• a22162

Setting Up a Private Limited Company

Updated: Jul 25

Incorporating a Private Limited Company




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.


Determining the Company Type

You must also select the type of company structure you want to use. Below shows the different types of companies:


Type of Private Company


Private Company Limited by Shares

- Has a maximum of 50 shareholders.


Exempt Private Company (EPC)

- Has a maximum of 20 shareholders.

- No corporation is a shareholder.


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.


Directors

A director is a person responsible for managing the affairs of the company. He must make decisions objectively and in the best interests of the company. Every company must have at least one resident director in Singapore. This person can be a Singapore Citizen, Singapore Permanent Resident, Dependent Pass holder or an EntrePass holder. Subject to laws and regulations on employment of foreign manpower, an Employment Pass holder may be accepted as a director.


These are the basic requirements of a company director. He must:


- be at least 18 years old;

- be of full legal capacity;

- 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.


Company Secretary


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.


Auditor


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.


Foreigners Who Wish to Incorporate a Local Company in Singapore


Foreigners who wish to establish a local company in Singapore must hire a director who meets the above-mentioned requirements regarding directors.


After establishing a local company, you can choose to live outside of Singapore. However, if you wish to come to Singapore to manage the company's business, you must obtain approval from the Ministry of Manpower (MOM).


Shareholders

There must be at least one shareholder (can be a corporate body or an individual). You need to provide personal identification details, contact information (phone number and email address) and the address of each shareholder's residence.

A private company has a maximum number of shareholders limited to 50. An Exempt Private Company (EPC) is a private company which has at most 20 shareholders and none of the shareholders is a corporation. 100% foreign ownership is allowed.


Paid-up Capital

You must also indicate the amount of issued capital, which is the total amount of shares paid by shareholders. The minimum issued capital must be at least $1. However, there is no minimum paid-up capital requirement. The minimum paid up share capital is typically $1 in any currency comprising at least one share.


The share capital may be altered or increased, subject to certain conditions. Companies are not required to have an authorized capital which is the maximum value of shares which a company may issue.


Companies can issue different types of shares under different conditions. Generally, companies issue two main types of shares:


- Ordinary shares: have voting rights and give shareholders a variable dividend rate (that is, dividends paid to shareholders from company profits)


- Preference shares: usually enjoy priority over ordinary shares in dividend distribution. The specific rights and benefits of preference shares are business decisions made by each company. They are included in the Constitution or resolutions passed during the meetings.


Companies with paid-up capital of $500,000 and above automatically become members of the Singapore Business Federation.


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.


Constitution


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, shareholders 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".


A copy of the constitution signed by the subscribers ("shareholders") should be kept in the company's registered office.


Any changes to the constitution will involve the passing of a special resolution. The company must also submit a copy of the special resolution and a copy of the revised constitution to ACRA ("Notice of Resolution" transaction) within 14 days.

Deciding on a Financial Year End


You must also decide the first financial year end (FYE) of the new company. FYE will determine when your company filings and taxes are due. Common choices for companies include March 31, June 30, September 30, or December 31.


You must also determine whether your accounting period is 12 months or more than 52 weeks.


The company must notify ACRA of any subsequent changes in FYE. Without the approval of the registrar, the company cannot change its FYE:

- if the FYE change will cause the financial year longer than 18 months; or

- if FYE has changed in the last 5 years (from the last changed FYE).

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.

Fee


The fee for registering a company is $315.


Licences and Approvals


Depending on the company's business activities, you may need to apply for licenses or approvals from other government agencies before starting your business. Please visit the GoBusiness Licensing website for more information.


If you would like to incorporate companies, please contact Bestar.

417 views0 comments

Recent Posts

See All