Vehicle for Your Cause
In championing a cause, mission, goal or the less fortunate who have been the victims of natural disasters, aggressive urbanisation, exploitation of labour, and environmental degradation, it is essential to create a sustainable community of like-minded individuals.
Having a registered company offers transparency for its members. Incoming funds can be deposited in a bank account under the registered company’s name, contracts will be signed under the company’s name instead of a few separate individuals, and it is generally easier for the NPO to function effectively as a whole.
In terms of branding and promotional activities, an established corporate identity can help in imprinting a strong, memorable impression upon potential donors and volunteers, particularly large corporations that actively seek opportunities for their employees.
If you’re an international charity organisation, volunteer welfare organisation, or social enterprise, we give you the freedom and confidence to put all your efforts into your cause without the burden of administrative matters to fulfill statutory requirements and obligations.
Related Read: 5 Things You Need to Know About Setting Up a Non-Profit Entity in Singapore »
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5 Things You Need to Know About Setting Up a Non-Profit Entity in Singapore
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