Setting Up an Exempt Private Company (EPC) in Singapore

Going by the World Bank’s Ease of Doing Business Index, Singapore is undoubtedly one of the friendliest places for private limited companies. But, to make the most out of it, you need to proceed with the ideal type of PLC for the nature of your business, one of which is an exempt private company, or EPC. 

This article dives into the intricacies of private limited liability companies to explore the underlying exempt and non-exempt subcategories. In particular, we’ll explain the differences between the two, as well as the principal features and benefits you should expect from a limited exempt private company in Singapore. 

What Is A Singapore Exempt Private Company?

An Exempt Private Company- or simply EPC in short- belongs to the private limited liability category of companies. This type of private company often falled under Private Company Limited by Shares, which puts restrictions on the company regarding shareholders. An EPC is still a separate legal entity from its stakeholders, and may be given tax exemption. 

Private limited liability companies in Singapore cannot stretch beyond 50 shareholders. While 50 is the maximum shareholder limit, not all private limited companies can accommodate as many.  These shareholders may be individuals or corporations, as long as they contributed to the share capital of the private company.

According to the Singapore Companies Act, an exempt private company limited to shares can have a maximum of 20 shareholders. ACRA regulates the type of shareholders as well The shares of an exempt private company limited to shares can only be acquired and held by individuals. This locks out corporations from direct and indirect EPC ownership in Singapore. 

How Does It Differ From a Non-Exempt Private Company?

An exempt private company and a non-exempt private company are both forms of private limited liability corporations in Singapore. But, while the former private limited company can only accommodate up to 20 shareholders, the latter has the privilege of expanding up to 50.

Additionally, the shares of a non-exempt private company in Singapore are open to both individuals and corporations. This gives even foreign corporations the freedom to incorporate, or take up non-exempt private companies in Singapore. 

But, what does this mean for limited exempt private companies in Singapore? 

There are benefits for a limited exempt private company that a non-exempt private corporation won’t have. For instance, an exempt private company is recognized as a separate legal entity, limiting the liability of the shareholders. There’s also no minimum capital requirement, and Singapore is open to foreign shareholders in exempt private companies. 

What Are the Benefits Of A Limited Exempt Private Company in Singapore?

• Limited Liability: ACRA recognizes each limited exempt private company as a distinct legal entity that exists and runs separately from its shareholders. What’s more, your liability is limited based on your share capital investment. 

• Unrestricted Share Number: Although Singapore restricts the number of shareholders between 1 and 20, it doesn’t limit the number of shares in your limited exempt private company. You can split it into as many shares as you want. 

• No Minimum Capital: Technically, there’s no minimum capital when it comes to setting up a limited exempt private company in Singapore. As long as you indicate a paid-up capital of at least S$1, you’ll be good to go. 

• Foreign and Domestic Shareholders: While corporations have been locked out of exempt private company ownership in Singapore, at least ACRA is generous enough to approve both foreign and domestic individuals. That said, the minimum number of shareholders required to incorporate a limited exempt private company in Singapore is 1.  

• Asset Ownership Rights: Since the Singapore Companies Act gives an exempt private company the legal rights of pretty much a natural person, you should be able to acquire, own and trade assets freely. This includes even real estate property and stock in other companies.

• Profit Operations: Unlike companies limited by guarantee, exempt private corporations have the power to make a profit in Singapore. You can conduct any legal business activity and raise funds for company use as well as personal benefit. 

• Tax Exemptions: This is where limited exempt private companies really start to outshine their non-exempt counterparts. While all types of limited liability corporations are lucky enough to qualify for various forms of tax exemptions in Singapore, exempt private companies are among the biggest beneficiaries. 

• Loan Extension: Another principal benefit that exempt private companies have over non-exempt private corporations is unrestricted loan extensions. Fundamentally, a limited exempt private company in Singapore can freely extend financial loans to its directors. 

Non-EPCs, on the other hand, can only do that after obtaining written approvals through general meetings. 

• Simplified Annual Returns Filing: ACRA is also considerate enough to simplify the compliance processes for EPCs. When it comes to filing annual returns, for example, the standard financial statements won’t be required. Instead, ACRA provides digital pre-filled forms to save you the trouble of repetitive manual filing.

• Financial Audit Exemption: The compliance exemption perks don’t end with annual returns filing.  A Singapore private limited company also gets to avoid much of the traditional audit requirements.

Your company is spared the trouble of conducting and submitting audit reports if it has 50 or fewer employees, assets worth S$10 million or less, plus an annual revenue of S$10 million or less. 

