Why Your ACRA Business Incorporation Might Be Denied: Common Reasons and How to Avoid Them
- John
- Dec 28, 2024
- 4 min read
When you’re starting a business in Singapore, one of the key steps is incorporating your company with the Accounting and Corporate Regulatory Authority (ACRA). ACRA is the government body responsible for regulating business entities in Singapore. While the process of incorporation is straightforward, it’s possible for your application to be denied. Understanding why your application might be rejected can help you avoid delays and ensure a smooth registration process.
In this blog post, we’ll cover some of the most common reasons why ACRA might deny your business incorporation application and provide guidance on how to avoid these pitfalls. We’ll also link to relevant sources that can provide further insights into the process.
Incomplete or Incorrect Documentation
One of the most frequent reasons for ACRA rejecting an incorporation application is submitting incomplete or inaccurate documentation. ACRA requires several key documents for registration, including:
Company name
Company’s registered address
Directors and shareholders' information
Company secretary details
Constitution of the company
If any of these documents are incomplete, incorrect, or missing, ACRA may reject the application outright. For instance, a company name that is too similar to an existing company or contains restricted words (like "bank" or "insurance") could lead to rejection. Additionally, the registered office address must be a valid physical location, not a P.O. box.
Company Name Issues
The name of your company must meet specific criteria set by ACRA. The name cannot be identical or similar to an existing registered business, nor can it contain words that are prohibited under Singapore’s laws, such as terms relating to illegal activities, government functions, or restricted sectors like banking and insurance.
Additionally, the name should not mislead or confuse the public. ACRA uses a search tool to check if the name you’ve chosen is already in use or if it violates any regulations. If your company name is flagged, your incorporation will be rejected.
How to avoid it
Before submitting your incorporation application, you could submit your preferred name to SG Corporate Services and we would conduct a free name search to ensure your preferred company name is available. Consider having several backup names ready, just in case.
Ineligible Directors or Shareholders
ACRA requires that every company in Singapore has at least one local director who is a Singapore resident (a citizen, permanent resident, or holder of an Employment Pass, EntrePass, or Dependent Pass). If the company’s directors do not meet the residency requirements, the application will be rejected.
Additionally, ACRA will deny the application if any of the proposed shareholders or directors have criminal records or if they are disqualified from being directors under Singapore’s laws.
How to avoid it
Ensure your directors and shareholders meet the eligibility requirements. If you do not have a local director, you can appoint a nominee director to meet this requirement.
No Company Secretary Appointed
According to Singapore’s Companies Act, every private limited company must appoint a company secretary within six months of incorporation. If you submit your application without appointing a secretary, ACRA will deny your application.
The company secretary must be a resident of Singapore and have the necessary knowledge and experience to fulfil the role effectively.
How to avoid it
Appoint a qualified company secretary at the time of incorporation or ensure you have one ready by the six-month deadline.
Non-Compliance with Legal Requirements
If your business violates any of Singapore's legal requirements or involves activities that require special permits or licenses, your incorporation may be denied. For example, businesses in regulated industries such as finance, healthcare, or education must obtain relevant licenses before they can be incorporated.
How to avoid it
Check if your business requires a license or special permits before incorporating. You can find information about licensing requirements with SG Corporate Services, who can guide you on regulatory compliance.
Inconsistent or Invalid Address
Your company’s registered address must be a physical address in Singapore. P.O. boxes or virtual office addresses are not acceptable. If your address is invalid or does not meet ACRA's criteria, your application will be rejected.
How to avoid it
Ensure that the registered address is a legitimate, physical address that complies with ACRA’s requirements. If you don’t have a physical office, you may use a commercial address, but it must be a legitimate location that ACRA can verify.
Ensuring Your ACRA Incorporation is Approved
Starting a business in Singapore is a relatively smooth process, but ensuring your ACRA business incorporation is approved requires careful attention to detail. By avoiding the common pitfalls mentioned above and thoroughly checking your application and documents, you can increase your chances of approval.
For further guidance on business incorporation in Singapore and to avoid any issues with ACRA, visit the official ACRA page on how to incorporate a company: ACRA Incorporation Guide.
If you're unsure about the process or need professional assistance with your incorporation application, companies like SG Corporate Services offer expert services to help guide you through every step of the way.
Contact us today for tailored solutions to streamline your incorporation process and ensure compliance with ACRA's regulations.
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