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Singapore Private Limited Company
Singapore provides new businesses with the lowest corporate tax rate in the world along with the necessary incentives to succeed. With a business-centric environment, companies are encouraged to grow and prosper in Singapore.
The Private Limited Company is the most common business form in Singapore. The Private Limited Company provides myriads of benefits to the owner and is backed up by the government through certain tax incentives. Some benefits include tax incentives for the first few years of the business and limited liability, protecting the owner from any potential legal matters regarding the business as the company is considered a legal entity on its own.
What is a Private Limited Company?
A Private Limited Company structure, also known as a Pte Ltd, is the most flexible, safe and adaptable business form in Singapore. Majority of privately incorporated businesses use this structure as it provides a myriad of benefits to the user and their shareholders. There should be no less than 50 persons holding shares and the shares are not available to the public. How can you tell if a company is registered under a Pte Ltd structure? For example, you would like to open a Pte Ltd company, Company A. It will be registered as “Company A Private Limited” or “Company A Pte Ltd”.
- Separate legal entity: The company is considered a legal entity on its own and business owners will not be touched for their assets, personal possessions in the event the company faces a lawsuit or debt. This applies to the directors and shareholder’s as well. The company is limited with the funds they contributed to the company’s paid-up capital in the beginning.
- Shareholder Expansion: The parent company holds 1 share amongst the 50 members. The other 49 are reserved for people who are interested in investing to expand the company.
- Shareholder Characteristics: Up to 50 members are allowed to hold shares in the company (including corporate ones); the minimum is 1 (the parent company). The Subsidiary’s operation or existence is not defined key shareholders; if key shareholders decide to sell their shares, resign, face bankruptcy or death, the Subsidiary functions as per normal within the frame of its shares.
- Transfer of ownership: Subsidiary Companies enjoy flexibility and vitality because of the ease of transfer of ownership. Ownership can be transferred either partially or wholly without disrupting operations or the need for complicated legal documentation and procedures. This is achieved through the selling of shares or part thereof to another individual.
- Augmentation of paid-up capital: New shares can be issued to change the amount of paid-up capital.
- Trusted image and branding: Using an incorporated business form allows your business to be branded in a credible image compared to a sole proprietorship or partnership business. This inadvertently creates a sense of trust amongst potential investors who might give them the push to invest into your business. In addition, banks are also more inclined to process loans if needed due to the limited liability characteristic
- Registration: Any person (or foreign company) is allowed to register for a Subsidiary, but he/she is required to submit a document called the Memorandum and Articles of Association which clarifies facts such as the Subsidiary’s name, its share capital and how the company is going to limit their members’ liabilities.
- Clarification: Before opening your subsidiary, please clarify if your area of business requires any specific regulatory documentation under the governmental Companies Act with our immigration specialist.
- Distinct legal entity: Subsidiaries are considered distinct legal entities and are responsible for its acts within the scope of its share capital. Basically, subsidiaries are responsible for the actions carried out by shareholder members.
- Wound up procedures: In the event of a closure, Subsidiaries are to be wound up according to certain legal procedures.