Chandra Mohan [Managing Director]
Founder / Senior Audit Partner / FCA [Singapore] / FCCA / CPA [Aust] / MBA
Published 23 April 2026
Where We Left Off
In Part 1 of this series, we traced two decades of Singapore’s corporate regulatory evolution – from liberalisation to strict accountability – and introduced the four key amendments taking effect on 6 May 2026. If you haven’t read Part 1, start there.
In this Part 2, we dive into the detail: what each amendment means, what every director must know about financial reporting, and your compliance action plan.
These amendments are not designed to punish compliant directors. They protect Singapore’s corporate ecosystem by holding accountable those with different motives – levelling the playing field for directors who play by the rules.
The four key amendments taking effect on 6 May 2026:
| # | Amendment | Impact Level |
|---|---|---|
| 1 | Heavier Penalties for Directors | 🔴 Critical |
| 2 | Expanded Director Disqualification (AML) | 🔴 Critical |
| 3 | Two-Tier Share Buyback Approval | 🟡 Important |
| 4 | Individual Auditor Identification | 🟡 Important |
FRS, FRSSE, and the Companies Act: What Every Director Must Know
Many SME directors leave financial reporting entirely to their accountants. While engaging qualified professionals is essential, you must understand the frameworks governing your company’s accounts.
In plain English: Your financial statements must follow specific accounting standards – FRS or FRSSE – depending on your company’s size. These standards are prescribed by the Accounting Standards Council (ASC) under ACRA.
Your Legal Obligations as a Director:
| Obligation | Companies Act Reference | What It Means |
|---|---|---|
| Maintain proper accounting records | Section 199 | Records must be accurate, up to date, and accessible at all times |
| Prepare compliant financial statements | FRS or FRSSE | Must comply with the applicable accounting standard – no exceptions |
| Ensure true and fair view | Companies Act | Financial statements must accurately reflect your company’s financial position |
| Act honestly and with reasonable diligence | Section 157 | You must take an active interest in your company’s affairs – not just sign documents |
A Critical Reminder: Engage a Registered Professional Accountant
One of the smartest decisions you can make as a director is to engage a professional accountant who is registered with and answerable to ACRA. These professionals operate under ACRA’s regulatory oversight – including the Practice Monitoring Programme (PMP) – and are held to prescribed standards of competence, ethics, and accountability.
Be thoughtful about who prepares your company’s financial statements. Unregistered individuals or firms may offer lower fees, but they are not subject to ACRA’s oversight, not bound by professional standards, and not accountable if things go wrong. You are. Under the new amendments, non-compliant financial statements can expose directors to penalties of up to $20,000 per offence and 12 months’ imprisonment. An ACRA-registered professional accountant is not just a service provider – they are your first line of protection.
Your Responsibility as a Director
Your professional accountant supports your compliance – they do not replace your responsibility for it. The Companies Act places the ultimate duty on you, the director.
- Your accountant prepares.
- Your auditor advises.
- Your secretary files.
- But it is your name on the directorship and your signature on the financial statements.
With a regulated professional by your side and a willingness to stay informed, you can meet your obligations with confidence.
We strongly encourage every director to:
- Schedule regular meetings with your professional accountant to discuss financial statements and compliance matters
- Understand the key provisions of the Companies Act that affect you – particularly Sections 157 and 199
- Ask questions before signing – understand what you are approving
You do not need to become an accountant – but you do need to be an informed and engaged director. That is the strongest foundation for compliance you can have.
Amendment 1: Heavier Penalties – Raising the Bar on Accountability
In short: Maximum fines increase from $5,000 to $20,000 per offence, with up to 12 months’ imprisonment.
Why this is positive: The previous $5,000 maximum was widely regarded as insufficient to deter those who deliberately disregarded their duties. For directors with improper motives, it was simply a cost of doing business. The increased penalties change that equation – protecting the reputation of every honest director.
The reality check: A director who fails to maintain proper records (breach 1), signs non-compliant financial statements (breach 2), and misses the annual return filing (breach 3) could face up to $60,000 in fines – and potentially imprisonment. The solution is not to fear the penalties – it is to ensure you never face them by engaging qualified professional support.
Read more: What Every Singapore Director Must Know About the Goh Jin Hian Case
Amendment 2: Expanded Director Disqualification – Safeguarding Integrity
In short: Directors convicted of money laundering offences will now be automatically disqualified.
