Private Limited Company Incorporation Package

Private Limited Company Setup

If you have a business that has substantial growth plans and development, then a Private Limited Company is a highly suitable business entity. Your company will be locally incorporated and the name of the venture includes the suffix “Private Limited/Pte Ltd”. While the number of shareholders cannot exceed 50, full foreign ownership is allowed. However, the company must have a Singapore Citizen or Employment Pass holder with a residential address as a local director.

Tax and Singapore Private Limited Company

Singapore Private Limited Company is considered a tax resident, and therefore eligible for tax exemptions. New start-up companies pay Zero Tax on the first S$100,000 of chargeable income for the first three consecutive years. A further 50 per cent exemption is given on the next S$200,000 of the chargeable income.

A company can be limited by shares through the following entity variations:

• Private Limited Company
• Public Limited Company
• Public Company Limited by Guarantee

Exempt and Non-Exempt Private Companies

Private Limited companies are classified into two categories on the basis of their annual auditing and income filing requirements:

1. Exempt companies
2. Non-Exempt companies

 

Exempt Private Company

The Private Limited Companies are released from statutory annual edit requirements under the following conditions:

• The company should not have more than 20 shareholders
• The shares of the company is not held by any corporate entity directly or indirectly
• The annual turnover of the company does not exceed SGD 5 million

 

The compliance cost for Exempt Company is less because the exempt companies have no statutory audit requirements.

Exempt companies are also not required to file their financial statement with Accounting and Corporate Regulatory Authority (ACRA) but they’ll still be required to maintain proper accounting records, prepare and present financial statements in compliance with ACRA and the Singapore Financial Reporting Standards (FRS).

Companies are required to submit an Exempt Company Certificate declaring their solvency status.

If the company is insolvent, it will have to file their financial statement with ACRA in XBRL format.

Non-Exempt Private Company

Private limited companies that do not qualify as an exempt company are known as Non-Exempt companies. These companies are required to submit audited financial statements with ACRA annually in XBRL format.

Public Limited Company

A Public Limited Company is a locally incorporated company of a medium to large scale that is well-established, recognised, and allows more than 50 Shareholders. These companies are often listed in the stock exchange and raises capital by issuing shares and debentures. A Public Company must register a prospectus with the Monetary Authority of Singapore before making any public offer of shares and debentures.

Features

• Additional capital is raised by issuing shares and debentures which ensures liquidity
• The image of the company becomes reputable due to the higher value of shares
• The strong status of the company enhances the confidence of the trading partners
• Acquisitions can be made easy as shareholders can sell or buy shares easily
• Company directors are accountable to the much larger number of external Shareholders
• Financial markets determine the value of your company through the trading of the company’s shares
• Company must abide by the rules of the stock exchange on which it is listed
• Mandatory public disclosure of financial affairs

Public Company Limited by Guarantee

A Public Company Limited by Guarantee is a locally incorporated company that exercises non-profit activities that have some basis of national or public interest such as a charity or an art organisation. It is mandatory that the company name includes the term ‘Limited’. However, the relevant authority may, on appeal, relieve a company from its obligation to include the term.

These companies are registered with ACRA and are governed by the Singapore Companies Act. These companies generally appoint members instead of Shareholders as they do not have any share capital. A member’s liability is limited to his guarantee, which is an undertaking to contribute a specific sum towards the company’s liabilities in the event of its closure.

Features

• The company is an independent legal entity
• Member’s liability is limited to his respective value of guarantee
• Complex compliance requirements
• Public disclosure of obligations
• High compliance costs
• Not suitable for small non-profit organisations