麻豆社区

麻豆社区's approach to Enforcement

1. In an increasingly complex and dynamic business landscape, 麻豆社区 has to maintain a regulatory regime that is progressive, responsive, effective and efficient. We strive to safeguard Singapore鈥檚 reputation as not only a trusted marketplace but also easiest places in the world to do business in. For our stakeholders to better understand our approach to enforcement, this Enforcement Policy Statement categorically sets out how we deal with enforcement issues and how we apply the appropriate regulatory tools to address them.

For business owner, officers and corporate service providers

2. This Enforcement Policy Statement contains information relevant to businesses, business owners and its officers and corporate service providers. We urge these stakeholders to peruse this Policy Statement to better understand 麻豆社区鈥檚 enforcement approach.

For those who wish to lodge complaints

3. For members of public who intend to lodge or had lodged complaints with 麻豆社区 about alleged statutory breaches should read this Enforcement Policy Statement to better understand what information is required when lodging complaints, what types of cases warrant investigations, our investigation timelines, our key considerations when deciding on the enforcement action to take and the types of compliance and enforcement measures that 麻豆社区 undertakes.

For those who are being investigated and face prosecution

4. For members of the public who are being investigated by 麻豆社区 or are facing prosecution by 麻豆社区 should read this Enforcement Policy Statement which lists key statutory obligations, various enforcement measures that 麻豆社区 may undertake including composition and court fines and information on making representations to 麻豆社区 on compliance or investigation matters.
5. Our enforcement philosophy is to encourage compliance and deter misconduct. It is important to note that we do not investigate offenders for each and every statutory breach but when we do, we will respond to different types of statutory breaches in different ways by applying one or more regulatory tools available to 麻豆社区. These tools range from denial of service, imposing attendance of an outreach session, issuing of a warning, making an offer to pay a composition sum in lieu of prosecution, striking off, disqualifying, issuing of a debarment order to prosecution, with the possibility of seeking deterrent sentences in egregious cases. 
6. The subject matter of certain cases may require us to refer to other law enforcement agencies such as the Police, the Commercial Affairs Department or some other regulators where it is more appropriate to do so. Examples include a penal offence such as criminal breach of trust under the Penal Code or a security-related offence under the Securities and Futures Act, both of which do not come under the purview of 麻豆社区.
7. To maximise the use of 麻豆社区鈥檚 limited resources, 麻豆社区 will decide whether to take enforcement action by applying the following 3 key factors:
   1. whether there is sufficient public interest
   2. what is the harm done by the alleged breach
   3. whether the complaint is bona fide and if so, whether it contains sufficient information to mount investigations
8. If the complaint meets all 3 key considerations, investigation will be conducted followed by an assessment on whether to enforce and what is the appropriate regulatory tool to use.

Factor 1 - Public Interest

9. In ascertaining if there is public interest, 麻豆社区 is guided by the following considerations.

Accuracy and integrity of the public registers maintained by 麻豆社区

10. One of 麻豆社区鈥檚 paramount concerns is the accuracy and integrity of these registers as members of the public and stakeholders such as investors and banks increasingly look to the public registers maintained by 麻豆社区 for relevant information about business entities.
11. In this regard, 麻豆社区 pays special focus to the failure to file Annual Returns (ARs) (breach of section 197 of the Companies Act (CA)). 麻豆社区 will investigate these breaches and take enforcement action.
12. If there is a failure to update change in existing information concerning directorships (breach of 173 CA) or registered address (breach of section 143 CA), 麻豆社区 will generally investigate.

The provision of timely and accurate financial information

13. The timely and accurate filing of financial information that must meet accounting standards is another one of 麻豆社区鈥檚 key areas of concern, especially in relation to listed companies and larger private companies as the public relies on such financial information to do business with or invest in these companies.

