Associations & Charities –
Legal Responsibilities
Presented by
Gregory Vijayendran / Lester Chua
Rajah & Tann LLP
Associations & Charities – Legal Responsibilities
Contents
1) Introduction
2) Statutory, General and Fiduciary Duties
3) Charity Trustees- Responsibilities
4) Delegation of Powers by Management
5) Inter-Relationship with Members: What Rights Do Members
Have?
6) Q & A
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Associations & Charities – Legal Responsibilities
1) Introduction

An association in Singapore can be set up as society or a
company limited by guarantee (“CLG”)

Charities have to be established as a CLG, a trust or a society.
Increasing trend in Singapore for associations and other not-forprofit organisations to be set up as CLGs.
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Associations & Charities – Legal Responsibilities
1) Introduction- Cont’d

CLGs are able to hold immovable assets directly in their own names
without the need for trustees, and can more easily carry out commercial
operations. Arguably, a CLG is better able to have members delegate
powers to its board of directors and for the board to delegate
responsibility to management. Conversely, the members of a society
have greater power and control over societal affairs than the members of
a CLG.

While a CLG is subject to ongoing public disclosure requirements and
greater annual reporting requirements, these are not particularly
onerous.
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Associations & Charities – Legal Responsibilities
Table of Comparison Between
Registered Society and CLG
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Associations & Charities – Legal Responsibilities
Table of Comparison Between
Registered Society and CLG
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Associations & Charities – Legal Responsibilities
Table of Comparison Between
Registered Society and CLG
Governing
Bodies
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CLG
Registered Society
• Board of directors and shareholders in
general meeting
• The board of directors has the authority
to manage the day-to-day business of the
CLG and can exercise all powers of the
CLG except those that are expressly
reserved to the member either under the
Companies Act or under its Memorandum
and Articles of Association
• The Companies Act prescribes a fairly
short list of major items reserved to
members (winding up of the company,
amendment of Memorandum and Articles
of Association, etc.
• Management committee
and general meeting of
members
• Management committee
typically comprises of at
least 3 key office bearers
ie President, Secretary
and Treasurer who
should be Singapore
citizens or Singapore
permanent residents
• Supreme authority of
the members is vested in
the general meeting of
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members
Associations & Charities – Legal Responsibilities
Table of Comparison Between
Registered Society and CLG
CLG
Ongoing
• Audit- accounts to be audited by
Requirement external certified accountants
s
•Annual general meetings
required. Information relating to
directors and personal particulars
of officers also have to be provided
to ACRA.
• Subject to ongoing public
disclosure requirements and
greater annual reporting
requirements
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Registered Society
• Audit- proper accounts and
records to be kept. External
auditor required where the
gross income or expenditure of
the society exceeds $500,000
in that financial year
• Annual general meetings also
required
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Associations & Charities – Legal Responsibilities
Table of Comparison Between
Registered Society and CLG
CLG
Registered Society
Amendment
of
Constitution
al
Documents
Members may by special
resolution alter its Memorandum
and Articles of Association
(approval of ACRA not required)
Members need to seek ROS
approval to amend its
Constitution.
Dissolution
By way of voluntary (by members)
or involuntary (by a court) winding
up; or dissolution by the ACRA
striking the company off its
register.
Voluntary dissolution in
accordance with the society’s
rules.
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Associations & Charities – Legal Responsibilities
Table of Comparison Between
Registered Society and CLG
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Associations & Charities – Legal Responsibilities
2) Statutory, General and Fiduciary Duties
CLG
• The Companies Act (“CA”) does not purport to codify the common law
duties imposed on directors. Instead, the CA makes it clear that the
common law and equitable duties on directors are expressly preserved.
• Common law duties of skill, care, diligence and fiduciary duties apply in
full to directors.
• Duties of directors primarily generally owed to the company as a whole
and not to an individual member or members (unless, for example,
directors benefit personally from their breach of duty)
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Associations & Charities – Legal Responsibilities
2) Statutory, General and Fiduciary Duties
Statutory Duties
Statutory Duties to act honestly and to use reasonable diligence in the
discharge of duties.
• A director who breaches this duty under section 157 of the CA is liable to the
company for any profits made by him or any damage suffered by the company as a
result of the breach (the civil liability) and
• Is guilty of an offence punishable with a fine of up to $5000 or imprisonment for a
term not exceeding one year (the criminal liability).
Duty to act honestly
• To act bona fide in the interests of the company in the performance of the directors’
duties
• So long as the director acts honestly, he cannot be made liable for damages
unless gross or cuplable negligence in a business sense is involved.
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Associations & Charities – Legal Responsibilities
2) Statutory, General and Fiduciary Duties- Cont’d
Statutory Duties
Duty to exercise reasonable diligence
• The standard of diligence expected of a director depends on what is
reasonable in the circumstances
