Companies looking to do business in Singapore must register with ACRA and adhere to the Companies Act. With multiple options available, a Private Limited Company is considered one of the best as it offers maximum flexibility for entrepreneurs seeking success in this dynamic nation.
At Atriox, we provide the essential guidance and support to help you establish your Singapore private limited company quickly. Our comprehensive incorporation process allows entrepreneurs of all sizes to jumpstart their ventures. Speak to Atriox's experienced consultants today to get help.
What is a Private Limited Company?
A Singapore private limited company is more than just a business; it's also considered its own legal entity. Corporates and individuals alike can gain ownership of a limited liability company through equity shares. This type of entity provides its shareholders with the security of limited liability and is held by no more than 50 individuals - as shares are not available for sale on public markets.
Shareholders' financial liability for the company extends only to their capital investment. This spares them from any debt or losses incurred by this separate taxable entity. A private limited company typically has the suffix “Private Limited“, “Pte Ltd” or “Ltd” as part of the company name.
Why Do Entrepreneurs Prefer Setting Up a Private Limited Company in Singapore?
Setting up a private limited company in Singapore has its perks, and the advantages are:
1. Limited Liabilities Reduce Your Risk Exposure
Shareholders and directors of a private limited company benefit from the peace of mind that comes with knowing their personal assets are separate and protected. This is because a private limited company is an independent legal entity. Therefore, the liability for owners and shareholders is only restricted to the share capital subscribed or held by them - either paid in full, partly unpaid or yet to be paid for.
On the other hand, without such protection provided by this business structure, sole proprietorships or partnerships can expose owners' personal properties & assets should any debt arise over the course of operation due lack of explicitly stated restrictions on individual liabilities.
2. Your Company is a Separate Legal Entity
For Singapore business owners, a private limited company operates as an independent legal entity, apart from those of its directors and shareholders. This unique structure allows the firm to acquire assets with greater ease, makes contract negotiations more seamless, and opens up borrowing possibilities for additional capital investments - not to mention afford protection should any potential disputes arise in court proceedings. This legal identity remains intact until formally dissolved by shareholders - contracts and agreements remain valid regardless of changes to the ownership structure.
The long-term stability of a private limited company is ensured, with its legal identity remaining unchanged even if owners/shareholders pass away or become incapacitated. This means it can honour all contracts that are entered into without disruption.
3. Newly set up private limited companies are entitled to tax incentives and exemptions.
Newly registered private limited companies are eligible for three years of full exemptions under this taxation regime - giving them the perfect headstart as they embark on their business journey!
4. Tax-free Dividends
The profits are taxed at corporate tax rates. However, the dividends are tax-free in the hands of shareholders.
5. Low start-up Capital
Minimum initial paid up share capital of S$1
6. Quick Company Registration
Private limited company registration can be done within an hour, subject to ACRA approval, upon receipt of all duly signed documents.
7. Private Limited Companies can Easily Raise Capital
The private limited company structure in Singapore offers owners and shareholders distinct advantages when raising capital for business operations. Not only can new loans be secured from banks, but the ability to issue new shares encourages additional investment.
These options are far more attractive than those available with a sole proprietor or partnership, where personal assets must often fund operations – at higher interest rates if a debt is necessary. The ease with which equities may be transferred makes this an incredibly beneficial option compared to alternative structures.
8. Credible Image
Private limited companies convey a more professional commitment and vision when compared to other entities, making them better placed to secure loans from financial institutions.
This credible standing in the business community also attracts potential investors, providing growth opportunities.
Further, businesses structured as private limited create an air of trustworthiness among clients, bankers, suppliers and other professionals in its field.
9. Private Limited Companies Can Easily Transfer Ownership
Transferring ownership of a private limited company, or appointing new shareholders can be made swiftly without disrupting its operations.
Shareholders may choose to sell their shares and relinquish control or issue additional shares to secure additional investments. By selling or issuing shares, existing owners may divide their holdings as they see fit while also facilitating the appointment of new investors to help propel growth and success for a business.
