Singapore is exceptionally open to both local and foreign businesses. The World Bank’s Ease of Doing Business Index currently ranks it as the second-best in the world. While the city-state supports six different types of businesses, the private limited company happens to be Singapore’s most commonly preferred corporation option.
How can you set up a private limited company in Singapore? Why exactly do foreign and local businesses go for this category? And where do you even start when you need to set up a private limited company in Singapore?
This guide will tell you all about private limited entities in Singapore, as well as the requirements for private limited company registration in Singapore. We'll also reveal what you should do after setting up a private limited company in Singapore.
What is a Private Limited Company in Singapore?
A private limited company is one of the limited liability companies that are registered and governed by Singapore’s Accounting and Corporate Regulatory Authority (ACRA). But, unlike public limited companies and companies limited by guarantee, a private limited company comes with very exclusive and independent shareholding privileges.
This means you won’t be forced to trade the shares publicly through the stock market. Instead, ACRA expects members of a private limited company in Singapore to hold and control their shares privately, based on the rules they set out in their company constitution.
Who Can Open a Private Limited Company in Singapore?
According to the Singapore Companies Act, individuals and corporate organizations are both allowed to take up equity in a private limited company in Singapore. Such members are collectively known as shareholders, and their company stakes are quantified in the form of shares.
That said, you can identify a private limited liability company in Singapore based on the name alone. ACRA typically registers the business names with suffixes like “Ltd”, “Pte Ltd”, or “Private Limited”.
Main Features of a Private Limited Company in Singapore
- Limited Liability: A private limited company in Singapore offers limited liability protection. The company is a separate legal entity, meaning its assets and liabilities are separate from those of its shareholders.
- Number and Type of Shareholders: Requires at least one shareholder and can have up to 50 shareholders. Both individuals and other companies can be shareholders.
- Number and Value of Shares: There is no limit to the number of shares that a Singapore company can issue. Shareholders’ ownership is determined by the percentage of shares they hold, which also defines their share of profits and capital.
- Minimum Paid-Up Capital: The minimum required paid-up capital for setting up a private limited company in Singapore is S$1.
- Share Trading: Shares of a private limited company can be traded freely. You can transfer shares within the company or allow external investors to buy shares.
- Company Constitution: The company constitution, submitted during the registration process, governs the company's operations and relationships between shareholders.
- Statutory Compliance: A private limited company in Singapore has several compliance obligations that can make the registration process somewhat costly and complex.
What Are the Benefits of Setting Up a Private Limited Company in Singapore?
As previously mentioned, setting up a private limited company is significantly more complicated compared to setting up a sole proprietorship. But on the bright side, at least it manages to make up for all that trouble with these outstanding benefits!
Limited Liability Protection
A Pte Ltd is considered a separate legal entity from its shareholders. This means that the company itself is responsible for its debts and liabilities, not the individual shareholders. As a result, your assets (like your home or savings) are protected from being used to settle company debts or legal disputes.
Exemption from Public Share Trading
Unlike public companies, Pte Ltd is not required to list its shares on a stock exchange. This means you don’t have to deal with the complexities and regulatory requirements of public trading. It also allows for more control over the company’s operations and ownership structure.
Low Setup Requirements
You can start a Pte Ltd with just one shareholder and a minimum paid-up capital of S$1. This low threshold makes it accessible for entrepreneurs and small business owners. It reduces the initial financial burden of setting up a company and encourages business formation.
Profit Sharing Flexibility
The Companies Act allows Pte Ltd to engage in profitable activities and share the profits among members. This means that as the company earns income, it can distribute the returns to shareholders according to their shareholding percentages, offering financial rewards based on the company’s success.
Flexible Ownership Transfer
Shares in a Pte Ltd can be transferred either internally (among existing members) or externally (to new investors or third parties). This flexibility makes it easier to change ownership or bring in new investors to raise additional capital or bring in new expertise.
Scalable Share Capital
The company’s share capital and number of shares are not fixed. You can issue more shares to raise additional funds or expand the company. This scalability allows for growth and investment opportunities without significant restructuring.
Perpetual Existence
A Pte Ltd has a perpetual lifespan, meaning it continues to exist independently of the life of its founders or shareholders. This continuity ensures that the company can operate indefinitely, providing stability and long-term planning opportunities.
