A composition offer lets a company or its director settle an offence by paying a sum to the agency instead of being prosecuted in court. Paying it in full, by the deadline, normally ends the matter: IRAS, for example, says no further prosecution action is taken once a composition sum is accepted and paid. Ignoring it, or missing the deadline, usually means the agency proceeds to charge you. Some agencies only offer composition after you fix the underlying breach, such as paying CPF arrears. Before paying, check that the offence described is correct, that you have actually fixed the problem, and whether there is a defence worth taking advice on.
A composition offer is often the last step before court. It is the agency choosing not to prosecute if you settle on its terms. Deal with it properly and on time: read what it covers, fix the breach, pay or raise your query before the deadline. Letting it lapse usually leads to a charge, a court appearance and possibly a conviction.
What is composition?
Many Singapore laws allow the enforcing agency to “compound” an offence: instead of prosecuting, it offers the offender the option of paying a sum. If the offer is accepted and paid, the case does not go to court. It is the agency’s discretion to offer it, and the offender’s choice whether to accept.
Composition at the main agencies
| Agency | What it says about composition | Condition or limit |
|---|---|---|
| IRAS (after an investigation) | A composition sum may be offered in lieu of prosecution; on acceptance and full payment no further prosecution action is taken | Up to 400% of the additional tax, depending on severity (IRAS) |
| IRAS (disclosed evasion) | A qualifying voluntary disclosure of wilful evasion may be compounded at 200% instead of prosecution | Disclosure must be timely and complete (IRAS e-Tax Guide) |
| CPF Board | May impose a composition amount of up to S$1,000 per offence | Only after all outstanding contributions and late payment interest are paid; otherwise CPF Board prosecutes (CPF Board) |
| MOM (workplace safety and health) | The Commissioner may compound offences instead of prosecuting | Up to half the maximum fine or S$5,000, whichever is lower (MOM) |
| ACRA | After an investigation, ACRA may allow you to compound a breach, or choose rectification, an advisory or warning, prosecution, or other tools | Depends on severity, cooperation and repeat offending (ACRA) |
Singapore Customs also compounds offences; see our guide to customs offences for importers. For unfiled tax returns, see IRAS court summonses for unfiled returns.
Pay, query or go to court?
Pay
Pay when the facts in the offer are right, the breach is real, and the underlying problem has been or is being fixed. For most filing and payment lapses, paying is far cheaper than a court case, and it ends the matter for that offence.
Query first
Contact the agency before the deadline if the offer names the wrong entity or person, the wrong period, a breach that was in fact complied with, or an amount you cannot reconcile. Ask in writing and keep the reply. If you need time to fix the breach, say so before the deadline rather than after.
Decline and go to court
Declining is a serious decision. It makes sense only where there is a real defence, for example the obligation did not apply, or the wrong person has been charged. Get legal advice before you decide; a lawyer can assess the defence and, where appropriate, make representations to the prosecution. See letters of representation.
Step by step
- Read the offer. Note the offence, the law, the period, the amount, the deadline and how to pay.
- Check the facts against your records. Filing dates, payment dates, payroll, CPF and returns.
- Fix the breach. File the overdue document, pay the arrears, correct the return. Some agencies will not compound until you have.
- Decide with the board. Record whether the company pays, and whether any individual officer’s composition is personal. See who pays the fine.
- Pay through the agency’s own channel before the deadline and keep the receipt.
- Prevent a repeat. Repeat offending is something agencies take into account. Set up a compliance calendar.
Frequently asked questions
Does paying a composition count as a conviction?
Composition is offered in lieu of prosecution, so the case does not go to court. Ask your lawyer how a composition should be described if a form, tender or licence application asks about past offences.
Can we pay by instalments?
Ask the agency before the deadline. Do not assume it will be allowed.
What if the deadline has passed?
Contact the agency immediately. The offer may have lapsed and the agency may already be preparing a charge, so get advice quickly.
More on the company law hub, and see which regulators give a last chance before prosecution.
Received a composition offer?
If your company, or you as a director or shareholder, has received a composition offer from ACRA, IRAS, CPF Board, MOM or another agency, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines and fix the underlying filings or payments. Where your matter needs a lawyer, we will refer you to a firm on our panel of Singapore law firms that regularly handles regulatory prosecutions. Raffles Corporate Services is a corporate services provider, not a law firm, and this article is general information, not legal advice.
Willie Tan, Raffles Corporate Services