Incorporate A Singapore Company: Overview
A corporation, or more commonly referred as company in Singapore
, is a business structure that is considered as a separate legal entity from its shareholders. As a result, this can own properties, file a lawsuit or be sued, and purchase supplies under its name.As a separate legal entity from its shareholders, the latter enjoys limited liability protection, a legal arrangement in which they cannot be personally liable for the financial losses, debts, and claims related to their business. With this, they can have an assurance that the money they can only lose is the one they have invested in their company in case of bankruptcy.
There are two basic types of Singapore company: the private limited company and the public limited company.
(Note: The third type of company, which is called public company by guarantee, is not considered by many professionals as a real business company since it is only used for non-profit activities.)
* Private limited company
A private limited company is allowed to have one to 50 shareholders who must raise capital and funds among themselves or through banking loans. Under the law, it is prohibited to invite the public to deposit money to raise funds or capital.
Business professionals categorize the private limited company in to two: the exempt and non-exempt companies.
Exempt private companies are not legally required to submit their statutory annual audits and financial statements to the Accounting and Corporate Regulatory Authority (ACRA). Companies that fall under this category has no more than 20 shareholders who are all individuals rather than a business organization, and it has less than S$5 million annual turnover.
Exempt private companies, which accounted for about 75 percent of all companies in Singapore, generally enjoy lower compliance cost. However, they should still maintain proper accounting records.
On the other hand, non-exempt private companies are required to submit their audited financial statements to ACRA every year.
Meanwhile, foreign companies and individuals are allowed to incorporate a Singapore company by registering a subsidiary company.
* Public limited company
As its name suggests, a public limited company is allowed to invite the public to deposit their money or subscribe to the companys shares and debentures. With this, a company is allowed to have more than 50 shareholders since the ownership is transferable and tradable.
Meanwhile, this business setup is subjected to the regulations imposed by the Singapore Exchange and the Monetary Authority of Singapore (MAS).
It is important to note that the shareholders of a public limited company have a liability based on the amount of shares they own. With this, their personal assets are protected and they cannot lose money they have not invested in their company.
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