Having said that, let’s now go into the process of setting up a limited exempt private company in Singapore. What do you think you’ll need to get started? 

What Are The Requirements Of Setting Up a Limited Exempt Private Company In Singapore?

Now, for starters, ACRA expects you to prepare the following documentation if you intend to incorporate a limited exempt private company in Singapore: 

• Proof of the physical Singapore office address. 
• The company’s constitution. 
• A shareholders’ agreement. 
• The personal details of all its shareholders. 
• The personal details of all its directors. 
• Details of the company secretary. 
• Details of the company auditor.

Ultimately, ACRA will only approve the application if the company meets the following requirements. Each EPC should have:

• At least one shareholder, who can be either a foreign or local resident. 
• At least one resident director, who should either be a Singapore citizen, a permanent resident, a dependent pass (DP) holder, or an employment pass (EP) holder. 
• A detailed company constitution. 
• A valid Singapore physical address. 
• An approved business name. 
• A minimum share paid-up capital of S$1. 
• At least one company secretary.
• At least one company auditor- that’s if the business doesn’t fall within the audit exemption category. 

If you’ve got these requirements figured out, you can go ahead with the process of setting up a limited exempt private company in Singapore. Filing requirements and necessary documents can be done through a third-party firm, which assists business entities. This is especially helpful for foreign individuals looking to start up a company in Singapore.

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The Process of Setting Up A Limited Exempt Private Company In Singapore: Step-by-Step Guide

All things considered, EPC follows pretty much the same incorporation procedure as other limited liability companies in Singapore. You’ll submit the application via ACRA’s BizFile+ portal, wait for the subsequent approval email, and then embark on the post-incorporation compliance measures. 

Here’s a step-by-step tutorial to guide you through it all:

• Register a Business Name: Before anything, find yourself a unique and ideal business name that will sustain your company for ages. Then once you make up your mind, go straight to ACRA’s business portal, BizFile+.
  
  ‍Here, you’ll find the business name registration link in the Local Company section under the eServices list of options. And once you’re in, you’ll only need about 10 minutes or so to fill the forms, plus S$15 for the application fee. 

• Submit Your EPC Company Details: As soon as ACRA approves the business name, you can embark on the main part of the incorporation process. Still on BizFile, start from its Local Company section, which you’ll find under the eServices list of options. Clicking on Incorporation of a Local Company will then direct you to the main application window.
  
  The first tab is all about the primary company details, the second one deals with the corresponding share capital details, while the third collects the shareholder details. So, fill in the fields accordingly, and then submit the supporting company constitution, shareholder agreement, plus the personal details of the shareholders and directors.
  
  This whole procedure should take you about 20-30 minutes, but the final application fee depends on your citizenship status. The standard rate for Singapore residents is S$300 while foreigners are typically charged S$600. 

• Application Approval: Thankfully, the review process doesn’t usually take long. You can expect ACRA to analyze your application in 1 or 2 days, after which it’ll communicate its decision via email.
  
  If everything checks out, you’ll receive an incorporation approval email, accompanied by a Unique Entity Number (UEN). This will serve as your company’s principal identification number and certificate of incorporation. 

What To Do After Incorporating An Exempt Private Company In Singapore

Although incorporation is a great achievement, it’s only one step to setting up a fully-fledged limited exempt private company in Singapore. You’ll still have a couple of compliance requirements to meet if you intend to eventually get your business up and running. 

That said, here’s a breakdown of some of the most important things you might want to prioritize after EPC registration: 

• Apply for all the relevant Singapore business licenses. 
• Open a corporate bank account with one of the local or foreign banks based in Singapore. 
• Appoint at least one company auditor within 3 months of incorporation. 
• Appoint at least one company secretary within 6 months of incorporation. 
• File the company’s annual returns. 
• File the company’s taxes with IRAS.
• File financial statements according to the Singapore Financial Reporting Standards. 
• Maintain proper accounting records.
• Submit audited accounts.
• Hold an Annual General Meeting (AGM) with all the shareholders and directors within the first 6 months of the company’s financial year. 

Over To You

You can confidently try to set up an exempt private company in Singapore, or alternatively, you could follow ACRA’s recommendation, and let Singapore company incorporation service providers like WealthBridge do all the heavy lifting for you. 

Behind WealthBridge is an accredited network of professions that combines extensive industry knowledge with best-in-class tech solutions. This translates to huge cost savings and unparalleled efficiency when it comes to company incorporation, tax filing, accounting, payroll management, and company secretarial services.

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