Overview of a Company Limited by guarantee

A company limited by guarantee in Singapore is governed under the Singapore Companies Act, which defines it as a non-profit organization engaged in public welfare work. For instance, charities, societies, etc. Clubs and charitable organizations usually apply for a company limited by guarantee. To cite an example, The National University of Singapore is a company limited by guarantee. A company limited by guarantee has the suffix “Ltd”. The main aim of a company limited by guarantee is to indulge in non-profit activities like charity. They are governed by the Companies Act of Singapore and are registered with the Accounting and Regulatory Authority of Singapore (ACRA).

Advantages of Company Limited by Guarantee in Singapore

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No cap on members

You can have as many members as you want in a company limited by guarantee.

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Ownership

A company limited by guarantee can be owned by local and foreign individuals.

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Share capital

In a company limited by guarantee, there are no obligations of share capital.

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Company limited by guarantee Vs. Company Limited by shares

The company's members, limited by guarantee, are liable for the specific amount they have invested in the company. However, the company members limited by shares are liable for the amount of capital invested by the shareholders. This means that in the case of a company limited by guarantee, the member's personal assets are protected in case the company is declared bankrupt.

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Nature of a Company Limited by Guarantee

Companies limited by guarantee are public companies. On the other hand, companies limited by shares come under the category of private companies. As a result, a company limited by guarantee does not pay its members bonuses and dividends.

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Types of Structure

You can form certain structures like charitable trusts or societies. A society consists of 10 or more people. Voluntary organizations usually form it. Society is not required to file annual income tax returns. For instance, the Indian Red Cross Society is a voluntary organization formed for humanitarian activities. On the other hand, a trust is formed by those who want to leave a part of their income behind for some charitable purpose. For instance, the Bill and Melinda Gates Foundation is a charitable trust operated by Warren Buffet and Melinda Gates.

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Tax Liability

The tax liability of a company limited by guarantee is similar to that of any other company in Singapore. The company has to pay a corporate income tax of 17 % on its chargeable income. However, a company limited by guarantee can apply for some tax exemptions. In case a company limited by guarantee earns 50% of its income from tax-deductible membership fees, then such an income would be subject to taxation. However, if the company limited by guarantee earns less than 50% of its income from tax-deductible membership fees, then income earned from non-members would be subjected to taxation.

Features of a Company Limited by guarantee in Singapore

There are some striking features of the company limited by guarantee, which have been discussed below-

1.Governance

The Company is managed by the board of directors.

2. No share capital

No shareholders in a company are limited by guarantee. It receives funds via donations and grants from its members.

3.Non-profit nature

The activities of a company limited by guarantee are non-profit and charitable, such as for educational and humanitarian purposes.

4. Company Constitution

The Constitution is a legal necessary paper that states the amount guaranteed by each member.

5. Guarantee Company

In a company limited by guarantee, there are guarantors instead of shareholders. And these guarantors contribute a guaranteed amount towards the company's debt. There is no fixed amount of guarantee. Members can contribute even $1.00 during the incorporation of the company.

6. Separate Legal Entity

The Company is limited by a guarantee function as a separate legal entity. This means that such a company can sue or be sued in its name.

7. Limited Liability

A Company limited by a guarantee provides its members limited liability protection. This means that the liability of a member in a Company limited by a guarantee is limited to the value contributed to the company.

8. Tax Rebates

A Company limited by a guarantee is charged corporate tax at a 17% rate. Apart from that, a Company limited by a guarantee engaged in charity work need not pay any tax.

Registration of a Company limited by guarantee in Singapore

Log in to the Portal

A company limited by guarantee in Singapore is registered with Singapore's Accounting and Corporate Regulatory Authority (ACRA). All the applications for the registration of a new Subsidiary company have to be submitted online via ACRA's electronic filing and information retrieval system, BizFile+.

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Application for Registration

First, you have to log in to the BizFile+ portal. Then, you have to engage a registered filing agent to apply on behalf of the proposed director. Under the eServices menu, click "Local Company" followed by “Start a New Local Company” and then attach the requisite necessary papers, including the company constitution, address, etc.

Cost of Registration

The total cost of registering a company limited by guarantee is around $315, which includes a $300 registration fee and a $15 name application fee. You have various payment options: Credit card/debit card, Apple Pay, Google Pay, and PayPal.