Tax Benefits
Private limited companies in Singapore benefit from various tax incentives and exemptions provided by the Inland Revenue Authority of Singapore (IRAS). These may include reduced corporate tax rates, tax exemptions for certain types of income, and other benefits designed to support business growth.
Property Ownership
A Pte Ltd can own property, including real estate, which can be a valuable asset for business operations or investment. This ability allows the company to acquire, lease, or sell property as part of its business strategy.
Banking Privileges
Financial institutions in Singapore treat Pte Ltd as distinct entities, enabling them to open business bank accounts, apply for loans, and establish lines of credit. This recognition facilitates financial transactions and supports business operations, including access to capital for growth and development.
Setting Up a Private Limited Company in Singapore
What Are the Requirements to Start a Private Limited Company?
Setting up a Singapore private limited company is not as simple as registering a sole proprietorship, partnership, or a company limited by guarantee. There are quite a number of requirements and documents you’ll need during and after the incorporation process.
That said, here are the key essentials each LTD in Singapore is required to have:
- An initial paid-up capital of not less than S$1.
- A valid physical company address.
- At least one shareholder, who can be an individual or corporate entity.
- At least one director, who should be a Singapore resident. If you don't have one, you can opt our nominee director services.
- At least one company secretary.
As for the documents, ACRA expects you to attach the following to your Pte Ltd. registration in Singapore:
- A unique and original company name.
- Your director’s personal details.
- The personal details of each shareholder.
- The company’s constitution (previously known as the Memorandum and Articles of Association), explicitly stating all the management rules, the company’s activities, as well the overall membership and shareholding structure.
- A description of the company’s physical address.
- An explicit shareholders agreement.
- A company registration fee of $300.
How to Register a Private Limited Company in Singapore?
If you have everything ready, you can proceed to set up a private limited company in Singapore by following this procedure:
- Start by registering a unique and original business name with ACRA, through the official BizFile+ website. This alone should cost you about S$15, after which ACRA will reserve the name for 120 days.
- Once ACRA approves the business name, proceed to the company incorporation section of the BizFile+ site, and start setting up a new local company.
- On the company registration form, pick a private limited company as your preferred company type, and then attach its name as well as the accompanying documentation- the company constitution, address information, plus the personal details of all the members.
- In the end, private limited company registration in Singapore is bound to cost you S$300. And when you combine that with the business name registration fee, the total cost will be S$315.
- If everything checks out, you should be able to incorporate the private limited company in as little as 1-3 days. ACRA is pretty efficient when it comes to reviewing and setting up new corporate entities.
Make no mistake though. Registration is just the first step to setting up a private limited company in Singapore. There’s still so much more that you’re expected to do after incorporation.
What Should You Do After Setting Up a Private Limited Company in Singapore?
Incorporating an LTD in Singapore means you’ll be getting an incorporation certificate, a share certificate, plus a company business profile.
However, the kicker is, you still won’t be able to kickstart your operations in Singapore. Not until you comply with the post-registration requirements that come with private limited businesses.
And to help you with that, here’s a breakdown of the steps you should follow right after incorporation:
- Apply for the relevant business permits and licenses. A good place to start would be the Singapore GoBusiness Licensing Portal.
- Hold the First Board Resolution within the first month of incorporation. This is a special meeting for confirming the company’s directors.
- Open a corporate bank account with one of the many local and international banks based in Singapore.
- Appoint a company auditor within 3 months of incorporation.
- Appoint a company secretary within 6 months of incorporation.
- Apply for Goods and Services Tax (GST) if your company’s yearly taxable income goes beyond S$1 million.
- Register for the Singapore Central Provident Fund (CPF) pension scheme.
- Hold an Annual General Meeting (AGM) with the company’s shareholders every year.
- File your company’s annual returns within 30 days from the date of the AGM.
- File your company’s corporate income tax every year by November 30th.
- Apply for the relevant government incentives and schemes. You could, for instance, consider the Enterprise Financing Scheme, Startup SG Tech, or Startup SG Accelerator. Singapore has a rich variety of options to choose from.
Where to Start
These guidelines should make it easy for both locals and foreigners who are planning to set up a private limited company in Singapore. But, you can still make the whole process much easier, faster, and more thorough by working with a Singapore company incorporation services such as WealthBridge.
Besides, ACRA strongly advises all types of entrepreneurs to save themselves the trouble and proceed with this option, as corporate services providers like WealthBridge know all there is to know about setting up companies in Singapore, as well as the subsequent processes of maintaining corporate compliance over the long haul.