• A director is not obliged to give continuous attention to the company’s
affairs.
• A director is permitted to entrust the affairs of the company to some other
official of the company and in the absence of grounds to raise his
suspicions, a director is entitled to rely on the official to perform his duties
honestly.
• However he cannot delegate away his duties and he remains liable where
he fails to control and/or supervise the company’s officials.
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Associations & Charities – Legal Responsibilities
2) Statutory, General and Fiduciary Duties
Statutory Duties
Duties in relation to accounts
• A director has the duty to ensure that a profit and loss account and
a balance sheet is prepared, duly audited and laid before the
company together with the auditor’s report and director’s report at
its annual general meeting (section 201 of the CA).
• This must be done no later than 18 months after the incorporation
of a company and subsequently at least once in every calendar
year at intervals of not more than 15 months.
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Associations & Charities – Legal Responsibilities
2) Statutory, General and Fiduciary Duties
Fiduciary Duties
• Duty to use powers for proper purposes- not for collateral
purposes
• Directors are viewed as fiduciaries and therefore owe fiduciary
duties to the company
• One aspect of this is a duty to disclose conflicts of interest:
codified in section 156 CA
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Associations & Charities – Legal Responsibilities
2) Statutory, General and Fiduciary Duties
Societies
• Registered societies are generally self-governing. A society has to
abide by the rules of its constitution and the prevailing laws in
Singapore.
• The constitution of a society is a set of rules and regulations that
binds the members of the society. Societies may draft their own
constitution or choose to use or modify Registrar of Societies’
Guide Constitution.
• The constitution should specify the functions, powers and
responsibilities of each office-bearer including the authority or
authorities for expenditure from the funds of the society.
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Associations & Charities – Legal Responsibilities
2) Statutory, General and Fiduciary Duties
• Statutory Duties under the Societies Act include the following:
• Maintaining proper accounts and records of the transactions and
affairs of the society for a period of at least 5 years;
• Submitting an Annual Return and its audited statement of
accounts to the Registrar of Societies annually;
• Submitting to the Registrar of Societies an audited statement of
accounts of any fund raising appeal 60 days after its completion;
.
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Associations & Charities – Legal Responsibilities
3) Charity Trustees-Responsibilities
If the association is a charity, the charity trustees take on a number
of responsibilities:• The trustees are the persons responsible for the general control
and management of the administration of the charity (board
members, management committee members, directors, trustees)
• Board of charity trustees- responsible for ensuring that the charity
is governed and managed responsibly and prudently such that the
charity is solvent, well-run, and delivering the charitable outcomes
for the benefit of the public for which it has been set up
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Associations & Charities – Legal Responsibilities
3) Charity Trustees-Responsibilities-Cont’d
• Duty of care and prudence- act in the best interest of the charity
and be actively involved in the management and decision making
process; exercise strict control over financial matters of the charity;
ensure compliance and law and regulations
• Charity trustees are encouraged to adopt the Code of Governance
for Charities and IPCs (principles and best practices on key areas
of governance and management of charities and IPCs)
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Associations & Charities – Legal Responsibilities
4) Delegation of Powers by Management
• Directors or office bearers of a CLG and a society may delegate
powers if authorised by the articles of association of the company
• Committees may be useful for deliberations on specific matters
such as setting up membership fees, deciding on matters of
policy etc.
• Reporting structures should be in place
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Associations & Charities – Legal Responsibilities
5) Inter-Relation with Members: What Rights do Members
Have?
CLG
• General sources of rights of members stem from the memorandum &
articles of association, the Companies Act and any rules or by-laws which
may be prescribed by the CLG from time to time
• General management of the company rests with directors, but members
have the role of making decisions about fundamental aspects of the
company. For example, its constitution; the composition of its board of
directors, winding up, changing company name, etc.
• A CLG may distribute profits to members if nothing in the memorandum &
articles of association prohibits this. However, in the case of a company
which is a charity, there must be a ‘no-distribution’ clause
• Class rights if there are different classes of members
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Associations & Charities – Legal Responsibilities
5) Inter-Relation with Members: What Rights do Members
Have?
Societies
• Generally set out in the Constitution
• Members of a society generally have greater power and control over
affairs of the society than members of a CLG
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Associations & Charities – Legal Responsibilities
Q&A
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Associations & Charities – Legal Responsibilities
THANK YOU
Gregory Vijayendran / Lester Chua
Rajah & Tann LLP
9 Battery Road #25-01
Straits Trading Building
Singapore 049910
DlD: 6232 0438 / 6232 0561
Email: gregory.vijayendran@rajahtann.com
lester.chua@rajahtann.com
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