Here’s a quick look at the different kinds of companies you can find in Singapore.(types of companies in singapore)
Company With Limited Liability(types of companies in singapore)
Under the Companies Act, a company is made into a Limited Liability Company (LLC) by registering with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. It has its own legal identity, which means that there is a legal barrier between the owners and the entity. The business can sign contracts and own things. In its own name, it can sue and be sued. The company’s liability is limited to the amount of its share capital, and each member’s liability is limited to the amount of share capital he or she bought (shareholder). The shareholders can be either a person or a company. The shareholders’ personal assets are kept separate from the company’s debts. There are the following kinds of LLC:
Company with limited liability(types of companies in singapore)
The Private Limited Company is the most common type of business in Singapore. It is also the most popular. All of the shares of a Private Limited Company are held privately and are not available to the public. In a Private Limited Company, there can’t be more than 50 shareholders. In Singapore, this kind of business name ends with “Private Limited” or “Pte Ltd.”
Private Limited Company Not Required(types of companies in singapore)
An Exempt Private Limited Company (EPC) is a Private Limited Company that doesn’t have to do a statutory annual audit. For a Private Limited Company to be an EPC, it must meet all of the following requirements:
- It can’t have more than 20 people who own it.
- No corporation should own its shares, which means it shouldn’t have any corporate shareholders.
- It can’t make more than S$5 million a year.
Instead of making and sending an audited statement to the ACRA every year, EPCs only have to send a signed statement from the directors and company secretary saying that the company is solvent. In case ACRA asks for them, EPCs must still keep records of the financial statements that follow Singapore’s Financial Reporting Standards (FRS).
A change to the Companies Act makes it possible for more companies to get the exemption, even if they don’t meet the criteria for an EPC. These kinds of businesses are called “small” businesses. Even if a company doesn’t qualify as an EPC, it won’t have to have an annual audit after July 1, 2015, as long as it meets at least two of the following new criteria for the two most recent financial years:
- Less than S$10 million is made each year.
- Not more than S$10 million in total assets
- Fewer than 50 workers
Small parent companies or subsidiaries that are part of a small group will also be exempt from audits. A small group is one that has met at least two of the three quantitative criteria above in each of the two most recent financial years.
Private Limited Company Pros and Cons
This is the most common type of entity because shareholders’ liability is limited and they have more control over the business.
The ownership can be easily transferred, either in full or in part, by just giving the shares to someone else. If the owner of an asset, license, or permit changes, it is easy to transfer those things.
Even though compliance costs are higher than for a sole proprietorship, Singapore’s competitive corporate tax rates make the tax bill a lot smaller. Companies with taxable profits of less than S$300,000 pay an effective rate of just 8.5%. Only 17% of profits over S$300,000 have to be taxed.
It’s pretty easy to get money by giving shares to new investors or by giving existing investors more shares. This makes it easier for the business to grow and get bigger. It also makes it easier to get help with money from banks and other institutions.
The company will still be around even if shareholders die or go bankrupt. It is always legal until it is taken off the list.
Open to the public
A public company can be one of two types:
- Share-based public company
- Guaranteed Public Limited Company
Share-Holding Public Company
A public limited company is an LLC with more than 50 shareholders. It could sell shares to the public. The word “Limited” or “Ltd.” comes after the name of a Public Limited Company. They can get listed on the stock exchange, but they have to give the Monetary Authority of Singapore (MAS) a prospectus first if they want to get listed and raise money from the public.
It has benefits that are similar to those of a private limited company, such as limiting the shareholders’ liability, offering a competitive corporate tax rate, and giving the company an overall prestigious image. They have a better chance of getting money because they can sell shares, debentures, and bonds to the public. Because they can buy and sell shares on the capital market, shareholders have more money to spend. But they have to follow strict rules, and their finances are looked at more closely by the public. The cost of following the law is very high. The shareholders are the ones who the board and management have to answer to.
Guaranteed Public Limited Company
A Public Company Limited by Guarantee is a company that was set up for the public good and not to make money. This group is made up of societies and organizations that are registered to promote the arts or help people in need. The members’ liability is limited to the amount they agree to contribute to the company’s assets if it goes out of business. In the Memorandum of Association, the amount of guarantee from each member will be written down. Usually, the amount is small. The word “Limited” is not in the names of these companies.
It’s important to note that this type of entity doesn’t have any shares. As long as the business is still going, the members don’t have to pay any capital. This structure is usually used by organizations that don’t trade or make money, like trade associations, charitable organizations, professional societies, religious organizations, incorporated clubs, and other not-for-profit groups.