Setting up a private limited company in Singapore

Not more than 50 corporate or individual shareholders

Public Company Limited by Shares

Can be more than 50 shareholders

Public Company Limited By Guarantee

Carries out non-profit making activities that have some basis in the national or public interest

1. Private Limited Company

A Private Limited Company is a locally incorporated company. The maximum shareholders in a Private Limited Company are not more than 50. These companies have the policy to restrict the rights of the members to transfer their shares in the company.

The members can transfer the share only if they complete some of the requirements mentioned in the company’s policies. They have to take the approval of the company’s board of directors, or the share they want to transfer must be first offered to be transferred to the existing shareholders.

1. Public Company Limited by Shares

It is a locally incorporated company, and the maximum number of shareholders ranges up to 50. The Public companies listed on the stock exchange are usually referred to as “listed companies.”

The company can increase its capital by offering shares and debentures to the public. Before making any public offering of shares and debentures, the Public company must register a prospectus with the Monetary Authority of Singapore.

1. Public Company Limited by Guarantee

A Public Company Limited by Guarantee has the national or public interest and carries out non-profit activities, and it works as an art promotion or charity. The Minister may approve the Public Company Limited by Guarantee without the additional words “Limited” or “Berhad.”

The Main Features of a Singapore Private Limited Company

The following are some of the main features of a Private Limited Company:

• A Private Limited Company is an independent legal entity separate from its owners. It can sue and be sued under its name. The company’s directors and shareholders are also not liable for the company’s debts.

• The company’s directors and shareholders have limited liability to the company. As long as the shares are paid up, the company’s members and shareholders have no other obligations to the company’s creditors. These creditors also insure their assets.

• The Private Limited Company owns the property.

• It can have a minimum of 1 and a maximum of 50 shareholders.

• It is considered a tax resident. The company is capable of local tax exemptions and incentives.

The benefits of a Private Limited Company

• If an entrepreneur incorporates a Private Limited Company, they convey a professional commitment.

• The chances of obtaining commercial loans from banks or financial institutions also increased.

• A Private Limited company also enjoys special tax exemptions and incentives.

Qualifying Requirements

• The company should not contain more than 20 individual shareholders.

• At least one shareholder of the company should be an individual with a minimum of 10% shareholding.

• A Private Limited company also enjoys special tax exemptions and incentives.

The benefits of a Private Limited Company in Singapore

The following are some of the advantages of setting up a Private Limited Company in Singapore, with which you can benefit yourself.

• The shareholders of a Private Limited Company are not liable for the debts and losses of the company.

• Profits of the company are taxed at corporate tax rates. All the dividends are tax-free in the hands of shareholders.

• The companies formed within the last years are entitled to tax incentives and exemptions.

• The Private Limited Company is a separate legal entity, and it does not cease to exist if any of its shareholders die.

• Shareholders are not liable for any debt or loss of the company; thus, their assets are protected.

• It conveys a professional commitment, thus maximizing the chances of loans from banks. It also establishes a credible image of the company in the business community.

The drawbacks of a Private Limited Company

• The company’s directors must inform all the company members about their interests in the company’s shares or contracts.

• The members of a Private Limited Company are restricted from transferring their shares in the company. They have to get approval from the company’s board of directors or first offer their shares to the existing shareholders.

• A Private Limited Company has some rules and regulations stipulated in the Singapore Companies Act. Violation of these rules can result in penalties for the company owners.

• The company must have one director and one company secretary, and the Annual Returns and Director’s Reports are required and must be filed.

• Operating costs of a Private Limited Company are generally high because there are greater disclosure and administration requirements.

• A Private Limited Company can be more expensive to set up in Singapore.

• The Private Limited Company must maintain ongoing compliance with ACRA/IRAS.

The Minimum Setup Requirements to register a Private Limited Company

The following are the requirements for the registration of a Private Limited Company

• 1 Shareholder

• 1 Resident Director · 1 Company Secretary

• Initial paid-up share capital of at least S$1

• A registered office address in Singapore

Incorporating Singapore Companies

To incorporate a company in Singapore, the owners must register it under the Companies Act. The company can have a minimum of 1 member, either individual or a corporation. The members of the company are referred to as shareholders.