10. Perpetual Succession
The company is perpetual, which means business operations are undisturbed by shareholder changes. If one desires to part ways with the organization for any reason, their shares can be sold to new or existing investors without jeopardizing operations.
In fact, this could open up opportunities and attract other potential investors due to the availability of fresh stocks!
Can Foreign Individuals or Companies Set up a Private Limited Company in Singapore?
Foreign individuals or companies are allowed to incorporate a company in Singapore even though they may choose to operate remotely from overseas without relocating to Singapore. At least one Director who is ordinarily resident in Singapore needs to be appointed.
Atriox Management is well geared to support your business by providing a full suite of services so that your newly set up Singapore company can be fully compliant with Singapore’s legal requirements, including:
Provision of Company Secretary
Provision of Registered Address
Provision of Nominee Director
Employment Pass related service
Private Limited Company Registration for Singapore Residents/Companies
Singapore residents or companies may incorporate a Singapore private limited company to take advantage of its limited liability protection and corporate tax benefits during the first 3 years of assessment.
Atriox Management provides a full suite of services to ensure that your company remain fully compliant with local legal requirements after the company registration in Singapore.
How to Start a Singapore Private Limited Company?
1. Choose a business structure
There are a few types of business structures to choose from:
Each business structure is different and will affect your brand, tax, personal liabilities and so on. Hence, it is important to choose the right business structure based on your business needs and future goals. In most cases, businesses will choose "private limited" as the business structure due to its flexibility and benefits.
2. Choose a unique business name
Choosing a unique name for your business is an important step in building a reputable brand. Be sure to select one that complies with Singapore law, avoiding any deceptive or undesirable words as well as those similar to existing corporate names and trademarks. Any name already in use will not be accepted.
3. Decide on business activities
Decide on the type of business activities that you plan to engage in. Refer to the Standard Industrial Classification Code 2010 to get a list of all business activities in Singapore.
4. Provide details of shareholding and share structure
Starting a Singapore Private Limited Company involves the issuance of one or more shares to its initial members. From there, owners have the ability to increase capitalisation through additional share offerings. Each member's stake can be determined through their portion of the total issued shares multiplied by each respective share's value.
5. Prepare shareholder's agreement
If you are investing your time and effort into a business venture, it is essential to establish a shareholders agreement. This document outlines your responsibilities as an owner while providing clarity on the roles of other parties involved in order to help avoid future disputes. By crafting such an agreement which explicitly states the rights and obligations of everyone invested, you can ensure that all interests remain secure so that focus can be placed solely on success!
6. Provide details of company shareholders
Forming a private limited company requires the engagement of at least one individual or corporate stakeholder, who can be landed with both director and shareholder roles. The Companies Act provides for up to 50 shareholders in such entities.
7. Provide details of company directors
For a company to be legally incorporated in Singapore, they must provide assurance that at least one of the directors is an established resident. This could include being a citizen or permanent resident, as well as holders of special passes such as Employment Pass/Entrepreneur Pass and Dependant's pass with residential address details within Singapore.
8. Provide a local registered address
When incorporating in Singapore, establishing a registered local physical address is essential – an avenue for all your official correspondences. While P.O Boxes are off the table, some types of businesses can opt to use residential addresses as their registered address instead!
9. Appoint a locally qualified company secretary
Singapore Private Limited companies must ensure they have a company secretary within 6 months of incorporation. Check out why you should outsource a company secretary and its benefits.
10. Appoint an auditor (unless exempted)
Singapore-incorporated company must appoint an auditor unless the company is qualified as "small company", which must fulfil at least 2 of 3 following criteria for the immediate past two consecutive financial years:
Total revenue not exceeding S$10 million;
Total assets not exceeding S$10 million;
Number of full-time employees not exceeding 50
Check out more details about Preparation of Unaudited Financial Statement in Singapore.
