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Creating a new business in Singapore is an exciting time for any budding entrepreneur. The most popular type of corporation in Singapore is a Private Limited Company due to its ease and simplicity of incorporating.
This article delves into all the information and guidance you’ll need for business incorporation.
What is a Private Limited Company?
A limited company in Singapore means it is limited by shares. It is also considered as a separate legal entity from its shareholders. A limited company is recognised as a taxable entity, which means shareholders are not liable for any of the debts and losses except for the amount of share capital.
How do I incorporate a Private Limited Company in Singapore?
The basic requirements of forming a Private Limited Company consists of:
1 company secretary
1 resident director
A physical office address in Singapore
At least 1-50 shareholders – which may be an individual or a corporate entity
A minimum initial paid-up share capital of S$1
A new business should be registered under the Accounting & Corporate Regulatory Authority (ACRA) of Singapore, where rules of law about how a business should be incorporated in Singapore is regulated.
Important requirements before setting up a Private Limited Company
All business organisations registered in Singapore must have a distinctive name. Typically, submissions for a company name that already exists will be rejected. Thus, it's critical to pick a unique brand name to stand out or encompass the brand value the business holds.
The company name should be simple to read, one-of-a-kind, and free of any vulgar or profane words. When it comes to choosing a company name, there should be no copyright issues or trademark infringement concerns. Some company names require approval from a third party, those that include words like media, finance, bank, education, among others.
After a company name is approved by ACRA, it is reserved for 60 days from the date of application filing. Following approval, you should proceed with company registration in Singapore within the stipulated time frame.
Deciding on the type of business operations you intend to engage in is crucial. The Singapore Standard Industrial Classification Code 2020 covers all commercial operations in Singapore. This is the code that governs the types of commercial activity you are permitted to engage in.
In Singapore, the constitution of a company sets out the basic framework by which a company is organised. It outlines the objects of the company and governs the rights, powers, duties and obligations conferred on the company, its board of directors and its shareholders.
For companies incorporating after 2016, only a Company Constitution is needed. There are many online corporate service providers that offer incorporation services, such as Crystal Clear. You may seek out these service providers or a legal advisor to draft your Company Constitution.
An official incorporation request must be filed and approved by ACRA before a Private Limited company can be formed in Singapore. ACRA will provide the business registration number and confirmation of incorporation. We recommend having all incorporation documents ready and signed by all parties concerned so that such processes can be expedited.
For the certificate of incorporation, the email by ACRA serves as a soft copy certification. If a hard copy is required, you can submit an online request to the authority (a small fee will be charged for this service).
A shareholder agreement assists shareholders in making informed decisions and ensures that everyone is on the same page when it comes to important issues like dividend policy, voting rights, signatories, extra share issuance, new shareholder admission, and shareholder departure.
Establishing such common ground reduces the likelihood of disagreements, and even if disagreements do exist, the agreement specifies the methods for resolving them, preventing risks of disrupting business operations. The agreement also safeguards the interests of shareholders, particularly minority owners, who may be confident that their rights in the company are protected.
Having a shareholder agreement may not be compulsory, but it is definitely highly encouraged to set in stone if the company has more than one shareholder.
Shareholding Pattern & Shareholder Details
In Singapore, a private limited corporation must issue at least one subscriber share to its founding members. You must have at least one individual or corporate shareholder.
Company Secretary Details
Within six months after a business has been incorporated, a Singapore Private Limited company must have a company secretary. This is because the Company Law in Singapore mandates that every company must appoint a Company Secretary, who is responsible for ensuring that the company complies with the relevant legislations and regulations. The Secretary also keeps the Board Members informed of their legal responsibilities towards the company.
Company Business Profile
Businesses and local companies currently registered with ACRA will retain their ACRA Registration Number as their Unique Entity Number (UEN). Your business UEN is important and facilitates convenient interaction with government agencies.
A nominal fee can be paid for a business profile that includes the firm name, registered address, formation date, registration number, paid-up capital, business activities, and details of shareholders, company secretary, and directors.
A director with a residential address is required for a limited company in Singapore. They must be a Singaporean citizen, Permanent Resident, or on an Entry Pass work visa to qualify.
Registered Address Details
In order to be incorporated in Singapore, a company must have a registered address. All official correspondences are sent to this physical address and a P.O. Box cannot be used as the registered address.
Unless exempted from auditing rules, all Singapore-incorporated firms must appoint an auditor within three months of establishment. The company must have less than 20 individual shareholders and no corporate shareholders to qualify for an exemption. In addition, the yearly turnover of the company should not exceed S$5 million.
The share certificate is a document that proves ownership of the company's stock. It serves as verification of each shareholder's share allocation and must be issued by the company secretary.
First Board Resolution
The resolution confirms the official appointment of shareholders and directors.
Bank Account Opening Resolution
The Company requires its own bank account as it is considered a separate legal entity. The Board of Directors approves the account opening and names of account signatories.
It is also vital to choose an ideal corporate bank account as there are many banking partner options in the market. Aside from different application processes and requirements, you should also consider the benefits to your company.
To open a corporate bank account, you will need:
The Resolution passed by the Board of Directors sanctioning the opening
Proof of incorporation certificate
Copy of the business profile
Proof of Company Constitution
Proof of residential address
Company License & Permit
Depending on the company's business activity, you may need to obtain one or more licences and permits. Before operating the business, a newly incorporated firm must get a licence.
However, not all forms of commercial activity require a licence. Examples of businesses that require a licence include travel agencies, cleaning, import/export services, restaurants, educational institutions, and financial services.
A company expecting to make more than S$1 million in annual revenue must register for Goods & Services Tax (GST). In Singapore, an indirect tax is collected on the consumption of goods and services. A GST-registered business must charge a 7% GST rate to its customers for goods and services.
After completing all the necessary steps to register a company in Singapore, the next step is to fulfil the following post-incorporation duties so as to have smooth business operations and start running your business.
Post-incorporation duties includes:
Opening a corporate bank account
Securing necessary business licenses applicable to the company’s activities
Obtaining an office space
Setting up a bookkeeping system for managing financial affairs or engaging the services of a professional accountant
is a Corporate Advisory firm headquartered out of Singapore with a specialization in Incorporation, Corporate Secretarial, Accounting & Tax, HR Administration and Business Expansion. We provide bespoke corporate solutions from experienced and professional advisors for businesses of any size.
We're here to assist entrepreneurs in starting or continuing their business in Singapore! Reach out to us to understand more on the services Crystal Clear offers.