Having a company set up in Singapore, you can plan to expand your business internationally. You already know that the economy of Singapore represents an attractive market, and you also know that the country's geographical location makes it a perfect logistics hub in the Southeast Asia region. Furthermore, you have confidence in the legal and regulatory system of the country with its proven record.
Now that you have added up all these factors, and it has helped you to decide to register a company, you wonder what would be the best business type to establish in Singapore.
In this article, we will discuss what a private limited company is, the requirements for the opening process, as well as the steps for registration of this type of business in Singapore.
What Is a Private Limited Company?
According to ACRA (Accounting and Corporate Regulatory Authority), a company is a locally incorporated entity in Singapore.
A company can be of a Private or a Public nature. A Private company is limited by a maximum of 50 shareholders, while a Public Company Limited can have more than the allowed amount of shareholders for a Private company and can raise capital from the public.
For this article, we will only focus on Private Limited Companies. Different from a Public company, the transfer of shares from a Private Limited Company is more restricted, and it is specified in the Memorandum and Articles of Association, which are the legal status and internal guidelines of a company.
A key element of this business structure is its legal identity, which is separate from its owners. This means that the liability of the Private Limited Company allows the shareholders, being either a corporate entity, individuals, or a combination of both, to limit their exposure and privacy by being a separate legal entity.
Types of Private Limited Companies
Within the category of Private Limited Companies, it can be divided into other types that have some key differences but operate virtually the same. These are the following:
- Exempt Private Company: this type of private company has a lower threshold for the maximum number of shareholders, and the shares can be only owned by individuals, either locals or foreigners. As the name implies, it is exempt from certain duties, such as attaching the financial statements every year on its Annual Return and extending loans to its directors.
- Subsidiary Company: for the subsidiary, the main characteristic is that the ownership of the company is held in majority by a foreign company, which is normally referred to as the parent company. By having a corporate shareholder, it cannot fall under the previous classification. The limit of shareholders remains at 50 maximum, and there is no restriction for foreigners to own the company. It can be wholly or partially foreign-owned.
Now that we have learned the specific characteristics of these kinds of Singapore-incorporated companies, we can move into the considerations before starting the company incorporation procedure.
What Are the Requirements Before Registering for a Private Limited Company?
The Private Limited Company offers minimum requirements for individuals or international businesses for the set-up process. Nevertheless, some elements are needed in the internal structure of the company to comply with the local regulations of Singapore. Here, we will list the requirements:
- Shareholders: a private company must have at least one shareholder.
- Directors: at least one director must be nominated to occupy this position in a private company. Additionally, one of the directors must be a Singapore resident. Foreign nationals can be nominated as directors, but if this person intends to be the only director, he or she must be eligible to legally reside in Singapore through the corresponding visa.
- Company Secretary: this position needs to be filled by a natural person who is a resident of Singapore. Moreover, they need to hold the right credentials and qualifications of a Company Secretary since they are required to maintain compliance in the company.
- Minimum paid-up capital: the required minimum share capital to start a Private Limited company in Singapore starts with 1 Singapore Dollar.
- Fiscal year-end for your business: this will encompass a full period of your business and impact the date for you to declare taxes. It is normally formed in 12 months.
- Registered office address: a company must have a physical office address in Singapore. For example, the ACRA (Accounting and Corporate Regulatory Authority) and the IRAS (Inland Revenue Authority) will use this address to notify your company. Also, the address to be used as the requirement is to be open for 3 hours every working day. Nevertheless, this is why people use their Company or Corporate Secretary as their registered address. Although you might not be allowed to conduct your business from their premises, if it is mainly conducted outside Singapore, you can save on operations costs through this alternative.
Before we dive into the steps to register Private Limited Companies, we must mention the legislation that rules business entities in Singapore, the Companies Act.
Singapore Companies Act - why should you know about it?
One of the key pieces of legislation that led to the thriving business environment in Singapore is the Companies Act of 1967. This law contains a set of rules that companies and business entities must follow. A company’s role, such as the basic structure and the number of directors and owners, is discussed in this law.
The government department in charge of the process of registration is the Accounting and Corporate Regulatory Authority (ACRA).
What are the steps to register a Private Limited Company?
Here, our team has prepared a list of steps to take in a general way:
- Verification of the chosen company name: verifying that another company does not already use your business name is important. Also, your proposed company name must not include offensive words that can mislead the public. Additionally, a business must define its activities to register with the authorities.
- Roles and ownership: Defining the way your company is going to be owned is something that you need to think about very carefully. Additionally, naming directors, shareholders, and company secretaries and appointing an auditor is also a requirement for most companies unless there is an exception for that type of business.
- Submit your application: an online application needs to be submitted to the online government platform Bizfile+, including all the information from the previous steps.
Other considerations
- Time frame: the registration process takes around one business day. Nevertheless, in some instances, it can take from 12 days to 2 months if another government authority needs to be involved in the process.
- Annual compliance: it is important to identify which are the requirements that the Singapore authorities will demand from your company. For example, the Annual Return must be submitted without delay every year with the most updated particulars of your company. Failing to do so can unchain penalties for your company.
- Company transactions: starting a business without a business account is like driving a car with only 3 wheels. You can drive it, but you will have difficulties, and in the long term, the car can break down. This is why you should prepare and seek your options. In Singapore, you have many options for this issue, either having a corporate bank account or a digital business account. Do you wish to know more? Reach out to the Statrys team to learn more about how to access a business account for your company in Singapore at sales@statrys.com
Submitting your application as a foreigner
In the most realistic scenario, a foreigner cannot register an entity by himself or herself if they are not a permanent resident of this country. Why is this? Because of the system that requires a Singaporean ID number to be used, the famous Singpass. For private limited company registration, an accounting firm, a law firm, or a company secretary can provide the service for registration.
Conclusion
As we have seen in this article, there are a few elements that make the Private Limited Company a favorite choice for starting a business in Singapore, with a few variants of this business entity. It is important to consider that even though there are few requirements, foreigners who want to establish a company in Singapore need to do it through an agent. In this scenario, it is better to approach the experts who can guide you through the whole Singapore company registration process.
