Definition: What is Private Limited Company in Singapore?
Benefits and Features of Private Limited Company Singapore
- Legal Status:
- Legal entity separated from its members and directors
- Members have a limited liability equal to their shares in the company
- Can sue or be sued in the company’s name
- Can own property in the company’s name
- Members are not personally liable for the debts and losses of the company
- Private Limited can have up to 50 corporate or individual members, but no less than 1. Their membership doesn’t define the firm’s existence: even if members die, resign, sell their share or become bankrupt, the Pte Ltd keeps functioning within the frame of its active shares.
- If your business isn’t going to have more than 20 members, no corporate members will hold the major part of the shares, and your prospective turnover isn’t going to be more than 5,000,000 SGD, you can register it as the Exempt Private Company and be freed from the annual filing of the audited accounts.
- Company can expand its paid-up capital by issuing more shares and involving new investors.
- Firm’s ownership can be transferred easily by selling the part or the whole set of shares.
- Choose Private Limited if you plan to involve banks’ loans: the company registered as the Pte Ltd has a more appealing and trustworthy image due to its limited liability. Investors are also more likely to support your business idea if your company provides protection for the personal assets.
- You are going to win more clients with the Pte Ltd as you can expand your services and reach out to your clients’ needs more efficiently.
- Directors can move to Singapore to take charge of their companies either before (on the EntrePass) or after the incorporation (on the EntrePass (during the first 6 months) or the Employment Pass). Crucial staff can also be relocated using appropriate work visas.
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Advantages of Private Limited Company Registration in Singapore
- Pte Ltd’s has a legal entity that is distinct and separated from its directors’ and shareholders’ personal legal entities. It means that their personal possessions are invulnerable in case the company faces risks, debts or legal issues because their liability is limited with the funds they contributed into the firm’s paid-up capital in the beginning.
- Singapore is famous for its low corporate tax rate – 17%, but your firm can also benefit from incentives the government offers for new Private Limited companies:
- 0% tax rate on first taxable income of 100,000 SGD;
- 8.5% tax rate on the next 200,000 SGD;
- 17% thereafter.
Disadvantages of Opening Private Limited Company Singapore
- A company is subject to stricter local rules and regulations. Unless you register an Exempt Private company, you have to file the firm’s audited accounts along with the tax returns yearly.
- Pte Ltd is required to have at least 1 Singaporean director and a local secretary. The real director can substitute the nominee later by getting the appropriate visa (the Employment Pass or the EntrePass).
- Due to lots of administrative requirements, costs of running a Pte Ltd are usually higher.
- Singapore practises transparency in running a business, and, therefore, companies are subject to higher disclosure standards. No hidden motives or secret interests are allowed.
- Pte Ltd’s director can be removed according to the shareholders’ resolution.
- Limited liability of the Pte Ltd doesn’t protect directors who use the form of the company for a fraud or any unlawful actions.
- Despite the company’s limited liability, directors can still expose their personal assets to risks because sometimes banks or lenders require personal guarantees.
- Winding up is also subject to certain regulations, and the company that decides to stop its activity needs to undergo certain legal procedures.
Share Capital of Singapore Private Limited CompanySingapore lays down winning conditions for foreigners who wish to set up their businesses as the Pte Ltd:
- You can register a company even having 1 SGD for the paid-up (share) capital.
- “Nationality” of the paid-up capital isn’t subject to any restrictions: it can be completely foreign.
Private Limited Company Registration Requirements
- Only individuals older than 18 are allowed to participate in the registration of the Pte Ltd in Singapore.
- Company must include no less than 1 and no more than 50 members (shareholders).
- Exempt Private Company implies the membership of no more than 20 members provided that the prospective turnover isn’t more than 5,000,000 SGD and the firm includes no corporate members holding the major of the shares.
- There is no maximum limit for the share capital and no “nationality” restrictions for it. The minimum amount is as low as 1 SGD.
- To register a company in Singapore, you must come up with a unique name that doesn’t copy the name of any existing company in Singapore or sound vulgar. A proper name check must be done before moving on to the registration procedure to avoid hitches. After choosing the appropriate name, you can get it reserved for 60 days with an option of further extension.
- Private Limited company must be registered at a real Singaporean address. Our incorporation team will help you to find appropriate commercial property for your business and shoulder the registration.
- Before registering a company, you need to find and appoint a local secretary and 1 Singaporean director (a real adult person with appropriate skills) who will shoulder administrative work in your company. You (a real director) will be able to make all crucial decisions, but your powers as a director will be limited until you replace this nominee by arriving in SG on the appropriate work or entrepreneur visa. Our Private Limited incorporation service includes appointing the Singaporean director and a secretary that fit your company’s needs.
- You might need a special approval from the authorities for operating in certain niches of economy (for example, in the financial sector). We will assist you in getting the required approval and licensing.
- Relocation to Singapore isn’t obligatory for a foreigner who registers a company here: you can run your Singaporean firm from abroad. If the director’s relocation is decided, you can choose among 2 relocation schemes: the EntrePass or the Employment Pass. The EntrePass is harder to obtain due to lots of specific business criteria like the paid-up capital of over 50,000 SGD or innovative business plan, but it gives the entrepreneur more freedom: he can arrive in SG before starting the incorporation and concentrate more administrative power in his hands. The Employment Pass is a work visa that can be used by executives hired by their own companies, and its criteria are lighter. If the foreign director prefers to stay abroad, he can still use regular visa system for making short business visits.
Types of Companies in SingaporeSetting up a company in Singapore comes in various business forms. You can choose the one that meets your entrepreneur needs. The Private Limited is the preferable business entity because it is the safest; however, it isn’t the cheapest. This business structure fits undertakings that have a long-range outlook and are aimed at expanding, involving more investors, loans, and buying property. If the company implies one major shareholder that is a corporate body, it is more advantageous to register such company as the Subsidiary. As a limited liability business structure, it saves all benefits of the Private Limited company. If your business isn’t associated with risks, the foreign parent company can opt for registering its Singapore’s firm as a Branch Office and save money because the Branch isn’t obliged to pay the corporate tax. This form, however, doesn’t protect the parent firm if issues arise due to the legal entity that is the same for the parent company and its Branch. If the planned business activity isn’t aimed at gaining profit but solely at a “representative” functions, opening a Singaporean company as the Representative Office is the right solution: such business form isn’t subject to taxes and filing.
How to Register Pte Ltd Company: the Best Scheme and TimelineSingapore is famous for its brief and easy business registration procedure: here you can get your new company set up in 1 day. Computerized registrar not only shortens the procedure of Private Limited company registration but also stamps out any red tape. However, to benefit from this flash procedure, foreigners have to undergo a complex preparation that includes such steps:
- Name check: the name should be absolutely unique on the Singapore’s business landscape and not sound insulting or vulgar. This check ought to be done in the very beginning to ensure the name’s fitness.
- Getting the local registration.
- Obtaining approval from the authorities (needed only for certain business sectors).
- Appointing a local secretary and a director.
- Polishing business profiles and preparing the package of required papers according to the government’s rules (if you use certified copies, take care of endorsing them; if your papers aren’t in English, enlist a professional business translation services).
- Preparing visa applications for the staff and executives.