A Complete Guide to Singapore Private Limited Company

A Complete Guide to Singapore Private Limited Company

In Singapore, setting up a private limited company is the most popular option because of its flexibility. Choosing a private limited company registration allows you to implement a highly dynamic and scalable legal structure for your business purposes. 

This article guides forming a private limited company in Singapore and the characteristics, advantages, requirements, and more. 

What is a Private Limited Company (Pte Ltd)?

 A private limited company is limited by shares and is a separate legal entity from its shareholders. It is recognized as a taxable entity by itself. As a result, the Singapore private limited company shareholders are not liable for debts and losses that exceed their share capital.

 

Advantages of setting up a Pte Ltd in Singapore

  • Shareholders are not personally responsible for the debts and losses of the company.
  • Profits are taxed at the corporate tax rate—tax-free dividends in the hands of shareholders.
  • Newly established companies are entitled to tax exemptions and incentives.
  • As a separate legal entity, the company will still exist if one or more of its shareholders passes away.
  • Ownership of the company can be transferred, and additional shareholders can be appointed.
  • Shareholders’ personal assets are protected because they are not personally responsible for the debts and losses of the company.
  • Ownership can be transferred, and additional shareholders can be appointed, allowing more capital injections for expansion purposes.
  • Delivering professional commitment and vision, maximizing loans from banks and other financial institutions, and building a credible image among the business world.
  • Companies are perpetual, and business operations are not subject to changes in shareholder or ownership patterns.

 

Characteristics of a Pte Ltd

Here are some characteristics of a private limited (Pte Ltd) company:

Independent legal entity

A Pte Ltd company, under the operating laws, a Pte Ltd company is granted a different juridical personality from its owners and shareholders. In the eyes of the law, it is a person that is given certain rights and is subject to certain obligations.

Limited liability

The liability that shareholders may incur is limited to the extension of their investment in the company. This feature is what makes Pte Ltd companies so attractive. As long as the share ownership is paid in full, the shareholders are not obliged to the company’s creditors.

Maximum of 50 shareholders

In a Pte Ltd company, a minimum of one shareholder and a maximum of 50 shareholders are allowed. If the number of shareholders exceeds this number, setting up an unlisted public limited liability company could be a better alternative. Since 100% foreign ownership is allowed, all shareholders can be foreigners. Shareholders can either be natural persons, corporate entities, or a mixture of both.

Flexible

A Pte Ltd company is a flexible entrepreneurial medium that meets the various needs of entities wishing to do business in Singapore. Entrepreneurs can use it to establish a corporate presence in Singapore or hold assets for or on behalf of investors or manage long-term investments for real estate business and debt handling.

 

Essential Requirements to Set Up a Singapore Pte Ltd

The key requirements to register a Pte Ltd company in Singapore are as follows:

  • One company secretary
  • One resident director
  • A physical office address in Singapore
  • At least 1-50 shareholders – which may be an individual or a corporate entity
  • A minimum initial paid-up share capital of S$1

Registration requirements

The registration of Pte Ltd is done with the Accounting and Corporate Regulatory Authority (ACRA). Under normal circumstances, you can register your company in the shortest possible time. Among the requirements for the Pte Ltd registration are as follows:

Company Name

Choosing a company name cleverly is essential to brand building. Try to put your business activity in your company name for this purpose. It is also a good idea to check if the company name you choose matches your domain name. Make sure your company name is not identical to another existing company name.

Shareholders

You must have at least one corporate or individual shareholder. A director and a shareholder can be the same or different people. 100% local or foreign share ownership is allowed. The Singapore Companies Act permits a minimum of one and a maximum of 50 shareholders for a Singapore Pte Ltd company. Shareholder details will appear in public records.

Resident Directors

You need to appoint one director who is a resident in Singapore, which means a Singapore citizen, permanent resident of Singapore, or a person holding an Employment Pass/EntrePass or Dependent Pass with a residential address in Singapore.

