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Primarily there are four types of business structures in Singapore, viz. Business, Limited Partnership and Limited Liability Partnership and Company. The Business comprises the simplest form of business structure, right from a sole proprietorship with one owner to a partnership with up to 20 owners. Business entities have unlimited liability, whereas a Company is a structure with limited liability and the owners are not personally liable for the company’s debts o losses. This article discusses Singapore’s seven different types of companies and their unique features.
There are 7 seven types of companies in Singapore:
Following are the key features of different types of companies in Singapore:
The Exempt Private Company is the most common type of company registration in Singapore. The name of the exempt private companies usually ends with “Pte Ltd”. These companies are required to suffix this name at the end of their name in order to convey to the public the type of company. An exempt private company can have a maximum of 20 shareholders, and such shareholders should not include a corporation. This company does have share capital.
An exempt private company is essentially a private limited company that has been exempted from some compliance requirements. The major exemptions available with an exempt private company are the exemptions from attaching financial statements in its Annual Returns. Additionally, it has more freedom and autonomy regarding financial loans compared to non-exempt Private Limited Companies. Further, they have the ability to extend more loans to their directors, which other Private Limited Companies can extend only after meeting a particular set of criteria.
A Private Company limited by shares is another type of company in Singapore whose name ends with “Pte Ltd.” similar to an exempt private company. Again, a Private Company limited by shares has a share capital. However, the major distinction between an exempt private company and a private company limited by shares is that in the latter, the maximum number of shareholders can extend to 50, and corporations have also been permitted to be shareholders in the company.
It must be remembered that in a private company, the liability of the shareholders towards the creditors is limited to the amount of capital originally invested by shareholders in the company, and the personal capital cannot be used to settle their loans.
A Public Company Limited by guarantee is usually incorporated for carrying on non-profit activities of public and national interest like religious bodies, trade associations, charitable organisations etc. These companies are required by law to attach the word “Ltd.” at the end of their company name. They do not have any share capital, and their extent of liability extends to the amount which has been undertaken to be contributed to the assets of the company in the case of winding up of the company. The guaranteed amount has to be specified in the company’s constitution itself.
A Public Company Limited by shares is also required to attach the suffix “Ltd.” at the end of their company name to inform outsiders that the company is a public company. Such a company has been allowed to have more than 50 shareholders. These companies have been permitted to raise capital by offering shares and debentures to the public. For making such offers to the public, the company must register a prospectus with the Monetary Authority of Singapore to regulate the making of such offers. Again, the liability of the shareholders to the creditors is limited to the capital originally invested by the shareholders.
An Unlimited Private Company is also required to attach the word “Unlimited” as part of its name to show the outside world that the company is an Unlimited entity. These companies are Hybrid companies that have been incorporated with or without share capital.
An Unlimited Exempt Private Company can have a maximum of 20 shareholders where a corporation has not been permitted to be a shareholder.
On the other hand, in the Unlimited Public Companies, there can be 50 or more than 50 shareholders, and Corporations have been permitted to become shareholders. In Unlimited Companies, the liability of its members is not limited.
A number of features of different types of companies in Singapore have been enumerated above. Therefore, company incorporation experts advise it to align the purposes and activities they wish to carry with the structure and exemptions available with different types of companies in Singapore before incorporating your business structure in Singapore. To obtain consultancy regarding which type of company is suitable according to the kind of activities you wish to carry out, get on a call with incorporation experts at Enterslice.
Read our Article: Company Incorporation in Singapore: A Comprehensive Guide