Share Capital Requirements & Shareholding Rules for Singapore Companies

It is relatively easy to incorporate your company in Singapore. Your company only needs at least one shareholder, one local director, a local registered address, and a minimum of S$1 issued share capital. Furthermore, your company may issue different types of shares with different requirements. To help you understand better, we have provided an overview of the regulations relating to share capital and shareholding in Singapore. 

What are common types of shares in Singapore?

Singapore’s company law allows companies to create different types of shares that offer different privileges and rights to shareholders. The most common types of shares issued by Singapore companies are:

Ordinary shares

To establish a company in Singapore, all companies must issue one ordinary share. Generally, ordinary shares carry voting rights of one vote per share at general meetings, the right to dividends, and the right to claim assets remaining when the company is dissolved.

Preference shares

These are shares that prioritize their holders in areas such as dividend payments or capital payments upon dissolution of the company. However, preference shareholders can have broader rights depending on further classification by the company that issued them.

Every company that issues preference shares must state the rights of its holders in the Constitution under S 75(1) CA, concerning the following.

  • Any rights towards repayment of capital
  • Any rights associated with participation in surplus assets or profits
  • Any voting rights
  • Regarding dividends, whether non-cumulative or cumulative

Non-voting shares

These shares carry no rights for voting or attending the annual general meetings conducted by the company. Non-voting shares are typically issued to (a) company employees (so a portion of their remuneration is paid out as dividends, as an incentive to employees) and (b) family members of the major shareholders.

Redeemable shares

 Redeemable shares allow companies to redeem shares if they wish to do so in the future. Less commonly, shareholders may also have the option to resell their shares to the company.

The option to redeem shares can occur on a specific date. Typically, the redemption price of this class of shares will depend on the provisions of the layout in the constitution. However, note that a company can only redeem these shares from its profits and proceeds from the issuance of new shares, which may have made it more difficult to redeem in the first place.

Deferred ordinary shares

 These are shares on which no dividend is paid to deferred shares until a minimum dividend has been paid to all other shareholders. The holders of these shares are generally the owners, the founders, venture capitalists, or private investment groups, who have a long-term stake in the company’s performance and growth.

Management shares

These are shares that carry extra voting rights to allow certain shareholders to retain control of the company. Usually, such shares are used to allow the company’s original founders to maintain control after additional shares have been issued to outside investors.

Alphabet shares

Any company can choose to create different classes of shares. For example, Class A, Class B, and Class C offer different rights and privileges to shareholders.

What are share capital requirements in Singapore?

Share capital refers to the money that shareholders have invested in a company in return for the shares issued by the company to them. Under Singapore’s company law, companies can issue shares without receiving full payment from shareholders. Thus, the company’s total share capital can be divided into two categories: 

Paid-up capital 

Paid-up capital refers to the money that shareholders have fully paid up for the issued shares. It can be freely used for the company’s business purposes unless not violated by the restrictions in the company’s constitution. For example, if the company becomes insolvent, the company’s paid-up capital will be used to repay creditors. 

For additional information, you may refer to:

A Quick Guide to Paid-Up Capital in Singapore

Unpaid capital

Unpaid share capital refers to a situation when none of the money due for the issued share allotment has been paid. In small companies, share capital is often unpaid and remains due to the company indefinitely.

Companies incorporated in Singapore need to indicate the total amount that their shareholders have paid for their shares. The minimum issued capital must be at least S$1. However, no minimum paid-up capital is required. In other words, it is possible to issue one share, to begin with. In addition, there is no price limit per share. For example, you can issue one share for S$1 or S$10.

Note:

Share capital is not restricted to the Singapore Dollar but can be represented by any major currency. 

What are shareholder requirements in Singapore?

According to Singapore’s company law, a private limited company must have a minimum of one shareholder and must not exceed a maximum of 50 shareholders. They can be both local and foreign individuals or corporations. In addition, Singapore allows 100% ownership of companies by foreign shareholders.

To become a shareholder, you must first buy shares of a company. By buying shares, you become the owner of the company as well. However, since a private limited company is a separate legal entity, you do not own the company’s assets and are not responsible for the company’s debts. 

Furthermore, as an owner and shareholder of a company, you are entitled to certain rights. Lastly, along with these rights, you are also subject to certain responsibilities. For further information, please refer to Shareholders’ roles, responsibilities, and rights in Singapore.

How does the share issuance work?

Your company may issue new shares at any time by passing an ordinary resolution of the shareholders and filing a return of allotment. However, it is not advisable to perform this task on your own. Therefore, you will need to engage a trusted corporate service agent in Singapore

We can assist you in filing a return of allotment with the Accounting and Corporate Regulatory Authority (ACRA). But, before we proceed with the filing process, we will require you to provide us with the following information:

  • The number of the shares in the allotment;
  • The amount (if any) paid or deemed to be paid on the allotment of each share;
  • The amount (if any) unpaid on each share;
  • The class of shares issued (if applicable);
  • The full name, identification, nationality, and address (for shareholders who are individuals);
  • The corporation name or UEN, and address (for shareholders that are corporations); and
  • The number and class of shares held by each of its members.

Aside from filing the return of allotment, we can also help your company with transferring shares. To carry out the share transfer process, we will need you to submit the following documents:

  • A notice of transfer;
  • A written board resolution;
  • A share certificate; 
  • A  stamp duty acknowledgment; and
  • A waiver of pre-emptive rights.

For detailed information about the transfer of shares in Singapore, please refer to:

Transfer of Shares for Singapore Private Limited Companies

 

Wrap up

It only takes a minimum of S$1 issued shared capital to register and run a company in Singapore. There is no cap or restriction for the maximum amount of share capital. Furthermore, your registered company may issue different types of shares with different rights and limitations to suit the needs of its shareholders and investors.

Feel free to contact us for further information or assistance relating to share capital and shareholding in Singapore.

 

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