Directors convicted under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (CDSA) will face automatic disqualification.
This amendment specifically targets individuals convicted of serious criminal offences – not honest directors acting in good faith. It protects compliant directors by removing convicted individuals from the corporate ecosystem, reducing the risk that your company or industry could be tainted by association.
| Implication | What You Must Do | Why It Matters |
| Your company’s operations | Ensure proper KYC procedures, maintain transaction records, report suspicious activities | Failing to understand how your company’s funds flow could lead to criminal conviction and permanent disqualification |
| Your director appointments | Screen all existing and proposed directors for CDSA convictions. Confirm CSP screening is updated | Appointing or retaining a disqualified person is itself an offence |
Practical Step: Review your company’s director appointments and ensure that proper due diligence is conducted. If you use nominee director services, confirm with your Corporate Service Provider that their screening processes have been updated to reflect the expanded disqualification criteria. Think of this not as a regulatory burden, but as a safeguard for your business.
Read more: A Comprehensive Guide for Nominee Directors in Singapore
Amendment 3: Two-Tier Share Buyback – Strengthening Shareholder Protection
In short: Selective share buybacks now require two levels of approval – an ordinary resolution followed by a special resolution.
Selective share buybacks now require two levels of approval:
| Approval Tier | Requirement |
| Tier 1 (Existing) | 75% approval from all shareholders (excluding the selling shareholder) |
| Tier 2 (New) | 75% approval from shareholders of the same class being bought back (excluding the selling shareholder) |
When does this matter for SMEs?
| Scenario | Why Two-Tier Approval Matters |
| Shareholder exits or retirements | Departing shareholder’s class must have a voice in the buyback terms |
| Dispute resolutions | Prevents majority shareholders from forcing unfavourable buybacks on minority holders |
| Succession planning | Ensures fair treatment when shares transfer between generations |
| Restructuring exercises | Protects shareholders in the affected class during reorganisation |
Practical Step: Before proceeding with any share buyback, consult your auditor, accountant, or corporate secretary to ensure the new two-tier process is followed correctly. Document all approvals meticulously. Proper process protects you.
Amendment 4: Individual Auditor Identification – Building Trust Through Transparency
Audit reports must now identify by name the public accountant primarily responsible for the audit. Previously, reports were signed by the firm without identifying the specific individual.
Why this benefits you:
As we explained in Part 1, ACRA has overseen auditors through the Practice Monitoring Programme (PMP) since 2004. The Public Accountants Oversight Committee (PAOC) can suspend or cancel an auditor’s registration. Naming individual auditors is the natural next step – making accountability visible to the public.
As a director, you should:
- Know your auditor by name – not just the firm
- Engage directly with the named auditor on significant accounting matters
- Understand that the named auditor is now publicly accountable for audit quality
At S C Mohan PAC, we have always practised personal accountability and direct partner involvement. This amendment aligns with our longstanding approach. We welcome this change.
The Unaudited Financial Statements Gap: Why Non-Audit Companies Need to Pay Attention
The common misconception: “My company qualifies for audit exemption, so I don’t need to worry about financial reporting compliance.
“This is wrong. Audit exemption means exemption from the audit requirement – never exemption from financial reporting compliance.
The Evolution of Audit Exemption in Singapore
| Year | Key Change | What It Means for You |
| Pre-2003 | No general audit exemption | Audit required for all |
| 2003 | Audit exemption first introduced for Exempt Private Companies (EPCs) with revenue ≤ $2.5M | Small companies no longer required to appoint auditors — but still required to prepare compliant financial statements |
| 2004 | Audit exemption first introduced for Exempt Private Companies (EPCs) with revenue ≤ $5M | Small companies no longer required to appoint auditors — but still required to prepare compliant financial statements |
| 2014 | Criteria expanded to a “small company” concept based on two of three thresholds (revenue ≤ $10M, assets ≤ $10M, employees ≤ 50) | More companies qualify for exemption — but compliance obligations remain unchanged |
| 2025–2026 | ACRA consulting on potentially increasing thresholds and allowing subsidiaries to qualify independently | If thresholds increase, even more companies will operate without an audit safety net |
At every stage, exempt companies were still required to maintain proper accounting records, prepare FRS/FRSSE-compliant financial statements, and file tax returns with IRAS. Compliance was never optional.
Important safeguards: Shareholders holding at least 5% of issued shares may request an audit, and ACRA may direct any company to be audited regardless of exemption status.