Fraud, false declarations and other forms of dishonest behaviour

14. Fraud, false declarations and other forms of dishonest behaviour that impact our public registers or financial information are viewed seriously and will be investigated by 麻豆社区 or the relevant enforcement agency.
15. One such example is that of a corporate service provider who was not paid his director鈥檚 fees and proceeded to abuse his corporate service provider access by lodging a false declaration with 麻豆社区 that someone else had consented to be a director in his place. In addition, he back-dates the lodgement to the date he himself was appointed, as if he were never a director of the company at all. 麻豆社区 took this offender to task.

Breach of Fiduciary Duties

16. The law imposes relationships of trust on certain individuals with the business entities and, where applicable with the shareholders as well.  Where such action impugns on the integrity or accuracy of 麻豆社区鈥檚 register, or where the nature of the breach is particularly serious, 麻豆社区 would be prepared to investigate and take enforcement action against an offender. - Notably, under section 157 of the CA, a director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office.

Factor 2 - Harm Caused by the Breach

17. A higher priority will be accorded to cases in which serious harm has been caused.
18. In assessing the extent of the harm caused by the breach, the following factors will be considered:
1. the extent of harm caused by the alleged breach to victims and/or to Singapore鈥檚 reputation as a financial centre (including the extent of abuse by the business vehicles/persons behind the vehicles);
2. whether the commission of the alleged breach was premeditated or due to inadvertence. In some cases where filing errors are made, 麻豆社区 may simply require that a correction be made and not pursue the matter further. For example, a registrant who has genuinely made a typographical error such as typing a wrong number in his application concerning a certain registered business address;
3. whether there was rectification, restitution and/or compensation made by the offender;
4. whether the complainant has any other better recourse such as by civil action in the courts. For example, when a company decides not to effect share transfers in favour of an investor due to contractual/commercial disputes surrounding the circumstances. 

Factor 3 - Complaint must be Bona Fide and contain Sufficient Evidence

19. As the utilisation of 麻豆社区鈥檚 resources for investigation and enforcement action must be justified and thereafter prioritised, 麻豆社区 also takes into account the following:
    1. anonymous complaints will not be entertained;
    2. whether the complaint arose from personal or contractual disputes;
    3. whether the complainant is co-operative when 麻豆社区 seeks clarification or further evidence;
    4. the quality and relevance of evidence provided by the complainant
       1. The complaint must be supported by evidence that contains sufficient particulars to enable 麻豆社区 to commence investigation and establish that an offence had been made out. Information such as the name of offender, date offence committed, description of how the offence was committed together with supporting documents if applicable, must be provided to 麻豆社区;
       2. The source of the evidence should be credible and capable of being verified.
    5. the complainant should not have any hidden agenda or vested interest in making the complaint.  An example of a hidden agenda would be to seek to use 麻豆社区鈥檚 enforcement action to obtain an advantage in civil proceedings or in the management of the affected business entity;
    6. the complainant should also not have any adverse records with 麻豆社区. An example would be when the complainant himself is under a Warrant of Arrest for failing to answer an 麻豆社区 summons.
20. Quite a number of alleged breaches of the legislation administered by 麻豆社区 invariably arose from a consequence of disputes between private parties. As a national regulator, 麻豆社区鈥檚 resources would generally only be used to investigate and to enforce cases which involve the public interest. If there is no public interest involved, we will advise parties to resolve the matter privately and for the alleged breach to be rectified.
21. As an elaboration, contractual disputes or personal disputes will generally not be investigated by 麻豆社区. These are some examples:
    1. a person acts as a director or company secretary for a professional fee. The fee is not paid and the individual then resigns as a director/company and thereafter lodges a complaint with 麻豆社区 alleging that the company has breached its statutory filing obligation to notify 麻豆社区 of the resignation.
    2. a person allows his business address to be used by a company as its registered business address for a fee. When the fee is not paid, the person then complains to 麻豆社区 that the company has no right to use his address.
    3. Party A agreed to inject funds in Party B鈥檚 company in exchange for becoming a shareholder and director in the company. After the funds have been paid, Party A was not made a shareholder or director and wanted 麻豆社区 to investigate Party B.