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Constitution of the Company Limited by guarantee

The Constitution is a legal necessary paper that outlines the rules regarding the governance of the proposed company limited by guarantee. Your company's constitution must contain the information mentioned in the subsequent paragraphs.

It must mention the rights of the key personnel like directors, the Company’s Name, the Company’s registered office address, and the contribution of company members.

It is important to mention that while submitting your application form for registration of your company on the BizFile+ portal, you should also attach a copy of the company’s constitution along with it. If you do not want to create your own constitution, you can adopt a model constitution under the Companies (Model Constitutions) Regulations 2015.

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Checklist: Registering a company limited by guarantee

Registering a Company Limited by guarantee in Singapore has been made easy by the Legal experts of Enterslice. We at Enterslice have prepared a comprehensive list of necessary papers that you require to register a company limited by guarantee in Singapore-

  • A Unique business name for the company
  • Structure of the company you want to form- Trust or Society?
  • The company’s constitution, which includes Article of Association and Memorandum of Association
  • Personal Particulars of the Director
  • The company’s registered office address
  • Description of business activities of the proposed company using the Singapore Standard Industrial Classification Code (SSIC) 2020.
  • Residential address of the Directors
  • Amount of contribution guaranteed by each member

Charity: How do I apply?

A company limited by guarantee does not have to be a charity. However, it can apply for a charity status to get a complete tax exemption on its income. A company limited by guarantee can apply for a charity status within three months of incorporation of the company with the ACRA.

To apply for a charity status, a company limited by guarantee must operate on a non-profit basis. Along with that, its activities should be focussed on charity and public welfare. A charity is entitled to complete tax exemption provided it meets the criteria of the Commissioner of Charities.

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Formation of a company limited by guarantee in Singapore

Forming a company limited by guarantee in Singapore is hassle-free, and we at Enterslice shall help you achieve it. Our team of experts will guide you through all the pre-registration necessary papers and the compliances that you need to ensure to successfully incorporate your company limited by guarantee in Singapore.

For registering a company limited by guarantee, all you require is three individual directors, two of which must be Singapore citizens, one company secretary, and a filing agent. Along with that, a minimum of $1 capital is required to be contributed by the guarantors.

The company secretary appointed must be a resident of Singapore. The person concerned is responsible for overseeing the administration of the company. The director appointed must be a permanent resident of Singapore. If, in case, a foreigner wants to serve as a director, then he must hold either a dependent Pass or an Employment Pass.

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Before registering a Company Limited by Guarantee in Singapore

Firstly, you should choose a unique business name for your company that must be in line with the ACRA guidelines and the Business Names Registration Act of Singapore. In case the chosen name is offensive or similar to the business already in function, then that name is liable to be refused by the company registrar.

Secondly, you must choose an appropriate financial year end to ensure systematic filing of taxes yearly. Our proficient CA team can help you file your annual tax returns.

Thirdly, preparing all the required necessary papers, like the residential address of the key personnel like the director, auditor, company secretary, registered address of the company in Singapore, etc., is crucial for a hassle-free registration of your company limited by guarantee.

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Refusal of Registration of a Company

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Non-Approval of Name

When a company name is not approved under the Business Name Registration Act on account of a similar name with an already functioning company or an offensive name, then that application for registration of a company is rejected by ACRA.

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Discrepancy in no. of Guarantors

At least one individual is required to start a company limited by guarantee in Singapore. Due to the failure to have the requisite number of guarantors to start a company, the application for registration is likely to be rejected.

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Violation of the Singapore Companies Act

If your registered company address is not in Singapore as per Section 142(1) of the Companies Act, then your application for registration is liable to be rejected by the ACRA of Singapore.

Post Registration of the Company

Getting an Email

BizFile+ will send an email to the appointed officers (e.g. directors, shareholders, and company secretary) for their endorsement. All appointed officers have to endorse their appointments in the BizFile+ portal within 60 days from the date of the email.

Unique Entity Number (UEN)

BizFile+ will automatically generate your company's UEN for successful registration. This UEN has to be kept confidential and will be used for the company's future transactions with the government.

Company Business Profile

The Company Business Profile is a comprehensive electronic necessary paper with essential business information. The ACRA provides it to newly established companies.

Board Resolution

The first board meeting is held to appoint directors in the newly incorporated company. It is mandatory to conduct this Annual General Meeting.

