Role of a Company Secretary During Fundraising and Share Issuance
Share issuance and fundraising are major milestones of a growth path of a particular company, be it to attract investments, expand operations, or to increase working capital. In Singapore, these corporate activities are to be handled under strict adherence to companies act and the rules of the Accounting and Corporate Regulatory Authority (ACRA). It is against this intricate processes that the company secretary is central in ensuring the compliance against legal, procedural and governance related issues.
The role of a qualified company secretary is to provide the link between the management, shareholders, and regulators, i.e. ensuring all filings made, drafting resolutions, and updating company records to represent the changes. They are crucial to the integrity of the company particularly when issuing new shares to investors or in raising funds by the company by way of private placements or rights issues, while also offering Ongoing compliance support for MAS-licensed entities.
Learning the Irony behind Fundraising Compliance.
Raising capital in Singapore is not only about getting commitments of investors. All the fundraising procedures, be it equity, convertible notes, and preference shares, should be based on legal and regulatory frameworks that safeguard the rights of shareholders and avoid conflicts in the future.
Companies must issue shares in accordance with their constitution, ensure shareholder approval where required, and maintain updated statutory records. This is where the company secretary’s role in managing fundraising and new share allotment in Singapore becomes indispensable, as they ensure every procedural step complies with ACRA’s filing obligations and the Singapore Companies Act (Cap. 50).
Preparation Before Fundraising
Revisiting the Constitution of the Company.
The company secretary will examine the company constitution before issuing new shares or capital raising in order to determine any restriction or procedural requirements on share allotment. Some constitutions can mandate the approval of the shareholders beforehand or restrict the nature or amount of shares issued.
In case the revision of the constitution is required to enable the issue of new types of shares, including preference shares or convertible securities, the secretary liaises the drafting and submission of the special resolution with ACRA via BizFile+. This makes all the changes legally acknowledged before fundraising commences.
Orchestrating Board and Shareholder Approvals.
The company secretary is the one who drafts the board and shareholder resolutions required to approve fundraising activities. This involves holding board meetings, preparation of minutes and getting signatures on the written resolutions.
An example is where a company issues shares to investors, the secretary should make sure that the directors approve the allotment formally and that actual shareholders are duly informed in the event of pre-emptive rights. This ensures the protection of corporate governance and transparency when issuing equity.
Carrying out Share Issuances.
Prewriting and Preparations of Offer Documents.
After the terms of fundraising are agreed upon, the secretary helps to prepare offer letters or subscription agreements of investors. The important information described in these documents includes share price, category of shares and terms of payment.
Although the secretary does not mandate that a private prospectus be issued by the private companies in Singapore, the offering should meet the exemptions of the Securities and Futures Act (SFA) in respect to the private placements or limited offer.
Allotment and Filing Allotment with ACRA
The company secretary should present a “Return of Allotment of Shares” (Form 71) through ACRA portal through the BizFile+ portal within 14 days of shares issuance. Such filing contains the names of new shareholders, number of shares allotted and amount of paid-up capital.
The secretary also makes sure that the Register of Members of the company is kept up to date and that new certificate of shares is issued to the investors. The inability to submit such updates in time may lead to regulatory fines, and the compliance with such measures by the secretary is a crucial factor at this point.
After-Issuance Compliance Obligations.
Making amendments to Statutory Registers.
The secretary also registers, after each share allotment, the statutory registers of the company, one of which is the Register of Members and another is the Register of Allotments, and another is the Register of Directors Shareholdings. These records should have the right capital structure and shareholding of the company after the fundraising.
This is part of the compliance duties of secretaries during equity issuance and fundraising rounds in Singapore, ensuring that corporate records remain up to date and aligned with ACRA’s electronic registers.
Issuing Share Certificates
The company should distribute physical or digital share certificates to the investors within 60 days of the share allotment date. This is managed by the secretary in which the certificates must be signed properly, numbered and kept. Every certificate is evidence of ownership and accuracy is therefore important.
The update of Paid-Up Capital and Financial Records.
The company secretary works together with the hard cash team to amend the paid-up capital numbers of the company in the internal and regulatory books. These changes are essential in the future filings, tax reporting, and audits, so that between the corporate and accounting documents they are consistent.
Investor Communication and Corporate Governance.
Being Transparent with the stakeholders.
The company secretary is the main contact linking the company and the shareholders and keeps them up-to-date of developments occurring because of the fundraising. This involves sending meeting invitations, resolutions, and information on shareholding changes.
Open communication will also aid in building trust among investors and ensures that the company follows the best practices of corporate governance especially in protecting the rights of minority shareholders of the company.
Shareholder Agreement Management.
When the company takes on new investors, the company secretary will tend to help in writing or revising the shareholder agreements, under which the rights of each party, obligations, and exit routes are undertaken. This assists in avoiding disagreements and makes the constitution of the company to conform to the contractual requirements.
Exceptional Cases in Fundraising.
Issuance of Preference or Convertible Shares.
Fundraising round can include issuing preference shares or convertible shares which have special privileges like right to dividends or right to convert. Under the constitution of the company, the secretary makes sure that such share classes are approved and well disclosed in the filings made in ACRA.
They are also involved in drafting of resolutions that require share terms and make sure that the company is not violating the Companies Act as well as the shareholder agreements.
Dealing with Employee Share Option Schemes (ESOS).
When a company introduces an Employee Share Option Scheme as a fundraising scheme or incentive scheme, the secretary takes care of the documentation, allotment filings and is the issuer of new shares under the scheme.
It is important that these options are well reported and kept in records so as to make sure that they are adhered to and are transparent to the employees and also to the regulators.
The Secretary and Due Diligence and Investor Relations.
In the process of raising funds, the investors normally exercise due diligence to identify the legal and financial stability of the company. This process is made easy by the company secretary who prepares corporate documents including the constitution, board resolutions, statutory registers, and share certificates.
Their presence also makes sure that all the records are complete, correct and easily available-increasing investor confidence and making the process of raising funds faster. Also they help provide responses to queries of the investor and produce certified true copies of corporate documents where necessary.
Conclusion to Role of a Company Secretary During Fundraising
The role of the company secretary is much broader than simple compliance- in fundraising and share issues, he or she will become the pillar of governance, accuracy of procedures. They possess this expertise to make sure that all resolutions, all filing and all updates on records are made according to the requirements of the ACRA and the Companies Act without being transparent or accountable to the shareholders.
Company secretaries facilitate the efficient and confidence fundraising through the management of documentation, regulatory filings, and shareholder communication to the businesses in Singapore. Their control makes sure every action is controlled according to the corporate governance provisions, which leads to the sustainable growth and investor confidence.