The Singapore Companies Act governs a Private Limited Company, and the company has to comply with the rules, regulations, and laws under Singapore’s ACRA and Inland Revenue Authority.

Singapore Company Name

ACRA must approve the company’s name in Singapore before its incorporation. The ACRA can reject the name of the company on the following basis.

• The company’s name is identical to any other existing company.

• It is undesirable.

• The ACRA can reject names and trademarks similar to famous companies.

Business Activities Description

Employ the Singapore Standard Industrial Classification Code (SSIC) 2010 to determine the business activities of your Singapore company.

Nature of Shareholding

A Singapore Private Limited Company must offer subscriber shares to its founding members upon formation, and it could enhance its capitalization by issuing additional shares. The allotted share capital of a firm is the sum of the total number of shares multiplied by the par value of each share. 

Shareholders Agreement

It’s critical to have a well-drafted shareholders’ agreement to minimize future problems. This agreement spells out how shareholders work together and their rights and responsibilities. It is always prudent to safeguard your interests and maintain “controlling rights.”

Company Constitution or Memorandum And Articles of Association (MAA)

The constitution lists the things that the company can do, while the Articles of Association list the rules for how the company is run from the inside. The typical MAA document provided by Singapore Company Registrar is sufficient for most situations.

Shareholders

A Private Limited company must have at least one corporate or individual shareholder. The person can be the director and shareholder of the company. Anyone, whether a local or foreign individual, can be a shareholder. Details of the shareholders appear on public records. However, the Singapore Companies Act allows a minimum of 1 and a maximum of 50 shareholders in a Singapore Private Limited Company.

Resident Directors

A Private Limited Company in Singapore must have at least one director. The director must be a citizen of Singapore or a Singapore permanent resident. The person who holds an Employment Pass or a Dependent’s Pass with a residential address in Singapore can also be the company’s director.

During private limited company registration, you can have as many additional local or foreign directors as a company wants. The directors must be at least the age of 18 years and must not be bankrupt or have any criminal record in the past. Information about the directors must also appear on public records.

The following is a list of the reasons on which a person can be disqualified from the position of a company’s director:

• Any bankruptcy or person having a criminal record is not eligible for a director’s post.

• Persons who are under disqualification orders made by the Court.

• Persons involved in fraud or dishonesty acts.

Company Secretary

Every Singapore Private Limited Company must have a competent Company Secretary, and the secretary must be a resident of Singapore. According to the Singapore Companies Act, the companies should appoint a company secretary within six months of incorporation.

The company secretary is the company officer who shares legal responsibilities with the directors for certain tasks. The company secretary is also responsible for the efficient administration of a company. Meanwhile, the secretary has to ensure compliance with statutory and regulatory requirements. He also ensures that the decisions of the board of directors are implemented.

The Appointment of Auditors

All the Singapore Private Limited Companies are required to appoint an auditor within three months from incorporation. The Singapore Companies Act has now introduced a new scheme according to which the qualified companies can reduce the regulatory costs because they have fewer audit requirements to comply with. The following is the mentioned scheme of the Singapore Company Act:

• There is no requirement for the profit and loss accounts. An approved auditor audits the consolidated accounts and the balance sheets.

• There is no requirement to provide the company members with copies of the auditor’s report.

• The Company Act has no requirement to present copies of the auditor’s report at the Annual General Meeting.

Under this scheme presented by the Singapore Company Act, a company can be qualified as a “small company” and is exempted from the audit if it meets the following criteria:

1. The total Revenue should not be more than S$10 million.

2. The total Assets should not be more than S$10 million.

3. The total number of employees should not be more than 50.

Share Capital or Paid-up Capital

The minimum paid-up capital is S$1, or its equivalent value in any other currency to register a Singapore company. The minimum issued capital is one share par value. In Singapore, “Bearer” shares or “No par value” is not permitted.

After the incorporation of the company, the share or paid-up capital can be increased at any time. The company’s issued share capital is the total number of shares that exist in the company and then multiplied by the nominal value of each share.

The shares of a Private Limited Company can be transferred with the agreement signed between the seller and the potential buyer. According to the law, the shares of a Private Company cannot be offered to the general public.

