Public Company Limited by Guarantee
Updated: Jul 9
What is Public Company Limited by Guarantee (CLG)?
CLG is an entity without share capital or shareholders. Instead, the members act as guarantors and agree to pay a fixed amount if the company fails.
Unlike companies that distribute profits to shareholders, CLG cannot distribute profits to its members in the form of dividends, bonuses or otherwise. Instead, they keep the profits in the company and reinvest them.
CLG is registered with the Accounting and Corporate Regulatory Authority of Singapore (ACRA) and is regulated by the Companies Act.
Is CLG a charity?
CLGs are usually set up by nonprofit organizations that need legal personality. However, CLGs can also obtain charitable status if they meet the criteria set by the Commissioner of Charities.
How does CLG pay its employees?
According to ACRA, the incomes can be used to provide:
- reasonable and appropriate remuneration for services to the company
- reimbursement of expenses due to company directors
- payment of reasonable and appropriate rent to directors or members of the company for premises leased to the company
Is CLG considered a public entity or a private entity?
Public. Companies require equity capital to be classified as private equity.
Why set up CLG?
- Protect members from personal liability for corporate debt
- Have a distinct legal entity from members
Public Company Limited by Guarantee is usually formed to carry out non-profit making activities such as promoting arts, etc.
Does CLG have to pay taxes?
CLG is responsible for paying corporate tax at the current corporate tax rate of 17%. CLGs with charitable status are exempted.
STARTING A NEW PUBLIC COMPANY LIMITED BY GUARANTEE (CLG)
Choosing a Company Name
Every business needs a name to distinguish itself and make it easy for others to find the business. The first step is to choose a suitable name.
Appointing Directors, Company Secretary and Other Key Personnel
You will need to provide company officers' personal identification details, contact information (phone number and email address) and residential address.
These are the basic requirements of a company director. He must:
- be at least 18 years old;
- be a Singapore citizen, Singapore permanent resident or EntrePass holder. Directors can also be Employment Pass (EP) holders. However, EP holders who wish to become a director of a local company must first obtain a Letter of Consent (LOC) from the Ministry of Manpower.
- not be disqualified from acting as a company director, such as an undischarged bankrupt.
Foreigners who wish to establish a CLG in Singapore must hire a director who meets the above-mentioned requirements regarding directors.
Every company must appoint a secretary within 6 months from the date of its incorporation. The company secretary must be a natural person residing locally in Singapore and he/she must not be the sole director of the company.
There must be at least one member (can be a corporate body or an individual). The sole member can be the sole guarantor.
You need to provide personal identification details, contact information (phone number and email address) and the address of each member's residence.
Members are only liable to pay the amount they have guaranteed in case the company is wound up. The amount of the guarantee will be set out in the Constitution of the CLG.
Every company must appoint an auditor within 3 months after the establishment of the company, unless the audit requirements are exempted in accordance with the relevant provisions of the Companies Act. Read more about the audit exemption concept for small companies here.
Registered Office Address
The registered office address refers to the place where all communications and notices to the company are sent, and the place where the company's register and records are kept.
You need to identify an address to carry out your business. P.O. Box address cannot be used as the business address.
The registered office must be operational and open to the public during normal office hours, but does not have to be where the company conducts activities (for example, the registered office address can be in Financial District, but the factory can be in Pioneer).
Under the Home Office Scheme, residents are allowed to use their residential address as the business address. This scheme applies to both HDB and private properties. Flat owners/occupiers can seek approval from HDB. Private residential property owners can seek approval from URA.
The constitution is a legal document in which it:
- Describe the key characteristics of the company.
- Contains its governance rules and regulations.
- Describes how to perform its operation.
- Explains the rights and responsibilities of directors, members and company secretary.
When applying for incorporation of a company, a copy of the company's constitution must be submitted.
If you do not want to create your own constitution, you can choose to adopt the "Model Constitution".
Time taken to register a company in Singapore
The time it takes to register a company in Singapore is usually within a day. It may take between 14 days to 2 months if the application needs to be referred to another agency for approval or review.
The fee for registering a company is $315.
If you would like to incorporate companies, please contact Bestar.