Audit Exemption for a “Small Company” having a Corporate Shareholder

Audit Exemption for a “Small Company” having a Corporate Shareholder

In Singapore, having a corporate shareholder does not automatically disqualify a company from audit exemption — but it depends on whether the company still qualifies as a small company or a small group under the Companies Act (Section 205C).

Here’s the breakdown 👇

✅ Audit Exemption for a “Small Company”

A private limited company is exempted from audit if it qualifies as a small company for the financial year in question.

A company qualifies as a small company if:

It meets at least 2 out of the following 3 criteria:

Total annual revenue ≤ SGD 10 million
Total assets ≤ SGD 10 million
Number of employees ≤ 50

However — the company must also be a private company (not a public one).

🏢 If there’s a corporate shareholder

Having a corporate shareholder does not automatically remove audit exemption.
But you need to check whether your company is part of a group.

🔸 If the company is part of a group

Then the entire group must qualify as a small group to enjoy audit exemption.

A “small group” means:

The consolidated group meets at least 2 of the 3 quantitative criteria above on a consolidated basis (revenue, assets, employees).

So, even if one shareholder is a company, as long as:

The group as a whole is “small”, and
Your company is a private company,

👉 the company can still be exempted from audit.

⚠️ When audit becomes mandatory

Audit is required if:

The company (or group) exceeds the small-company or small-group thresholds; or
It is dormant but previously held significant assets or has not filed dormant declarations properly; or
It is public or limited by guarantee.

✅ Example 1: Audit-Exempt (Even with Corporate Shareholder)

Structure:

ABC Pte. Ltd. (a Singapore company)
Shareholders:
- John Tan – 60% (individual)
- XYZ Holdings Pte. Ltd. – 40% (corporate shareholder)

ABC Pte. Ltd. Financials (FY2024):

Revenue: S$5 million
Total assets: S$4 million
Employees: 20

Group Situation:

XYZ Holdings Pte. Ltd. is dormant (no revenue, no assets).
There is no consolidation, or if consolidated, the group total still falls below the thresholds.

✅ Result:
Even though ABC Pte. Ltd. has a corporate shareholder, it still qualifies as a small company, and the group qualifies as a small group.
👉 Audit exemption applies.

❌ Example 2: Audit Required

Structure:

DEF Pte. Ltd. (a Singapore company)
Shareholders:
- BigGroup Holdings Pte. Ltd. – 100% (corporate shareholder)

DEF Pte. Ltd. Financials (FY2024):

Revenue: S$2 million
Total assets: S$1 million
Employees: 10

Group Situation:

BigGroup Holdings Pte. Ltd. consolidates 10 subsidiaries in Singapore and overseas.
Consolidated group revenue: S$80 million
Consolidated assets: S$50 million
Employees: 300

❌ Result:
Even though DEF Pte. Ltd. alone is “small”, it’s part of a large group that exceeds the thresholds.
👉 Audit is required for DEF Pte. Ltd.

📘 Summary

Condition	Audit Exempt?
Small company + small group	✅ Yes
Small company + large group	❌ No
Public company	❌ No
Dormant company (with no significant transactions)	✅ Yes

If the corporate shareholder (BigGroup Holdings) is not a Singapore company

The Singapore company’s audit exemption depends on whether it is considered part of a group — even if that group is foreign.

🔹 Key rule under Section 205C, Companies Act (Singapore):

The audit exemption for a “small company” also extends to a “small group.”

A company is considered part of a group if it has a parent or subsidiary — regardless of where the parent is incorporated.

So, even if BigGroup Holdings is a foreign (non-Singapore) company, the Singapore subsidiary (DEF Pte. Ltd.) is still part of a group.

🔹 How to determine audit exemption in this case

Scenario	Audit exemption
Foreign parent exists, but no consolidated financial statements are prepared anywhere, and the Singapore company itself meets the “small company” criteria	✅ Can still be audit-exempt (practically accepted by ACRA if there’s no actual group consolidation and no other subsidiaries)
Foreign parent prepares consolidated financial statements, and the group exceeds the thresholds (revenue > S$10M, assets > S$10M, employees > 50)	❌ Audit required — because the Singapore company is part of a large group, even if the parent is overseas
Foreign parent is dormant / holding only one Singapore subsidiary	✅ Likely audit-exempt, as the group is still considered “small”

🔹 Supporting ACRA’s guidance

ACRA clarifies that:

For foreign-owned subsidiaries, audit exemption may apply if the company and the group (including the foreign parent, if any) meet the quantitative criteria on a consolidated basis.

In practice, if the Singapore company is the only entity in the group (the foreign parent owns only that one company and doesn’t consolidate elsewhere), then the Singapore company can still claim audit exemption as a small company.

💡 Example

BigGroup Holdings Ltd. (incorporated in the UK)
owns DEF Pte. Ltd. (Singapore).

BigGroup Holdings has no other subsidiaries.
DEF Pte. Ltd. revenue = S$2M, assets = S$1M, employees = 10.
BigGroup Holdings has no group financials.

✅ Result: DEF Pte. Ltd. qualifies as a small company, and there’s no large “group” to consolidate — audit-exempt.

Summary Table

Case	Group Structure	Consolidation
Foreign parent, no other subsidiaries	No consolidation	✅ Yes
Foreign parent consolidates multiple entities	Yes	❌ No
Foreign parent dormant	No	✅ Yes

📘 ACRA Source: “Audit Exemption for Small Companies”

👉 ACRA – Audit Exemption for Small Companies

🟩 Relevant Extracts (as of ACRA’s current guidance):

1️⃣ Definition of a “Small Company”

A company qualifies as a small company if:

It is a private company; and

It meets at least two of the following:

Revenue ≤ S$10 million

Total assets ≤ S$10 million

Number of employees ≤ 50.

2️⃣ When the Company Belongs to a Group

Where the company is part of a group, the entire group must be a “small group” to qualify for the audit exemption.

A group is considered small if the group (including any foreign parent) meets at least two of the three quantitative criteria on a consolidated basis.

3️⃣ Note on Foreign Parent

If the Singapore company has a foreign corporate shareholder, it may still qualify for audit exemption if the group as a whole is small, or if there is no group consolidation because the foreign parent has only one Singapore subsidiary.

🟦 In short (supported by ACRA)

The foreign corporate shareholder does not automatically disqualify the company.
The key question is whether the group (including the foreign parent) exceeds the “small group” thresholds.
If the foreign parent does not consolidate or has no other subsidiaries, ACRA accepts the company’s claim as audit-exempt.

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