Registered Address

Every Private Limited Company is required to have a registered office address. The registered address is not the usual business address, but it can sometimes be the address of the company’s lawyers or accountants.

The registered company’s address must be a physical address. PO Box address has no value for the registration process. The companies can also use their residential address for certain types of businesses.

The government uses this address to send official letters and documentation; therefore, the address must be shown on all official company documents. If the company has changed the registered office address after incorporation, the new address can be notified to ACRA.

Governance Structure

The company’s constitutional documents and provisions of the Companies Act governed the governance structure of the company and the interrelationship between the company and its shareholders.

The articles of association and the memorandum are now merged and renamed a single document, called “Constitution.” All the existing companies incorporated before this law are not required to merge the document and can continue with their memorandum and articles of association.

Certificate of Incorporation

If you need to, you can buy a hard copy of the certificate of incorporation.

Stock Certificate

This certificate is evidence of share ownership and lists the number of shares granted to each shareholder. The company secretary is responsible for issuing this certificate.

First Board Resolution

This resolution is required for shareholder and director appointments to become official.

Bank Account Opening Resolution

Because a limited liability business is a different legal entity from its directors and stockholders, it must have a bank account. Consequently, the company’s board of directors must pass a resolution authorizing the account’s opening and specifying its signatories.

Additional Requirements to Operate a Singapore Company

Singapore Company Seal

If stipulated in the company constitution, a corporate seal is a legal necessity for Singaporean businesses.

Company Stamp

In addition to your Singapore company seal, its stamp is also essential because it demonstrates its legitimacy and enhances the credibility of official company documents. Because of this, all official company documents, in addition to containing the firm’s UEN and registered address, must also bear an official rubber stamp.

Lastly, post-incorporation filing and compliance obligations for every Singapore firm are as follows:

Annual General Meeting (AGM)

Every corporation must hold its AGM once every calendar year, where its financial results are presented for shareholder approval.

Tax Filing

The due date for filing corporate tax returns is November 30. Whether audited or not, reports and tax computations require the appropriate filing.

Annual Returns

Every corporation has a one-month window following the annual general meeting (AGM) to file its annual returns.

Fiscal Year Determination

Each corporation in Singapore is responsible for determining its fiscal year-end (FYE), which is not always December 31. However, it is recommended to keep the company’s fiscal year-end within 365 days to qualify for tax exemptions for new start-ups (75 percent tax exemption on the first $100,000 of regular chargeable revenue for the first three years of operation).

Creating a Singapore Corporate Bank Account

Carefully select your corporate bank account during business registration, as Singapore offers a variety of banking options to private enterprises. The banking criteria, application method, and opening time are all distinct.

You’ll need the following documents to get started: 

• a board resolution authorizing the account opening, 

• a certificate of incorporation,

• a business profile, 

• a copy of the MAA, 

• a passport (or Singapore national identification card) for each director, and 

• ultimate beneficial owner, as well as proof of their residential addresses.

Compliance and Post Registration

Registered Office Hours

During regular business hours on weekdays, your registered office must be open to the public for at least three hours each day.

Permits And Licenses

Government authorities oversee some business operations in Singapore. Even though your business has been registered, you cannot begin operations unless you have obtained the proper government approval or license. Private schools, video firms, travel agencies, liquor distributors, payday lenders, banks, financial advisors, childcare centers, importers, wholesalers, and retailers of liquor licenses are examples of enterprises that require operating permissions.

Registration Number

ACRA’s business registration numbers must appear on letterheads, invoices, and other official business communications.

Singapore Central Provident Fund (CPF) Registration

The CPF, Central Provident, is a pension fund mandated by the Singapore government for the employer and the worker to contribute a portion of their monthly payments. All Singapore national and permanent residents making upwards of S$50 each month must contribute CPF through their employer. Employer and employee contributions to the CPF are capped at 17% and 20%, respectively.

Conclusion

So, there you have the comprehensive guide to registering a Singapore limited liability corporation. But remember, suppose your business involves import, export, or shipment into or out of Singapore. In that case, you must register your company with Singapore Customs and get a CR Number, often known as Custom Registration.