Since 1 July 2015, small companies have been assessed against three criteria. A private company is classified as a Small Company if the company can meet any TWO of the following THREE critieria (“Qualifying Conditions”) in each of the immediate past two financial years:
- Total annual revenue not exceeding S$10 million
- Total assets not exceeding S$10 million
- Number of employees of not more than 50
Once classified as a Small Company, the company will remain as a Small Company unless it has been DISQUALIFIED as a Small Company.
A Company will be disqualified as a Small Company if it DOES NOT MEET the above 2 out of 3 criteria in each of the immediate past two financial years.
In a nutshell, a Company is CLASSIFIED as a Small Company if it meets the Qualifying Conditions for both of the last 2 financial years and will remain as a Small Company until it is disqualified because it cannot meet the Qualifying Conditions for both of the last 2 financial years.
The following illustrations will explain whether a Company is exempt from audit of its accounts over the years.
Three scenarios to explain the applicability of the new “small company” criteria
FIRST SCENARIO:
(i) Company meets the quantitative criteria in FY 2025 and FY 2026;
(ii) Company is a “small company” in FY 2026.
| Application of Law
Scenario 1 |
FY2027 |
FY2028 | FY2029 | FY2030 | FY2031 |
FY2032 |
| Meets quantitative criteria |
Yes
|
No
|
Yes
|
No
|
No
|
Yes
|
| Qualifies as a “small company” |
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
| Remarks |
The company already qualified as a “small company” and is not disqualified. |
As the company already qualified as a “small company”, it continues to be a “small company” despite not meeting the quantitative criteria in the current FY. It will only be disqualified when it fails to meet the quantitative criteria for two consecutive FYs preceding the current FY. | The company is not disqualified as it has only failed to meet the quantitative criteria for one of the two preceding FYs (that is, FY 2028) | Although the company does not meet the quantitative criteria in the current FY, it continues to be a “small company” as it is not disqualified. It is not disqualified as it has only failed to meet the quantitative criteria for one of the two preceding FYs. | Although the company does not meet the quantitative criteria in the current FY, it continues to be a “small company” as it is not disqualified. It is not disqualified as it has only failed to meet the quantitative criteria for one of the two preceding FYs. |
Although the company meets the quantitative criteria in the current FY, it is disqualified because it fails to meet the quantitative criteria for two consecutive FYs preceding the current FY (that is, FY 2030 and FY 2031). |
SECOND SCENARIO:
(i) Company does not meet the quantitative criteria in FY 2025 and FY 2026;
(ii) Company is NOT a “small company” in FY 2026.
| Application of Law
Scenario 2 |
FY2027 |
FY2028 | FY2029 | FY2030 | FY2031 |
FY2032 |
| Meets quantitative criteria |
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
| Qualifies as a “small company” |
No
|
No
|
Yes
|
Yes
|
Yes
|
No
|
| Remarks |
As the company does not meet the quantitative criteria in the two consecutive preceding FYs (that is, FY 2025 and FY 2026), it does not qualify as a “small company” in FY 2027 even though it meets the quantitative criteria in the current FY. |
As the company only meets the quantitative criteria in one of the two preceding FYs, it does not qualify as a “small company” in FY 2028. | The company qualifies as a “small company” as it meets the quantitative criteria in the two consecutive FYs preceding the current FY (that is, FY 2027 and FY 2028). | As the company already qualified as a “small company”, it continues to be a “small company” despite not meeting quantitative criteria in the current FY. It will only be disqualified when it fails to meet the quantitative criteria for two consecutive FYs preceding the current FY. | As the company already qualified as a “small company”, it continues to be a “small company” despite not meeting quantitative criteria in the current FY. It will only be disqualified when it fails to meet the quantitative criteria for two consecutive FYs preceding the current FY. |
Although the company meets the quantitative criteria in the current FY, it is disqualified because it fails to meet the quantitative criteria for two consecutive FYs preceding the current FY (that is, FY 2030 and FY 2031). |
THIRD SCENARIO:
(i) Company meets the quantitative criteria in FY 2025 and FY 2026;
(ii) Company is a “small company” in FY 2026.
| Application of Law
Scenario 3 |
FY2027 |
FY2028 | FY2029 | FY2030 | FY2031 |
FY2032 |
| Meets quantitative criteria |
No
|
No
|
Yes
|
Yes
|
Yes
|
Yes
|
| Qualifies as a “small company” |
Yes
|
Yes
|
No
|
No
|
Yes
|
Yes
|
| Remarks | As the company already qualified as a “small company”, it continues to be a “small company” despite not meeting quantitative criteria in the current FY. It will only be disqualified when it fails to meet the quantitative criteria for two consecutive FYs preceding the current FY. | As the company already qualified as a “small company”, it continues to be a “small company” despite not meeting quantitative criteria in the current FY. It will only be disqualified when it fails to meet the quantitative criteria for two consecutive FYs preceding the current FY. | The company is disqualified because it fails to meet the quantitative criteria for two consecutive FYs preceding the current FY (that is, FY 2027 and FY 2028). | As the company does not meet the quantitative criteria in the immediate past two consecutive FYs (that is, FY 2028 and FY 2029), it does not qualify as a “small company” in FY 2030. | The company qualifies as a “small company” as it meets the quantitative criteria in the immediate past two consecutive FYs (that is, FY 2029 and FY 2030). | continues to be a “small company” as it qualified as a “small company” in FY 2031 and is not disqualified. |
