Common SME Mistakes When Picking a Corporate Secretarial Services Provider

SME mistakes

Common SME mistakes is thinking of Corporate Secretarial services as an afterthought.

As one of the main business hubs of Southeast Asia, Singapore has no shortage of corporate secretarial services. However, the abundance of options can also lead to confusion – it doesn’t help that many such services are, on the surface, not well differentiated. Here are the common mistakes made when choosing a provider:

SME mistakes
Common SME mistakes when selecting a Corporate secretary service in Singapore

1. SME Mistakes: Ignoring your growth plans when picking a corporate secretarial service

There are two broad categories when it comes to corporate secretarial services:

The first group consists of small services, which handle mainly administrative tasks at an affordable price. The second consists of larger, “full-suite” service providers (e.g. Deloitte), which typically extend into full blown legal and auditing / accounting services. 

When choosing between the two, don’t make the mistake of always just picking the cheapest, or always defaulting to the expensive, branded service. Make your choice based on the immediate future plans of your business.

For example, if you intend to grow the business quickly in the coming years (e.g. you expect multiple funding rounds, or the possibility of going public), then a small service provider may be insufficient. This is partly because the smaller providers tend to work on volume, so may have less time to devote to your complex business. Another drawback is that smaller services may not provide more in-depth tax or legal advice, which bigger firms can often do. 

On the other hand, if you’re intending to keep things simple (e.g. a small family-run business that will remain that way for decades to come), then it may not be worth the expense of engaging a larger service provider. 

2. SME Mistakes: Changing to a “less troublesome” service because they “ask fewer questions”

We understand that administrative issues can be bothersome; and it can sometime be a pain to have your corporate secretarial service calling you multiple times. A good one may want to do sufficient “Know-your-customer” KYC due diligence.

However, this shouldn’t always be taken as a drawback. Often, it’s the better service providers that bother to do this. For example, a good service provider may want to discuss how votes are tallied during the AGM. This may seem like a trivial and time-wastong question, with a snap answer (get them to raise their hands!) 

But it can have significant implications. For example, do you want someone who hasn’t yet paid for their shares to actually have voting rights? Or what if someone were to gain inordinate influence through improper use of proxies? These are all issues that a proper service provider will raise to your attention.

Don’t make the assumption that, because a corporate secretarial service rarely calls, that means they’re “efficient” or “have things under control”. It can also mean they just aren’t giving your business the attention it needs. The “bothersome” service may be the one that does its job.

3. SME mistakes of just picking “any” service, because you’re busy now and can think about changing it later

When you’re just starting your business, you’re probably eager to work on other aspects such as marketing or product design. But in your excitement, don’t make the mistake of hand waving corporate secretarial services as just a formality.

Contrary to what some business owners believe, changing your service provider later is not simple. Even if the direct monetary cost is low, the time and effort involved will more than make up the difference. Shareholders will have to be informed (some may have questions), passwords need to be changed, crucial documents need to change hands, and – quite often – AGMs and financial statements get delayed in the handover. 

As such, you should pick your service provider with as much care as any other vendor in your business. Changing your provider is no less disruptive than, say, changing a supplier or logistics provider later on. Minimise your downstream costs, by picking the right service from the start.

We provide a comprehensive corporate secretarial service that can be fitted to your needs, particularly if you’re a foreigner starting a business in Singapore. Contact us so we can help you today.

4. Assuming it’s best to use the same corporate secretarial service for all your businesses

This is not always the best option, especially if your business entities are of different sizes and in different industries. As with point 1, it’s not always necessary for a small business to engage a full-suite provider of corporate services.

Besides this, consider that each corporate secretarial service provider tends to have a niche. Some may have a larger clientele with industrial businesses, for example, while others may have deeper involvement in shipping or holding companies. It’s always best to find a service provider that better understands each of your businesses – this ensures you get the most mileage from the expense.

There may be situations in which this isn’t feasible (e.g. time constraints demand that you handle everything through a single point of contact). But as and when time permits, try to use the right service for the right business.

5. Engaging a service provider that keeps pushing for creative, “grey area” solutions

There is a fine line between resourcefulness, and risking your business by gaming the system. Be wary of corporate secretarial services that constantly come up with unorthodox ways to do the latter. While some level of flexibility helps the business, too much “Grey area” is a serious mistake SMEs cannot afford to take. So let’s do things the proper way here.

Examples include registering your main business activity as being quite different from what you really do (e.g. registering the business as a media company, when all the media you produce is really to market another product), or explaining that you can use alternative terms for words like “investment” or “healthcare” to dodge certain regulations.

While you don’t have to take their suggestions (and probably shouldn’t), you may want to reconsider working with these types of service providers. If their risky practices get them in trouble, it can cause administrative chaos for you.

If they get into trouble for “helping” another client with such methods, for instance, their suspension could also leave you having to replace them The handover can be chaotic, especially on sudden notice. 

So do practice discernment, in spotting the difference between a resourceful provider, and just a shady one. As a rule of thumb, change the service provider the moment you start to feel uncomfortable. 

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