article/Private Limited Company

Incorporation

Private Limited Company

A company is a business entity registered under the Singapore Companies Act , Chapter 50. As an entity, the company has rights to own properties, has perpetual succession and can sue or be sued. Among the different types of business structure, a private limited company is one of the most popular in Singapore.

Characteristics

One of the key characteristics of a private limited company is that it has a separate legal entity from its owners, shareholders, and directors. This allows the company the legal capacity to enter into agreements and contracts, assume obligations, incur and pay debts, sue and be sued in its own right, and be held responsible for its actions and debts incurred by the business.

Compliance Requirements

Company Name A Company Name (in English) ending with Private Limited or its abbreviation, Pte Ltd. It cannot be identical or similar to another business name or existing trademark, or contain any offensive or vulgar words, and requires ACRA approval.
Registered Address A registered office address in Singapore cannot be a PO BOX. Under the Home Office Scheme, HDB and private property homeowners can conduct certain small-scale businesses, such as consulting and design firms, in their residency. Tenants need to obtain written consent from the owner before applying for the scheme (please visit URA's website for details). Application for the Home Office Scheme can be made either before or after the company registration with ACRA.
Paid-up Capital An initial paid-up capital of at least SGD1. Additional capital can be injected anytime after incorporation.
Fiscal Year A fiscal year period must be chosen, which can be any time of the year.
Director At least one Director who is an ordinarily resident in Singapore aged 18 years and above. If a foreigner wishes to act as the local director, the person can apply for a valid work pass.

Shareholders 1 to 50 shareholders. The shareholders can either be an individual or another corporate entity, and the shares are not made available to the general public. 100% local or foreign shareholding is allowed. A shareholder can also be the director of the company.
Secretary Must appoint one Company Secretary within six months of the date of its incorporation.
Auditor Unless the company is a small entity, it must appoint an auditor within 3 months from the date of its incorporation.
CPF The company needs to make mandatory Central Provident Fund (CPF) contributions to local resident employees who earn more than SGD50 per month.

For more information, please visit our Singapore Statutory Compliance Requirements page and Incorporation Details page.

Once the company is incorporated, annual filings to ACRA and IRAS is required. Please visit our Annual Filings page for more information.

Pros and Cons of a Private Limited Company

Shareholders are not liable for the company's debts beyond the amount of capital they have put into the company.
It is easy to transfer ownership through the selling of shares or issuing of new shares to new investors.
It has perpetual succession, which means there is no need to wind up the company in the event of deaths, or changes in shareholders or directors.
It is easier to obtain funding from investors or loans from financial institutions.
It has higher credibility and status in the minds of customers and partners.
It is entitled to attractive tax benefits and incentives. For example, the corporate tax rate for a private limited company with profits up to SGD 300,000 is below 9% and capped at 17% for profits above SGD 300,000. There is also no capital gains tax.

There are tighter rules and regulations compared to sole proprietorship and partnerships.
There are more detailed disclosure and administrative requirements, such as filing of annual returns and appointment of a Company Secretary, compared to sole proprietorship and partnerships, which translates to higher operating cost.
Directors must disclose to the company certain information about their interests in the company’s shares, contracts and debentures.

Note

VOPlus can advise you on the most suitable type of business entity for your business and help you convert a private limited company in Singapore promptly. Contact us today for a consultation!