11. Preparation of Memorandum and Articles of Association (MAA)
The memorandum outlines the activities in which your business may partake, while the Articles of Association provide guidance on how internal affairs should be managed according to Singapore Company Registrar standards.
12. Certificate of Incorporation
Filing for incorporation with ACRA (Singapore’s Accounting and Corporate Regulatory Authority) and getting their approval is the first step to getting your business to become legally recognized by the government.
Once approval is granted, confirmation will arrive via email containing your registration number as well as an electronic version of your official incorporation certificate.
A hard copy of the certificate of incorporation can be purchased if required.
13. Company Business Profile
Once a Singapore business is incorporated, it will receive an official confirmation email from the Singapore Company Registrar containing its Unique Entity Number. A company can pay a small fee to obtain a company business profile, which contains the company name, registration number, incorporation date, business activities, initial paid-up capital, registered address, and details of the shareholders, directors, and the company secretary.
14. Prepare Share Certificate
This share certificate is the official document attesting to a shareholder's ownership. It outlines the number of shares allocated. It is the company secretary's responsibility to issue this certificate.
15. First Board Resolution Minutes:
The document will officially appoint the directors and shareholders.
16. Open a corporate bank account
Opening a corporate bank account is mandatory for Singapore-incorporated companies. A resolution from the company's board of directors is required to sanction the account opening and specify who should have signing privileges to the account.
Documents needed to setup a bank account:
The Resolution passed by the BOD sanctioning the opening
Copy of the certificate of incorporation
Copy of the business profile
Copy of the company's MAA
Copy of the passports or NRIC
Proof of residential address in Singapore
During The Process Of Preparing The Documents
All business owners and local representative to be present at our office
Bring along NRIC and/or passport of all members and local representatives
Signing of documents need to be witnessed in our office
Notary public is required to witness the signing of documents for members who are not present or are overseas
What is the cost of setting up a Private Limited Company in Singapore?
S$ 1 of a minimum paid up capital is required only.
Can I register and set up a Private Limited Company myself?
Yes. However, the private limited company registration process in Singapore can be very tedious and it takes a lot of time to prepare the right documents without any knowledge or prior experience.
It is recommended to appoint a company secretary to help you with the incorporation of the company.
Does a private limited company need an accountant?
Yes, all companies must have at least one accountant to maintain the company’s accounting record, prepare financial statements and so on.
How long does it take to incorporate a Private Limited Company (Pte Ltd) in Singapore?
The process can be done within an hour, subject to ACRA approval, upon receipt of all duly signed documents.
How many directors are required for a private limited company in Singapore?
At least 1 local or resident director.
Can a private limited company in Singapore be listed on Singapore's stock exchange?
A private limited company's shares are unavailable to the general public, and therefore cannot be traded on Singapore's stock exchange. However, a private limited company can be converted to a Public Company after adhering to procedures set out by the Singapore Stock Exchange (SGX).
What are the disadvantages of setting up a Private Limited Company?
Private Limited Companies Follow Tighter Compliance Rules
Private limited companies in Singapore must abide by stringent regulations as detailed within the Singapore Companies Act. Failing to comply could result in costly consequences, so it's important for business owners to stay up-to-date with all relevant legal requirements.
The liquidation Process Can Be Lengthy & Expensive
Closing a private limited company can be tedious, complicated and expensive. Depending on the situation, it can require complex and costly liquidation proceedings as well as legal and financial help to manage equity concerns between shareholders or boards of directors, navigate compliance regulations, and settle any tax matters with IRAS. Getting qualified professionals onboard during this process may be crucial for successful dissolution of your business entity.
Higher Operational Costs for Private Limited Company
Incorporating as a Pte Ltd company comes with greater administrative commitments than running a partnership - and failure to fulfil these can have significant financial consequences. All limited companies must file annual returns, Director's Reports, and other related documents or face hefty penalties from Accounting & Corporate Regulatory Authority (ACRA). This means that the operational costs of owning such an entity are higher compared to partnerships.