There is no limit to the number of additional local or foreign directors a Singapore Pte Ltd company can appoint. Directors must be at least 18 years of age and must not go bankrupt or be convicted of past criminal malpractice. Director information will appear in public records. Directors can also be shareholders or vice versa.

Company Secretary

All private limited companies must appoint a company secretary within six months of incorporation. He or she must have prerequisite domain knowledge and be responsible for ensuring all regulatory compliance. You can transfer all these mandatory company secretary requirements to a Singapore-registered company incorporation specialist 

 

Appointment of Auditors

All Singapore-incorporated companies must appoint an auditor within three months from the date of incorporation unless the company is exempted from the audit requirements. To be exempted, the number of individual shareholders in the company must be less than 20 with no corporate shareholders, and its annual turnover must be less than S$5 million.

Share Capital/Paid-up Capital

The minimum paid-up capital for Singapore company registration is S$1 or its equivalent in any currency. The minimum issued capital is one part of the par value. “Bearer” shares or “no par value” shares are not allowed. Shares or paid-in capital can be increased at any time after the incorporation. 

The company’s issued share capital is the number of shares in the company multiplied by the nominal value of each share. Shares in private companies are usually transferred through private agreements between sellers and buyers because shares in private companies may not be legally offered to the general public.

Memorandum & Articles of Association (M&AA)

The memorandum section of this document details the activities your company will undertake. And the Articles of Association establish the rules for its internal management.

You can pay the necessary fees to ACRA and get standard M&AA documents for your use. If you want a customized M&AA to meet your specific needs, hire a competent company secretary to prepare it for you.

Registered Address

During the incorporation process in Singapore, you need to have a registered address where official correspondence will be sent. The registered address must be a physical address and cannot be P.O. Box. The use of residential addresses is permitted for certain types of businesses.

Company’s Business Profile

You can pay ACRA fees and get your company business profile. The document provides the company name, Unique Entity Number (UEN), date of establishment, intended business activities, paid-up capital, registered address in Singapore, and details of its stakeholders such as shareholders, directors, & company secretaries.

 

Additional Requirements

There are also other requirements a Singapore Pte Ltd has to meet after the company incorporation such as:

Opening a Corporate Bank Account

A company requires a separate bank account because it is a separate legal entity. The board of directors imposes sanctions on opening an account while determining the signatories to the account. 

During company formation, the choice of company bank account is critical. With the many banking options available, application procedures and banking requirements may differ from one private bank to another.

For detailed information about how to open a corporate bank account in Singapore, read this article:

A Complete Guide to Opening a Corporate Bank Account in Singapore

Company Seal

You will also need to submit a company seal. It adds to the company’s credibility when you use it on official documents and correspondence. Company documents that include a Unique Entity Number (UEN), company’s registered address, and official seal look very authentic.

AGMs and Annual Returns

 Holding annual general meetings (AGMs) on time is one of the compliance requirements for any Singapore company. The company must hold an AGM every calendar year except the initial year.

Management must prepare company accounts and financial statement tables for shareholder examination. They must submit the company’s annual returns to ACRA within one month after the AGM.

Tax Filing

Singapore Pte Ltd companies pay company income tax on their chargeable income. The deadline is November 30 each year. Documents that a company must submit are audited or unaudited reports and tax calculations. Afterward, they can disburse tax-free dividends to their shareholders.

Financial Year-End

Every company in Singapore must specify a financial year-end (FYE), which is not necessarily December 31. But it is advisable to save the company FYE within 365 days to enjoy the benefits of the Startup Tax Exemption scheme. Under this scheme, startups can claim 75% of the tax exemption on the first S$100,000 of accrued income for the first three years. Furthermore, S$200,000 gets 50% tax exemption.

As per the World Bank’s 2020 report, Singapore is the 2nd best place to do business. The government supports startups with several grant and tax exemption schemes. For most Singaporean companies, the effective tax rate is 8.5-9.5%.

If you want to know more about the list of requirements you need to fulfill after the company incorporation, you may refer to:

A Post-Incorporation Guide for Singapore Startups (Part 1)

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