Here we look at the most frequently asked questions for opening a private limited company in Singapore.
What are the most popular business forms in Singapore?
There are several possible business structures for individuals or international enterprises who wish to do business in Singapore. We consider each in turn:
- Sole proprietorship/sole trader. This is the default business form in Singapore. It is usually only available to Singapore residents. As there is no separation between the business and the individual, they are taxed at personal income tax rates, and the individual has full legal and tax liability.
- Partnership. In a general partnership, individuals join together to run a business in Singapore. There must be at least two partners, and all have joint and several liability for the conduct of the business.
- Limited partnership. In a limited partnership, there is at least one ‘general partner’ with full liability, but there can also be one or more partners with limited liability.
- Limited liability partnership. In a limited liability partnership (LLP), all partners have limited liability.
- Private limited company. In a private limited company, the business has limited liability and is taxed according to corporate income tax rates. This is the most commonly chosen business form for international businesses setting up in Singapore. There are several different types of private companies in Singapore, which we discuss further below.
What are the different types of private companies in Singapore?
The types of private companies in Singapore are:
- An exempt private company. This is the most popular corporate form in Singapore. It allows a maximum of 20 shareholders and does not allow for corporate shareholders.
- Private company limited by shares. A private company that permits up to 50 shareholders, and allows for corporate shareholders.
- Private company limited by guarantee. Has no share capital or shareholders, and is usually set up for charitable purposes.
Directors and Company Secretary
Do directors of Singapore companies need to be Singapore residents?
All directors of Singapore private limited companies must meet certain criteria. They must be:
- A natural person
- At least 18 years of age, and
- Not have been disqualified from directorship (for example, they cannot be bankrupt or have convictions for dishonesty).
In addition, every private limited company must have one director who is a local resident of Singapore and is also a citizen, a permanent resident, or a holder of an EntrePass.
Can foreign companies be directors of a Singapore company?
No. All directors of Singapore companies must be natural persons, rather than corporations.
Note, however, that foreign companies can appoint an individual to act for them as their nominee (‘nominee director’). A nominee director is a full legal director and has the same powers and responsibilities under Singapore company law as any other director.
When a nominee director is appointed, there will be a contract between the company and the nominee director specifying their obligations to the company.
Do Singapore companies need a company secretary?
Yes. All Singapore companies must appoint a company secretary within six months of incorporation. The company secretary is responsible for dealing with the Singapore regulatory authorities, filing necessary documentation, and advising directors on their compliance and legal responsibilities.
It is common for a professional company secretary firm to be used for this in Singapore.
Shareholders
How many shareholders must a Singapore company have?
A Singapore-exempt private limited company must have at least one shareholder and a maximum of 20. For a private company limited by shares, up to 50 shareholders are permitted.
This shareholder must be a holder of at least one ordinary share with full voting rights.
Can I start a Singapore company with more than 50 shareholders?
Yes. But it must be a public company, not a private company limited by shares.
What is the minimum share capital in Singapore?
The minimum share capital in a private limited company in Singapore is S$ 1 dollar in value, but it can be paid in any currency.
Are non-voting shares permitted in Singapore?
Yes, but at least one share must be a share with full voting rights.
Can foreign individuals be shareholders in the Singapore company?
Yes. All shareholders in a Singapore company can be foreigners.
Can foreign companies be shareholders in a Singapore company?
Yes, foreign companies, including corporate trustees of foreign trusts, can be the shareholders of Singapore private companies limited by shares (but not exempt private companies).
Note, however, that on the application for Singapore incorporation, full details of beneficial ownership must be provided to the Accounting and Corporate Regulatory Authority.
Company Name
Do I need approval from the Singapore regulatory authorities for my company name?
Yes. Before applying for incorporation those wishing to start a Singapore company should apply to the online portal for approval of the name of their company. The company name must not be a name in use by another Singapore company.
Does approval of my Singapore company name provide me with a trademark in that name?
No. Approval of a name gives the holder no intellectual property rights in that name under Singapore law.
Taxes
Which companies in Singapore have to pay Singapore corporate income tax?
All companies incorporated in Singapore must pay corporate income tax in Singapore. The current corporate income tax rate is 17 percent.
In addition, any international enterprise that has a ‘permanent establishment’ in Singapore is required to pay all corporate income taxes there. A permanent establishment will generally exist where an international business has a fixed place of business in Singapore where it carries out its core business.
Does my company have to pay GST in Singapore?
If your Singapore company is projected to have a turnover of S$ 1,000,000 then it must register for GST. GST is an indirect tax on goods and services in Singapore, similar to ‘Value-Added Tax’ or ‘VAT’ in Europe. The current GST rate is 7 percent.
Incorporation and Registration
What do I need to do to incorporate my company in Singapore?
Once approval for the company name has been received, the company must:
- Prepare a company constitution, setting out the fundamental rules of the company
- Prepare ‘consent to act’ forms for directors, and get each director to sign them
- Prepare a ‘consent to act' form for the company secretary, and get the company secretary to sign it
- Collect identification details for directors, shareholders, and beneficial owners. Any corporate shareholders must also provide evidence of their registration overseas, as well as detailed information about their ownership structure.
Once formed, the company is in a position to open a bank or business account in the name of the new private company and begin trading.
Besides company registration, do I need any other approvals from government authorities in Singapore?
It depends on the kind of business that the company will be conducting. Some companies require special licenses or registrations: For example, all real estate companies need to have individuals with a real estate agent license.
Ongoing Compliance
Do I need an accountant in Singapore?
Unless exempt, a Singapore-registered private company must keep full financial records that are audited annually by an external firm.
There is an exemption for exempt private companies in Singapore that meet two out of three of the following criteria:
- total annual revenue of a maximum of S$10 million
- total assets of a maximum of S$10 million
- a total number of employees of 50 or fewer.
How often am I required to file my corporate income taxes?
Tax returns must be submitted annually.
Note, companies that are required to be registered for GST will also have to submit GST returns at intervals as requested by the Singapore authorities.
Do I have to submit annual compliance returns?
Yes. Every company registered in Singapore must submit an annual return to ensure that the authorities and stakeholders have up-to-date information. This is often prepared and submitted by the company secretary.
It contains identification information for directors and shareholders, information about shares, and attached financial statements: Where the company is exempt from preparing audited financial statements, it must submit a declaration to this effect.
