While the company registration process in Singapore requires you to submit all sorts of information about your business, everything ultimately revolves around two basic elements — the company’s shares and the accompanying shareholders.
The registrar of companies in Singapore — Accounting and Corporate Regulatory Authority (ACRA) — primarily reviews the types of shares in your company, the distribution of shares among the company shareholders, your share capital, as well as the shareholders’ rights and responsibilities.
But, it doesn’t end there. Once you incorporate the business, ACRA will proceed to keep a close eye on how you manage everything about your shares and shareholders. If you so much as try to transfer shares or issue new shares, for instance, ACRA will require you to abide by not only Singapore law but also your own company constitution.
So, to make things much easier for you, we’ll explain all the essentials regarding company shares and shareholders in Singapore.
Company Shares and Shareholders: The Basics
For starters, here are the basics you should know ahead of the company incorporation process:
- A private limited liability company should have at least one shareholder, but not more than 50.
- Both Singapore locals and foreigners are free to register as shareholders of a company.
- You can go ahead and set up as many shares as you want.
- Your company’s share capital can be as little as S$1.
- ACRA allows you to establish different types of shares, with each offering a distinct set of privileges and rights.
- Shareholders are free to control the transfer and issue of shares within their company.
- Companies can proceed to trade their shares in any major global currency.
Singapore Company Shares
Types of Shares in Singapore Companies
- Ordinary Shares: This category offers shareholders dividend rights, voting rights (typically one vote for each share), as well as the license to acquire a fair share of the company’s assets after dissolution. ACRA requires each company to set aside at least one ordinary share during incorporation.
- Preference Shares: Preference Shares are considered to be superior to ordinary shares when it comes to dividend payouts. Such shareholders can, for instance, receive their dividend checks before regular shareholders.
- Non-Voting Shares: Although these shares can make you a rightful company member, they don’t come with voting rights. One particularly common example is Preference Shares.
- Deferred Shares: Companies hold off dividend payouts to Deferred Shares until the rest of the shares have received their rightful minimum allocations.
- Redeemable Shares: These are more like temporary shares that are allocated to new members, on condition that the company will reacquire them at a later date. This makes them ideal for short-term investors.
- Management Shares: This is a special type that’s commonly allocated to senior company members such as founders. And the reason is, they happen to offer additional privileges like extra voting powers and decision-making rights.
- Alphabet Shares: This collectively refers to custom-defined categories of shares. Singapore’s Companies Act allows you to set up various share classes based on your company’s structure. You could, for instance, create Class A and Class B share classes with varying levels of privileges and rights.
Share Capital vs Paid-Up Capital vs Unpaid Capital
Share Capital, to begin with, refers to the funds that members contribute to the company’s equity. By so doing, each member manages to purchase equity in the form of shares, consequently making them shareholders.
It’s worth noting, though, that members don’t have to necessarily pay up to become shareholders. Companies in Singapore are allowed to allocate shares to members even without full payment of the share capital.
And that’s precisely where paid-up capital and unpaid capital comes in.
Now, as you’ve probably guessed already, paid-up capital is share capital that shareholders have paid for in full, while unpaid capital is the complete opposite- which means the share capital amounts that are yet to be submitted by the company’s shareholders.
Whichever category your company happens to fall in, the lowest it can go is S$1. That’s the minimum share capital for all companies registered in Singapore.
The Share Issuance Process
Thankfully, you’re won’t be limited to the shares you create and reserve during the company incorporation process. At least ACRA is flexible enough to accommodate a wide range of changes on your company shares, as well as the corresponding shareholders.
You can, for example, proceed to issue new shares whenever you want. All it takes is passing an ordinary resolution along with other shareholders, after which you should file ACRA’s return of allotment within 14 days.
That, in other words, means submitting a formal application via the official BizFile portal. And while you’re at it, you’ll be expected to submit the following details:
- The classes of shares you’re issuing.
- The paid and unpaid amounts for each share allotment.
- The number of shares the company is issuing.
- The business name, UEN, and registered address of the shareholders who happen to corporations.
- The full name, nationality, identification info, and physical address of each shareholder who happens to be an individual.
- The number of shares owned by each shareholder, plus their corresponding share classes.
The Share Transfer Process
Apart from issuing new shares, shareholders can go ahead and transfer shares between themselves. That means it’s possible to cede a chunk of your ownership equity to other company members.
But- while ACRA allows shareholders to proceed freely, this whole process is usually controlled and governed by the company constitution. As such, you can only transfer shares at the discretion of your company’s rules.
And while you’re at it, you might want to notify ACRA accordingly. Such transactions are usually reported via share transfer notices on the BizFile portal. Or, alternatively, you could simply include the share transfer details in your company’s annual return reports.
Shareholders In Singapore Companies
Shareholder Requirements in Singapore
- You can only become a shareholder by purchasing company shares.
- A private limited company in Singapore can have as few as one shareholder, and as many as 50 shareholders.
- Both individuals and corporations can be registered as shareholders.
- Singaporean companies are open to both local and foreign shareholders. In fact, foreign shareholders can even go ahead and take up all the shares in a company.
- Once incorporated, a company exists and runs as a completely separate entity from its shareholders. That means shareholders are not personally responsible for any liabilities and debts that might arise from the company.
- The shares allocated to shareholders come with specific rights and privileges, which subsequently determine the roles and responsibilities of each shareholder.
- Shareholders are free to transfer and issue shares to other company shareholders.
- Each shareholder’s ownership equity is determined by the combined volume and value of the shares they own. With 50% of the company shares, for instance, you’d pretty much be entitled to half of the company.
Shareholders’ Rights Within The Company
Through their share allocations, shareholders ordinarily get the following privileges:
- The right to vote.
- The right to a proportional share of the dividend payout.
- The right to fair treatment within the company.
- The right to attend and organize company meetings.
- The right to participate in the company dissolution process.
- The right to a share of the company assets after dissolution.
Shareholders’ Responsibilities Within The Company
In addition to rights and privileges, shares happen to come to responsibilities too. Shareholders are fundamentally expected to:
- Actively participate in the management of the company by expressing their views and opinions to the company secretary.
- Take part in general company meetings- including AGMs, and EGMs.
- Make their vote count during company elections.
- Contribute to the company’s capital by paying for their shares in full.
- Protect the company’s interests.
Over To You
With this information, you should be able to come up with a rough structure of the type of shares and shareholders that’ll make up your Singaporean company. You might also want to pass the info on to your business partners, and subsequently, get them up to speed on the basic rights and requirements of shareholders in Singapore.
But, don’t get too caught up in the excitement and end up rushing the company incorporation process. While these are great company formation insights we’ve included here, you’ll still need the guidance of an incorporation expert — much like WealthBridge.
Yes, that’s right — you can, indeed, trust us to fine-tune your company’s shares based on Singapore’s corporate law, as well as your business needs.