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Particulars of Registration

NRIC and full name

The full name of the company director, company secretary, auditor, and other key personnel involved must be attached to the application of registration. Any change concerning the appointment of key personnel must be duly communicated to the ACRA.

Contact information

The key personnel's contact details, namely telephone number and email address, must be specified.

Residential Address

The residential address or proof of the key personnel's address must be specified. Any change in these particulars must be duly communicated to the ACRA.

Nationality

The nationality of the company director, company secretary, auditor, and other key personnel involved should also be mentioned.

Bank Account Opening of Company

After the successful completion of the registration of the company on the BizFile+ portal, the company can proceed to open up a bank account in Singapore in the company's name. Opening a corporate bank account in Singapore is an easy task, given Enterslice's assistance. We have prepared a list of necessary papers required by you to open up a bank account in Singapore-

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Resolution by the company’s board of directors mandating their consent for the same
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Copy of Certificate of Incorporation of the company
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Copy of the business profile of the company
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National ID card of Singapore or copy of passport
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Proof of residential addresses of the directors

Challenges: Registering a Company limited by guarantee

There are some hindrances that you may encounter while registering your company in Singapore, which include choosing the right form of structure for your company, choosing an appropriate business name, Regulatory compliances as per ACRA guidelines, Tax Regulations Compliance, Post Registration Compliances, Maintaining necessary papers/checklist, Forming the constitution of the proposed company, Opening up of bank account in the name of the company and Getting appropriate licenses and permits. Our Foreign Business Incorporation desk at Enterslice shall help you resolve these challenges and create a hassle-free registration experience for you.

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Post Registration Compliances for the Company

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Licenses/Permits

You can apply for the permits and licenses through the Singapore Go Business Licensing portal.

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Appointing of key personnel

An auditor must be appointed within 3 months of the company's incorporation date. A company secretary must be appointed within 6 months of the company's date of incorporation.

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Tax Returns

It is required to file the company’s annual tax returns with ACRA every year on December 15th.

Tax Rebates

There are certain tax exemptions that a company limited by guarantee is entitled to apart from paying 17% corporate income tax. The extent of the tax exemptions depends on the quantum of income earned. A charity is entitled to complete tax exemption provided it meets the criteria of the Commissioner of Charities.

To be eligible for tax exemptions, a company limited by guarantee must not have half of its receipts from membership fees from Singapore members that are tax-deductible in accordance with the Income Tax Act. Additionally, it must not engage in a trade or a professional association.

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Dissolving a Company limited by guarantee

The dissolution of the company is approved by the Commissioner to the M&A of charities or the Sector Administrator. It is required for M&A to specify the circumstances of the dissolution of the company. It is noteworthy to mention that after settling the debts, the company's remaining assets should be donated to other charitable organizations.

There are two ways of dissolving a company limited by guarantee. You can wind it up, which can be done voluntarily or involuntarily. The other way is that the Company registrar can strike off the company from its register as per Section 344 of the Singapore Companies Act. All you have to do is apply to ACRA to strike off your company’s name.

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Registration of the company by a foreigner

If a foreigner wants to register a company in Singapore, then he/she must engage a registered filing agent who would submit the online application at BizFile+ on his behalf. If your company wants to employ foreign workers, you must issue an employment pass. Information pertaining to the employment pass shall be available on the Ministry of Manpower (MOM) website.

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Why should you trust Enterslice?

Our team at Enterslice provides tailor-made solutions per our clients' different business needs.

  • 1000+ Companies successfully incorporated in Singapore
  • Team Enterslice at your service 24*7
  • A wide network of Singapore-based Company Secretaries, CA, at your service
  • Expert consultation and guidance from our Singapore Business Incorporation Desk.
  • Continuous support by the Company secretary for AGM preparation
  • End-to-end assistance throughout the registration process by a robust panel of experts

The hassle-free registration process of your company

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The Services offered by Enterslice

We will make sure to guide you step by step from registering your Company in Singapore to the end stage of ensuring timely compliance. Our team offers the following services to our clients globally-

  • Performing name search with ACRA to reserve your company name
  • Filing application on the BizFile+ portal on behalf of the applicant
  • Preparation of compliance kits
  • Preparation of board resolutions
  • Setting up a corporate bank account
  • Preparing a checklist of necessary papers needed for registration
  • Arranging a local company secretary for the company
  • Registering a CorpPass account on behalf of the company
  • Providing Singapore citizens to act as directors for the company registration
  • Getting the appropriate licenses and permits
  • We can assist you with bookkeeping in accounting systems
  • We will help you in selecting an appropriate financial year to ensure the systematic filing of taxes every year.
  • We shall help you apply for an employment pass.
  • We shall help you with post-registration compliances like GST registration.

