Draft of Constitution
What is the Company Constitution in Singapore?
The Company Constitution is one of the statutory requirements in the company’s incorporation process. The Company Constitution is an essential document as it outlines rules and regulations to govern the company, and sets out the rights and relations of various members of the company, which include the company’s directors and shareholders.
According to the Singapore Companies Act, the constitution of a company is legally defined as the constitution that a company registers with the Registrar. Those companies that exist before the 2014 Amendment to the Companies Act, the Memorandum and Articles of Association of the company in force immediately before the amendment date.
The Companies Act (CA) of Singapore is the main law that businesses and companies need to comply with. In 2015, the CA was updated and Singapore’s Accounting and Corporate Regulatory Authority (ACRA) has also drafted a Model Constitution (a company constitution sample) for businesses in line with this. The Company Constitution was made mandatory for any new companies incorporated in Singapore from then on.
The Company Constitution must be submitted when applying to incorporate your company.
As a business owner, you could either:
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Create your own constitution
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Or, you may choose to adopt the sample or template of the Company Constitution, that is the Model Constitution provided by Singapore’s Accounting and Corporate Regulatory Authority (ACRA). ACRA’s sample of the model company constitution will reduce the cost of setting up a company and streamline the administration requirements for companies.
Drafting The Constitution
A person who wishes to set up a new company has to first draft the constitution. Drafting the constitution in line with the Company Law and the main object of the business is of utmost importance.
When drafting the constitution:
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The constitution must contain a legal statement signed by the subscribers agreeing to form the company
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Keep the business objective and purpose in mind while framing the rules for operating the company
Mandatory Sections of the Company Constitution
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Name Clause
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Registered Office Clause
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Liability Clause
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Capital Clause
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Subscriber Clause
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Objects Clause
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Rules
Shareholders’ Agreement
What is a Shareholders’ Agreement?
Shareholder’s Agreement (SHA) is a supplement to the company’s constitution and is highly recommended for companies with More Than One Shareholder. It sets the tone on the governance of the business and protects the interests of the shareholders (founders and investors) by regulating the powers and rights of the stakeholder.
Types of Shareholders’ Agreement
The following parties may come together for a Shareholder’s agreement:
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A group of shareholders
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All the shareholders of the company
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Shareholders & company
Benefits of Shareholders’ Agreements
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All parties to the Shareholders’ agreement must consent to alter it. On the other hand, a company’s constitution can be altered based on votes.
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As opposed to the company’s constitution, a shareholders’ agreement is not open for public scrutiny.
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The shareholder’s agreement can detail rules for governing matters not included in the company’s constitution.
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The shareholder’s agreement can address protection and specific rights to investors in great detail.
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The agreement can be employed to enhance the competitive edge of the company.
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The agreement can also specify confidentiality and non-competitive obligations.
Employee Stock Options Plan (ESOP)
What is a ESOP?
ESOPs give an employee the right to purchase shares in the startup at a specific pre-determined price within a certain time frame. Such plans are structured by an ESOP agreement which forms an Employee Stock Option Pool consisting of a percentage of equity shareholding. The employees are given an option to participate in the shares of the company through this pool of shares.
Whether you are publicly listed, privately owned, or a multi-national organisation, Forbis is primed to expertly handle all facets of your employee share plan — from the design phase through to implementation and share plan administration. Our seamless process, enabled by our panel of experts and practical tools, has led us to be highly successful in providing Employee Stock Options Plan (ESOP) services
Advantages of ESOPs:
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Sense of ownership among employees
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Employee retention
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Shared entrepreneurship
Contract Drafting
When you’re managing a small business, you will need to draft various corporate contracts to limit legal risk and comply with regulations. ForBis understands that drafting your own contract can be challenging, which is why ForBis provides such a service for your corporate needs.
We offer a wide range of contracts for your business needs including, but not limited to:
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Employment-related contracts
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Leases contracts
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Sales-related contracts
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General business contracts