Singapore has, for more than a decade now, proven to be exceptionally friendly to both local and foreign businesses. The World Bank’s Ease of Doing Business Index currently ranks it as the second-best in the world. And, while the city-state supports six different types of businesses, the private limited company happens to be Singapore’s most commonly preferred corporation.
So, what’s the fuss about running a private limited company in Singapore? Why exactly do foreign and local businesses go for this category? And where do you even start when you need to set up a private limited company in Singapore?
This guide answers all the questions you might have about private limited entities in Singapore, as well as the requirements for private limited company registration in Singapore. Then to top it off, we also reveal what you should do after setting up a private limited company in Singapore.
A private limited company, for starters, is one of the limited liability companies that are registered and governed by Singapore’s Accounting and Corporate Regulatory Authority. But, unlike public limited companies and companies limited by guarantee, a private limited company comes with very exclusive and independent shareholding privileges.
That means you won’t be forced to trade the shares publicly through the stock market. Instead, ACRA expects members of a private limited company in Singapore to hold and control their shares privately, based on the rules they set out in their company constitution.
According to the Singapore Companies Act, individuals and corporate organizations are both allowed to take up equity in a private limited company in Singapore. Such members are collectively known as shareholders, and their company stakes are quantified in the form of shares.
That said, you can identify a private limited liability company in Singapore based on the name alone. ACRA typically registers the business names with suffixes like “Ltd”, “Pte Ltd”, or “Private Limited”.
Then when you dive deeper, you’re bound to notice the additional features that distinctly set private limited entities apart from the rest of the corporations in Singapore. This is where you discover the principal benefits that ultimately convince all sorts of entrepreneurs to incorporate a private limited company.
Come to think of it, the best thing about an LTD in Singapore is its limited liability status. The company itself is set up as a distinct legal entity, separate from its shareholders.
Consequently, you cannot be held personally responsible for the company’s liabilities and debts. The Companies Act protects your personal assets from all the legal implications that may arise from the company’s debt disputes. It can even file for bankruptcy without affecting its shareholders.
Number and Type of Shareholders
It’s worth noting, however, that there are restrictions when it comes to the number of shareholders. An LTD in Singapore is only allowed to proceed with a minimum of 1 shareholder and a maximum of 50. What’s more, you can register both individuals and company entities as shareholder members.
Number and Value of Shares
But, get this. Contrastingly, the Companies Act doesn’t limit the accompanying share volume. Members of an LTD in Singapore can go ahead and register as many shares as they want. That won’t affect the company’s overall equity allocation.
Rather, your stake in an LTD is calculated based on the percentage of shares you hold. With 500 shares, for instance, you can be said to own 50% of an LTD with 1,000 shares, or 25% of one with 2,000 shares. Such percentage values determine the corresponding fraction of profit and capital you’ll be entitled to.
In the end, therefore, you can establish the total share capital by multiplying the cumulative number of shares by the corresponding nominal share value.
Minimum Paid-Up Capital
And while you’re at it, please note that the minimum paid-up capital for a limited liability company in Singapore is S$1. Nonetheless, you’ll be free to increase the company’s paid-up and share capital after incorporation.
The Trading of Company Shares
Another privilege that comes with an LTD in Singapore is unrestricted share trading. You can transfer the shares internally or, in case you’re trying to raise capital, allow third-party investors to buy their way into the company. You just need a private sale agreement that adheres to your company’s constitution.
But, that’s not all there is to the constitution.
The Company Constitution
The constitution document that you submit during the LTD registration in Singapore will govern pretty much all the company operations and interrelationships between shareholders. That’s why, as a matter of fact, ACRA previously described it as the Memorandum and Articles of Association.
Sadly, however, your company’s constitution won’t save you from the numerous compliance responsibilities that come with this type of corporation. Registration of company in Singapore is even said to be a little bit costly and cumbersome because of its complex compliance intricacies.
But, on the bright side, at least it manages to make up for all that trouble with these outstanding benefits...
Now, as it turns out, setting up a Singapore private limited company is not as simple as registering a sole proprietorship, partnership, or a company limited by guarantee. There are quite a number of requirements and documents you’ll need during and after the incorporation process.
That said, here are the key essentials each LTD in Singapore is required to have:
As for the documents, ACRA expects you to attach the following to your Pte Ltd. registration in Singapore:
If you have everything ready, you can proceed to set up a private limited company in Singapore by following this procedure:
Make no mistake though. Registration is just the first step to setting up a private limited company in Singapore. There’s still so much more that you’re expected to do after incorporation.
Incorporating an LTD in Singapore means you’ll be getting an incorporation certificate, a share certificate, plus a company business profile.
However, the kicker is, you still won’t be able to kickstart your operations in Singapore. Not until you comply with the post-registration requirements that come with private limited businesses.
And to help you with that, here’s a breakdown of the steps you should follow right after incorporation:
These guidelines should make it easy for both locals and foreigners who are planning to set up a private limited company in Singapore. But, you can still make the whole process much easier, faster, and thorough by working with a specialized company incorporation service provider such as WealthBridge.
Besides, ACRA strongly advises all types of entrepreneurs to save themselves the trouble and proceed with this option, as incorporation service providers like WealthBridge know all there is to know about setting up companies in Singapore, as well as the subsequent processes of maintaining corporate compliance over the long haul.