Several companies registered by individuals in Singapore are Private Limited companies and as a suffix to the company name, they usually have “Private Limited” or the most popular one “Ltd”. Private Limited companies in Singapore have significant differences from those found in other parts of the world. Before we go deeper into the method of registering a Private Limited Company in Singapore, let’s take a look at how companies are grouped.
Categories of Companies in Singapore
Every registered company in Singapore falls under two major groups: the private and the public companies.
Private companies are all known as Private Limited companies and it is one in which there is a maximum of 50 shareholders. The rights to transfer company shares are strongly restricted and usually happens only if the transfer is approved by a group of people known as the company’s board of directors, or if not, the shares have to be transferred to all the shareholders.
The public companies in Singapore fall into two categories: those limited by shares and those limited by guarantee.
Public Company Limited by Shares
A public company which is limited by shares is one in which the maximum number of shareholders can exceed 50. These public companies may or may not appear in the stock exchange market. They don't raise capitals individually or by just a small group of people. They get their capital when they offer shares to the public. Before any public company can offer these shares to the public in order to raise capital, it must first be registered with the Monetary Authority of Singapore.
Public Company Limited by Guarantee
This type of company does not function for profit. It carries out non-profit activities, putting the interest of the members of the society in mind. This kind of company can be approved without the "Limited" behind its name because they're working to help the government.
Key Features Possessed by Singapore Private Companies
When dealing with Singapore private companies, there are several similar features they all possess by being an independent company run by at most 50 people.
- The company can sue and be sued. The company directors are not usually held responsible for the company’s downfall.
- It is permitted to own property.
- The directors and shareholders in the company have only a limited liability to the company. They have no obligations to the company as long as the shares are paid.
- They are eligible for exemptions of local taxes.
- They must have at least 1 and at most 50 shareholders investing in the company.
Advantages of a Private Limited Company in Singapore
- Establishing a Private Limited company shows dedication and commitment to the job, and this permits better chances of being granted commercial loans from various financial institutions.
- A Private Limited company does not pay taxes and several incentives.
- Shareholders are not to be held responsible for the company’s debts.
- If one or more of the shareholders dies, the company still remains in existence and fully functional.
- Additional shareholders can be appointed to the company and the company’s ownership can be transferred to someone else after following some procedures.
- Due to shareholders being added to the company, more capital is input into the company, which means additional growth.
- Since the shareholders are not responsible for company losses, their personal assets are always protected.
Disadvantages of a Private Limited Company in Singapore
- Annual Reports must be filed and there must always be a company director and secretary to ensure that the company is still running.
- It has to follow the rules and regulations put down by the Singapore Companies Act and must never violate any of these rules, or else they may face serious consequences.
- Setting up this type of company is usually very expensive.
- The operation costs are usually much higher than that of the public due to administrative requirements.
There are several steps to follow when planning to register your Private Limited Company. Prior to registration, you have to have gathered everything needed to make the registration a successful one.
Private Company Registration Requirements
- Capital: Before planning to start up the company, you must have enough capital at hand. At least S$1 must be available to start the company. Due to the ability to add shareholders, capital can increase over time.
- Company Name: You must have gotten the company name approved before deciding to take the registration step because your company cannot be given a name that is already approved and being used by another individual.
- Shareholders: It must be ensured that your company has at least 1 shareholder before registration and the shareholder doesn’t necessarily have to be in Singapore. They can be foreign individuals or corporate entities.
- Secretary: The company must have a secretary that is a resident of Singapore who has been employed within 6 months before the time of registration.
- Address: The address where the company is located must be registered. This is where the company will keep all its documents, and also possibly have people managing the place.
- Director(s): A Singapore Private Limited Company can have several directors dwelling in both Singapore and foreign countries.
Registering your Company
- Have your company name approved by ACRA. It is a very simple online procedure which ensures that your name is not being used by any other company, has not been reserved by another company, and is not obscene.
- Prepare all your documentation necessary for registrations: The documents to be prepared include: a) company constitution, b) signed consent to stand as a director for each director, c) signed consent to stand in for the company secretary, and d) residential address and identification details of every shareholder and worker in the company. All the documents provided must be in the English Language or should have been translated into English.
- Registration with ACRA: Once the essential documents have been gotten, it is very easy to register with ACRA online in a procedure that won’t take over 1 hour, although it can take a few weeks if it involves another government.
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Documents Issued after Registration
After completing your registration with ACRA, a document will be issued to you:
Certificate of Incorporation shows that the company has been registered and also provides a Unique Entity Number (UEN) for your company’s use. This certificate is acceptable everywhere in Singapore and can be used to carry out official processes.