Why Non-Audited Companies Face Greater Risk
Without an auditor reviewing your financial statements, errors and non-compliance can go undetected until it’s too late – whether during an IRAS audit, an ACRA inquiry, or a shareholder dispute. The heavier penalties under Amendment 1 apply equally to audited and non-audited companies.
| Risk Factor | Audited Company | Non-Audited Company |
| Independent check on FRS/FRSSE compliance | ✅ Auditor reviews | ❌ No independent review |
| Auditor subject to ACRA’s PMP | ✅ Yes | ❌ No auditor involved |
| Errors detected early | ✅ Audit process catches issues | ❌ Can go undetected for years |
| Professional oversight | ✅ Built into the process | ❌ Only if director engages a professional |
| Penalties under new amendments | Up to $20,000 + 12 months | Exactly the same |
The good news? This is entirely preventable. Engaging a qualified professional closes this gap completely.
The Smart Investment
| Scenario | Estimated Cost |
| Professional compilation/review of financial statements | A few thousand dollars annually |
| ACRA fine for non-compliant financial statements (per offence) | Up to $20,000 |
| Legal costs to defend against regulatory action | $10,000 – $50,000+ |
| Reputational damage and director disqualification | Incalculable |
At S C Mohan PAC, we offer compilation and review services specifically designed for audit-exempt SME companies. Our team ensures your accounts are prepared correctly, filed on time, and compliant with FRS or FRSSE.
Read more: Directors’ Loans in Singapore – Compliance, Benefits & Restrictions (Part 1) and Directors’ Loans: Tax Rules, Examples, and Compliance Tips (Part 2)
Your Compliance Action Plan
Here is a quick-start checklist to act on before 6 May 2026:
| # | Action | Status |
|---|---|---|
| 1 | Confirm your accountant is ACRA-registered — verify via ACRA’s public register | ☐ |
| 2 | Review your company’s financial statements — are they FRS or FRSSE compliant? | ☐ |
| 3 | Schedule a meeting with your accountant to discuss the new amendments and their impact | ☐ |
| 4 | Review director appointments — conduct due diligence on all current directors | ☐ |
| 5 | Know your auditor by name (if applicable) and confirm direct engagement | ☐ |
| 6 | Understand Sections 157 and 199 of the Companies Act — ask your accountant to walk you through them | ☐ |
| 7 | Review your financial statements – Does it compliance with FRS or FRSSE — ask your accountant in writing | ☐ |
| 8 | If audit-exempt, ensure you still have professional oversight for financial statement preparation | ☐ |
| 9 | Understand the four key amendments – Read Part 1 and Part 2 of this series | ☐ |
Conclusion: A Stronger Singapore Benefits Every Director
Directors who invest in compliance – who engage qualified professionals, who understand their obligations, who take an active interest in their company’s financial reporting – have nothing to fear from these amendments. They have everything to gain.
The cost of compliance is modest. The cost of non-compliance is devastating. The choice is clear.
The time to act is now – not out of fear, but because informed, proactive compliance is the smartest decision you can make for your company and yourself.
Contact Us
S C Mohan PAC
Whether you need audit services with direct partner involvement, compilation and review services for audit-exempt companies, corporate secretarial support, or advisory services on director duties and regulatory changes – we are here to help.
📞 +65 9144 1840
📧 [email protected] | [email protected]
🌐 www.scmohan.com.sg
Related Reading:
- Part 1: Directors, Take Note – ACRA’s 2025 Amendments Are the Biggest Regulatory Shift in 20 Years – And You Are Personally Liable
- What Every Singapore Director Must Know About the Goh Jin Hian Case
- A Comprehensive Guide for Nominee Directors in Singapore
- Directors’ Loans in Singapore (Part 1)
- Directors’ Loans: Tax Rules and Compliance Tips (Part 2)
Disclaimer: This blog is intended for general informational purposes only and does not constitute legal, financial, or professional advice. All information, legislative references, regulatory developments, and factual statements presented in this blog are accurate as of the date of publication (April 2026). Regulatory frameworks, legislation, and compliance requirements are subject to change, and readers should verify current requirements with the relevant authorities or their professional advisors. While every effort has been made to ensure accuracy, including verification against official government and regulatory sources, readers should consult with qualified professionals regarding their specific circumstances. S C Mohan PAC accepts no liability for any actions taken or not taken based on the content of this blog.
© 2026 S C Mohan PAC. All rights reserved.
