A company is a business entity registered under the Companies Act, Chapter 50. Most companies in Singapore are private companies limited by shares - "Pte Ltd". All companies must be registered/incorporated with the Accounting and Corporate Regulatory Authority (ACRA).
Characteristics
Who Can Register Or Incorporate?
Types Of Companies
Set Up Costs
Advantages
Disadvantages
Registering Or Incorporating Your Company
Characteristics
- A company is a legal entity (i.e. it can sue or be sued in its own name and can own or hold any property).
- The owners of the company are called shareholders. There must be a minimum of one share owned by one shareholder. The value of the share can be just S$1.
- Profits are taxed at corporate tax rates.
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Who Can Register Or Incorporate?
- Almost anyone or any company can incorporate a company.
- However, there must be at least one director of the company who is above 18 and be one of the following:
- Singapore Citizen
- Singapore Permanent Resident
- Employment Pass holder
- Approval-in-Principal Employment Pass holder
- Dependant Pass holder
- Directors cannot be bankrupts or persons convicted of dishonesty. Consult your lawyer for a full list of people who are disqualified from being directors.
- There must be at least one shareholder and one director. They can be the same person. However, most companies opt to have at least 2 directors as banks and other financial institutions usually require 2 signatories.
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Types Of Companies
- Companies can be private or public. When a company can offer shares, debentures and other interests to the public, it is known as a public company.
- There are 3 types of companies:
- Private/public companies limited by shares
- Public companies limited by guarantee
- Unlimited companies
- Most companies in Singapore are private companies limited by shares - "Pte Ltd". Private companies with more than 50 shareholders must be converted to public companies limited by shares.
- Not-for-profit, religious and charitable organisations usually set up public companies limited by guarantee. There is no share capital. When the company is wound up, each member pays a nominal fee that could be as little as S$1.
- Unlimited companies are very rare. Basically, they are companies with no restriction on membership or liability.
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Set Up Costs
- Fees for approval of company name: S$15 per name.
- Registration fees: S$300 for companies limited by shares. S$600 for companies limited by guarantee.
- Yearly renewal fees: Not applicable.
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Advantages
- Limited liability
Liability for debts and losses are limited to the value of the shares. The personal assets of shareholders are protected.
- More attractive to investors
Companies can fund their business by selling shares to friends, family, employees, business associates and other companies.
- Better growth potential
A company can "go public" and raise funds by offering shares and debentures to the public. Private companies with more than 50 shareholders must be converted to public companies.
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Disadvantages
- There are more formalities and procedures to comply with. For instance, there are specific rules for appointment of directors, annual general meetings and shareholders resolutions.
- Exempt private companies (EPC) - companies with less than 20 individual shareholders and with no corporate shareholder - do not need to audit their accounts if revenue is less than S$5 million for the financial year. However, professional firms filing on behalf of EPC may still require the hardcopy exempt certificates from directors as evidence of compliance and to keep for record purposes, even though ACRA has removed the need to attach these certificates in the annual return.
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Registering Or Incorporating Your Company
All companies must be registered/incorporated with ACRA.
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