When planning foreign investment, every investor wants to find a country that enjoys relative stability, a robust economy and setting up a company, and doing business is easy. Singapore ranks highly in all these considerations and many others.
For many years, the Asian country has continued ranking top in the World Bank Ease of Doing Business Index. There are multiple other reasons to start a business in the country. This is a leading financial hub in Asia with a lot of untapped potential across all sectors.
The attractive corporate tax system, ease of incorporation and operation, developed infrastructure and lack of stringent foreign company rules make this an ideal investment destination.
If you plan to register a private limited company in the country, this post explores all rules and steps to undertake.
The Private Limited Company Business Structure
A private limited company is one of the most popular business structures in the country. This is a locally incorporated company with a maximum of 50 shareholders.
The company is a separate legal entity from its shareholders and is thus recognized as a taxable entity. Shareholders of a Singapore private limited company are thus not liable for its debts and losses if the amounts exceed their share capital.
The memorandum or articles of association restrict members’ right to transfer their shares in the company. If a shareholder wishes to transfer shares, the company’s board of directors has to approve this. Existing shareholders also have the right to buy these shares.
Some advantages of a Private Limited Company in Singapore include:
- Competitive tax benefits (corporate tax benefits)
- Perpetual succession: Changes in shareholders or the holding pattern can’t disrupt business operations).
- Easy entry (simple company registration process)
- Separate legal entity: Shareholders’ personal assets are protected).
- Through registration, the company can obtain commercial loans from banks/ financial institutions.
- Special tax exemptions and incentives
- Profits taxed at corporate tax rates.
- Dividends are tax-free in the hands of shareholders
Some drawbacks of a Singapore private limited company include:
- Stringent compliance rules. Violation of rules and regulations will result in penalties.
- High incorporation and administrative costs
- Complicated termination process
- The company must maintain on-going compliance with ACRA/IRAS
- The company must have at least one director and one company secretary to file Annual Returns and Directors’ Reports.
Working with experienced VoPlus Singapore company registration services helps you understand all these issues before you commence the business registration process.
Registration of a Private Limited Company in Singapore
Upon registration under the Companies Act, a Singapore Company can start operations. The registration process is done through the Accounting and Corporate Regulatory Authority (ACRA).
For a smooth private limited company registration in Singapore, it’s advisable to understand all the requirements and processes to follow. Here’s a breakdown of everything you need to know.
Minimum Setup Requirements
To register a private limited company, you need at least:
- Shareholder (individual or corporate entity). A minimum of one and a maximum of 50 shareholders.
- A physical address in Singapore not a PO Box.
- A resident director
- A company secretary
- Initial paid-up share capital of at least S$1
For a foreigner registering a local company, they employ a local director (Singaporean, Permanent Resident, or EntrePass holder). It’s also easier to work with a company registration service to complete the process on your behalf.
Here are some of the documents you need to initiate the registration process for a private limited company in the country.
- Company name: You have to apply for reservation of the company name through ACRA’s website (BizFile+). This application can be rejected is the company name is identical to an existing company name, undesirable or it’s a trademark.
- Company description: What your business will be doing.
- Singapore registered address of the company
- Shareholders particulars
- Directors particulars
- Company secretary particulars
- A copy of their passport and residential address proof (overseas) for foreign entrepreneurs
- A copy of their Singapore identity card for local entrepreneurs
- Memorandum & Articles of Associations in case of a foreign company.
Submit the Private Limited Company Application
Once you have collected all the documents you need, log in to BizFile+ to submit your application. The transaction number of your approved company name comes handy at this stage of the company registration.
If the process is successful, you receive an email from ACRA confirming the full incorporation. In the email is a company registration number which services as the official certificate of incorporation in Singapore. For a hard copy of the same, make an online request and pay a nominal fee for the service.
Using Business Registration Services in Singapore
using business registration services in Singapore is easier if you want to set up a private limited company. These service providers offer tailored packages to suit the needs of different investors.
The company registration package can even include free corporate secretary and registered office for a state period, document preparation, name reservation and many other services.
What do you need to know before Incorporation?
Before you can start with the company, there are many things that you need to know. Until and unless you are prepared with the following things, you will not be able to start with the private limited companies.
How Private Companies Come Into Existence?
Every private company in Singapore comes into existence after signing the Companies act. The requirement of the contract is very simple. You can start a private limited company with just one registered member. This member can symbolize an individual for an organization. These members are considered to be the shareholders of the company.
The Singapore act governs all the private limited companies in Singapore. And they are bound by the jurisdiction to follow the rules and regulations under the ACRA and Inland Revenue Authority Of Singapore.
Singapore Company Name
You need to be aware of the fact that the company’s name needs to be approved by the ACRA before it can incorporate itself. Here are some of the key points that need to be considered while choosing a company anime.
- Ensure that the company’s name is not identical to the other private limited companies.
- It needs to be relevant to your profession.
- The name and trademark should have a resemblance.
When you enter the private limited industry, you need at least one shareholder of the company. Having a shareholder means that a particular person has actually invested in the company. A shareholder can be anyone. 100% of the local and foreign shareholding is also acceptable. The Singapore company allows a private limited company to have a minimum of one persona and a maximum of 50 shareholders of the company.
It is very, very important that you have a director of Singapore origin. That means the directors need to be permanent citizens of Singapore and have permanent Employments pass. Other than this, there are no limitations on the local and foreign directors. While hiring a director ensures that the directors are at least 18 years of age and have no past criminal case or bankrupt history.
Information related to the Directors is highlighted on the public records, so be very cautious while choosing the right man for the job. A director can also be a shareholder in the company and vice versa.
Here are some of the traits that might disqualify a person from becoming a Director.
- Undischarged Bankrupt.
- A person who is disqualified by the court.
- A person who had past criminal or violence records.
Before you can incorporate your company into the industry, you need to have a competent secretary. You need to have records of having the right secretary to get permission from the Singapore company act. One of the most appealing traits of the secretary is that they need to be a permanent Singapore citizen. However, there is a period that allows you to have a secretary. You get six months, after the Incorporation of the company, to hire a competent secretary.
As a company secretary, you will become an officer of the company sharing sensitive data with the director of the company. Hence, it is very important to hire the best person for this job. The key job of the secretary is to monitor and efficiently administer the workflow of the company.
The company’s governance is done with the help of the company’s interrelationship and its shareholders by governing the confidential data and the company’s provisional act. Note that as of 2016, the Memorandum and the article of the association will be merged to form one single legal document called “Constitution.” All the other companies existing prior to the date will not be required to make this change and carry on with currency M&A.
Singapore is the ideal business destination. The favourable tax system, stable economy, availability of labour and ease of doing business all make this the best place to incorporate your business. With these tips, you can now commence the process of registering your private limited company.