The hassle-free registration process of your company

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Frequently Ask Questions

A company limited by guarantee in Singapore is a non-profit organization engaged in public welfare work. To cite an example, The National University of Singapore is a company limited by guarantee. A company limited by guarantee has the suffix “Ltd”.

A company limited by guarantee in Singapore is registered with Singapore's Accounting and Corporate Regulatory Authority (ACRA). All the applications for the registration of a new company have to be submitted online via ACRA's electronic filing and information retrieval system, BizFile+.

A company limited by guarantee comprises a Director, Auditor, and Company Secretary.

The total Registration fee for forming a company limited by guarantee in Singapore is about $315, including the name registration fee.

A Company limited by a guarantee provides its members limited liability protection. This means that the liability of a member in a Company limited by a guarantee is limited to the value contributed to the company.

Due to its limited liability character, non-profit organizations prefer to set up a company limited by registration.

After the successful registration of your company, you need to obtain permits and licenses as per your business activity.

If a foreigner wants to register a company in Singapore, then he/she must engage a registered filing agent who would submit the online application at BizFile+ on his behalf.

No, you need not come to Singapore to set up a company. All you can do is engage a filing agent on your behalf.

In case the annual income of the company exceeds $1 million, it shall have to file for GST.

Companies limited by guarantee are public companies. On the other hand, companies limited by shares come under the category of private companies. As a result, a company limited by guarantee does not pay its members bonuses and dividends.

The corporate income tax rate of 17% is charged on the company’s chargeable income.

A company limited by guarantee can apply for some tax exemptions. In case a company limited by guarantee earns 50% of its income from tax-deductible membership fees, then such an income would be subject to taxation. However, if the company limited by guarantee earns less than 50% of its income from tax-deductible membership fees, then income earned from non-members would be subjected to taxation.

Forming a company in Singapore takes around 3 days to a week.

To open up a bank account in the name of a company in Singapore, you must have a resolution by the company’s board of directors mandating their consent for the same, a copy of Certificate of incorporation, a copy of the business profile, National ID card of Singapore or copy of passport, Proof of residential addresses of the directors.

You can apply for the permits and licenses through the Singapore Go Business Licensing portal.

Yes, appointing a resident director in a company limited by guarantee in Singapore is mandatory.

For registering a company limited by guarantee, all you require is three individual directors, two of which must be Singapore citizens, one company secretary, and a filing agent. Along with that, a minimum of $1 capital is required to be contributed by the guarantors.

Yes, it is necessary to have your business name approved as per the ACRA guidelines before the incorporation of the company limited by guarantee in Singapore.

Post-registration compliances in the form of bookkeeping, annual tax filing, choosing financial year end, and conducting the Annual General Meetings have to be done by the newly incorporated subsidiary company.

When a company name is not approved under the Business Name Registration Act on account of a similar name with an already functioning company or if the name is offensive, then registration of a subsidiary company can be refused.

A unique Entity Number is a system-generated number given to the newly registered subsidiary company to transact with government agencies.

There are two ways of dissolving a company limited by guarantee. You can wind it up, which can be done voluntarily or involuntarily. The other way is that the Company registrar can strike off the company from its register as per Section 344 of the Singapore Companies Act.

Any company in Singapore must have an audit. The Company auditor must be appointed within 3 months of the company's incorporation date.

The appointment of a company secretary is mandatory for any company in Singapore within 6 months of the date of incorporation of such company.

Any company in Singapore can employ foreign workers by applying for an Employment pass.

The Constitution is a legal necessary paper that outlines the rules regarding the governance of the proposed company, like the rights of appointed officers and rules pertaining to corporate governance.

A company limited by guarantee can apply for a charity status within three months of incorporation of the company. To apply for a charity status, a company limited by guarantee must operate on a non-profit basis. Along with that, its activities should be focussed on charity and public welfare.

The company's remaining assets are distributed to similar charitable organizations after the dissolution of the company.

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