Singapore has a highly business-friendly culture that positively encourages incorporation at all levels, including the SME level. It also has a long-standing commitment to the idea that public accountability on the part of companies, including SMEs, is both the logical corollary of the granting of limited liability status and a positive tool for encouraging business activity by allowing third parties access to information about companies’ financial health. The reforms put forward by the government steering committee on company law in 2011 differ from initiatives undertaken in the recent past in other comparable countries since they are motivated, in part, by a desire to see more, not less, financial information being published by small companies.

The streamlined regime for EPCs, as introduced in 2003, within which the smallest companies do not have to publish accounting information or to have it audited, has demonstrated that there is an appetite in Singapore, as there is in other countries, for the non-disclosure of financial information. For the government and the business community the challenge, which is being addressed within the current company law reform process, is how to strike the right balance between the desire for confidentiality on the part of small business owners and the public policy ideal of transparency. Despite strong support for abolition of the EPC concept and the introduction of mandatory filing for all companies at the SME level, the government has decided that the business case for privacy overrides the case for transparency at this level.

The company law regime in Singapore combines rigorous rules on internal financial management and the preparation of annual accounts with extensive protections for stakeholders at all levels. Information on all companies is publicly available from the companies’ regulator. Directors are liable to the company’s creditors where they make an unlawful dividend payment, and may be made personally liable for their company’s debts and liabilities, without limitation, where the company has been conducting business fraudulently or has incurred debt that, at the time, the company had no reasonable or probable expectation of repaying. Also, as a condition of being allowed to take advantage of the exemption from publishing accounts, the directors of small companies are required to make declarations of solvency, with stiff criminal sanctions for those who make the declaration without having reasonable grounds for doing so.

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