If you have a business that has substantial growth plans and development, then a Private Limited Company is highly suitable business entity for your start-up company. Your company will be locally incorporated and the name of the venture includes the suffix “Private Limited”. 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 as a local director.
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 percent 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 Companies are classified into two categories – Exempt or Non-Exempt – based on their annual auditing and income filing requirements. More than 75% of companies in Singapore are exempt private companies.
Exempt Private Company
Since 2003, small Private Limited Companies are released from statutory annual audit requirements under the following conditions:
Because exempt companies have no statutory audit requirement, the compliance cost for Exempt Company is less. 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 (a company is solvent if they’re able to pay their debts and liabilities promptly). 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.
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.
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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 At-a-Glance
