Register Your Private Limited Company in Singapore (2024-25)

Starting a private limited company in Singapore is a popular option for entrepreneurs and enterprises. The country provides a favorable business climate, a robust legal structure, and lucrative tax breaks. In this detailed tutorial, we will look at the process of forming a private limited company in Singapore, including its kinds, features, benefits, and drawbacks. We will also go over the minimal setup needs, post-incorporation issues, and continuing compliance obligations.

Starting a Private Limited Company in Singapore

The majority of enterprises in Singapore are registered as private limited corporations. These businesses are generally referred to as corporations, limited liability firms, or with the suffixes “Private Limited,” “Pte Ltd,” or “Ltd” in their titles. Companies in Singapore are registered by the Accounting and Corporate Regulatory Authority (ACRA).

Types of Private Limited Companies in Singapore

There are three main types of private limited companies in Singapore:

• Private Limited Company: A locally incorporated company with a maximum of 50 shareholders. The transfer of shares in a private limited company is usually restricted by the company’s memorandum or articles of association, requiring approval from the board of directors or existing shareholders.
• Public Company Limited by Shares: A locally incorporated company with more than 50 shareholders. Public companies may or may not be listed on a stock exchange and can raise capital by offering shares and debentures to the public.
• Public Company Limited by Guarantee: A company that carries out non-profit activities in the public interest, such as promoting art or charity. The registration of this type of company may be approved without the addition of the words “Limited” or “Berhad” to its name.

Features of a Private Limited Company in Singapore

The several key features of private limited company in Singapore are:

• Independent legal entity: A private limited company is a separate legal entity from its owners. It can sue and be sued in its own name, and the company’s directors and shareholders are not personally liable for its debts.
• Limited liability: Directors and shareholders have limited liability to the company. As long as the shares are paid up, there are no other obligations of the shareholders to the company’s creditors, and their personal assets are protected.
• Property ownership: A private limited company can own property in its own name.
• Shareholders: A private limited company can have a minimum of 1 and a maximum of 50 shareholders.
• Tax resident status: A Singapore private limited company is considered a tax resident and is eligible for local tax exemptions and incentives.

Advantages of a Private Limited Company in Singapore

There are several advantages of opening a private limited company in Singapore:

• Limited liability: Shareholders are not personally liable for the company’s debts and losses, protecting their personal assets.
• Tax benefits: Newly incorporated private limited companies are entitled to tax incentives and exemptions. The first S$100,000 of taxable income is exempt from taxes, and the effective tax rates can be as low as 5.6% on taxable income up to S$300,000.
• Credibility and access to financing: Incorporating a private limited company conveys a professional commitment and increases the company’s chances of obtaining commercial loans from banks and financial institutions.
• Transferability of ownership: Ownership of a private limited company can be transferred, and additional shareholders can be appointed, allowing for capital injection and expansion.
• Perpetual existence: The company does not cease to exist if one or more shareholders die.

Disadvantages of a Private Limited Company in Singapore

Some of the disadvantages for starting a private limited company in Singapore are:

• Compliance requirements: Private limited companies are governed by rules and regulations stipulated in the Singapore Companies Act. Failure to comply with these requirements can result in penalties.
• Higher operating costs: Private limited companies have greater disclosure and administration requirements, leading to higher operating costs compared to other business structures.
• Disclosure of interests: Directors must disclose information about their interests in the company’s shares, contracts, and debentures, adding an additional layer of transparency.
• Setup expenses: The initial setup costs for a private limited company can be higher compared to other business structures.

Requirements to Register a Private Limited Company in Singapore

To register a private limited company in Singapore, certain minimum setup requirements must be met:

• Shareholders: A minimum of 1 shareholder is required, which can be an individual or a corporate entity.
• Resident director: At least 1 resident director is required. The director must be an ordinary resident in Singapore, such as a Singapore citizen, permanent resident, Employment Pass holder, or Dependent Pass holder.
• Company secretary: A competent company secretary must be appointed within 6 months of incorporation. The company secretary must be ordinarily resident in Singapore.
• Paid-up share capital: The company must have an initial paid-up share capital of at least S$1 or its equivalent in any currency.
• Registered office address: The company must have a physical registered office address in Singapore, which cannot be a PO Box.

How to Register a Private Limited Company in Singapore?

The important points for registering a private limited company in Singapore are listed below:

• Incorporation process: The company comes into existence upon registration under the Companies Act. The registration must be done through the Accounting and Corporate Regulatory Authority (ACRA).
• Company name: The proposed company name must be approved by ACRA before incorporation. It should not be identical to an existing company name or undesirable. Certain names or trademarks may also be restricted.
• Shareholders: A minimum of at least one shareholder, who can be an individual or a corporate entity, is required. Details of shareholders will appear on public records.
• Resident directors: The company must have at least one director who is an ordinarily resident in Singapore. Certain individuals are disqualified from acting as company directors.
• Company secretary: A competent company secretary must be appointed within 6 months of incorporation. The company secretary is responsible for ensuring compliance with statutory and regulatory requirements.
• Auditors: Singapore companies must appoint an auditor within 3 months from the date of incorporation, unless exempted from audit requirements.
• Share capital: The minimum paid-up share capital for registration is S$1, and the company can issue shares of par value.
• Registered office address: Every private limited company must have a registered office address in Singapore, which cannot be a PO Box.

Post Registration and Compliance for Singaporean Private Limited Company

After incorporating a private limited company in Singapore, there are several post-registration and compliance requirements to fulfill:

• Licenses and permits: Depending on the nature of the business, certain licenses and permits may be required from relevant government authorities before commencement of operations.
• Registered office hours: The registered office must be open to the public for a minimum of three hours per day during normal business hours on weekdays.
• Registration number: The business registration number issued by ACRA must be included on all official company communications.
• Custom registration: If the business involves import, export, and transhipment, the company may need to register with Singapore Customs and obtain a CR Number.
• Singapore Goods and Services Tax (GST) registration: Businesses with annual taxable revenue exceeding S$1 million or making taxable supplies are required to register for GST.
• Singapore Central Provident Fund (CPF) registration: Employers must register for CPF and contribute to the employees’ pension fund.

Conclusion

Opening a private limited company in Singapore has various benefits, including restricted liability, tax breaks, and improved credibility. However, there are regulatory requirements and set-up costs to consider. Entrepreneurs who understand the procedure, regulations, and continuing compliance duties may make educated judgements and establish a successful private limited company in Singapore.
If you want to set up a private limited company in Singapore, contact OnDemand International Today!