Exempt Private Limited Company in Singapore
Singapore gives an array of choices to entrepreneurs to opt for a type of entity as per the nature and scope of the business. The majority of the entrepreneurs who set up new companies rely on incorporating private limited companies. It is popular because of its business structure and other features. These private companies are limited by share. Therefore, they cannot exceed the limit of 50 shareholders.
Private companies in Singapore limited by shares come under two categories as per their business needs which are as follows:
- A private company with a shareholder of 1-50 members.
- An exempt private limited company with 1-20 number of shareholders.
Exempt Private Limited Company name should differ from another legal entity name. A Private limited company by shares should hold the suffix of ‘Private Limited Company' or abbreviation ‘Pte Ltd.' An Exempt Private company uses an abbreviation of EPC as a suffix in its company name.
Features of Exempt Private Limited Company in Singapore
A private company whose shares are not carried by a corporate body and does not exceed 20 shareholders qualifies for Exempt Private Limited Company or EPC. The history of the Exempt Private Limited Company started in the year 2003 under the amendment of Companies Act.
An Exempt Private Limited Company is the most common and preferred business entity in Singapore due to is reduced compliance requirements. Many small companies under Private limited entities converted their status to Exempt Private Limited Company because of some compliance privileges.
Exempt Private Limited Companies that have annual revenue of $5million are exempted from auditing requirements. Instead of filling statutory yearly accounts, Exempt Private Limited Company submits the declaration of solvency approved by directors and company secretary. Due to any reason, it fails to file the statement, then it must submit an unaudited account to the ACRA. Until the company is solvent and submits the solvency declaration, there is no need for providing an annual report to ACRA.
Exempt Private Companies need to maintain proper accounting records, develop and present a financial statement as per the Companies Act and Singapore Financial Reporting Standards.
An Exempt Private Company that is newly setup has entitled to full tax exemption privileges. In their first three years of establishment, the company can enjoy substantial savings from tax exemption. Exempt Private Limited Companies are small companies that have significant benefits. The process of statutory auditing formalities authorizes Exempt Private Limited Company to save more on auditing fees.
Exempt Private Limited Companies have more benefits in terms of loans to a director and intercompany loans/ guarantee. Section 163 of the Companies Act forbids extending loans to other companies or offering a guarantee of security for loan gained by another company if the director of the former company has 20% or more interest.
Section 165 does not allow an organization to extend loans to directors unless the loan is exempt. An Exempt Private Limited Company has greater flexibility to leverage capital and earnings for directors of a small company.
What are the essential requirements for Exempt Private Limited Company in Singapore?
The essential requirements for incorporating an Exempt Private Limited Company in Singapore are as follows:
- Foreigners can hold all the shares of the company.
- A newly set up company gets a 3-year partial exemption of corporate taxes.
- Shareholders have a limitation to their share capital contribution.
- The minimum requirement for the shareholder is one who can be a foreigner, up to a maximum of 20 individuals.
- No minimum amount of capital is required for incorporation.
- The name of shareholders is not publicized in records.
- English is one of the official languages.
- Singapore Exempt Private Company Name.
Tax exemptions are available for Exempt Private Limited Company in Singapore
The companies can have tax exemptions and incentives provided by Singapore tax authorities. Government agencies support newly setup companies by offering them to have financial benefits to survive in difficult times. Corporate tax is applied to them.
For the first three years, the company pays 0% corporate tax on its initial amount of S$1, 00,000. If the taxable amount is less than S$3, 00,000, then the tax rate applied is 8.5%. For payable income amount exceeding S$3, 00,000, a tax rate of 17% is applied.
Exempted Private Companies in Singapore enjoy many advantages. It is a primary business medium because of its exclusive opportunities like distinct legal entity, shareholder assets, the reputation of the organisation and transfer of shares.
Process of Registration of Exempt Private Limited Company in Singapore
The process of Registration of Exempt Private Limited Company in Singapore is as follows:
Choose the Name of the Company
The first step of Incorporating an Exempt Private Limited Company in Singapore is to choose the name of the company. The name chosen should be unique and should not contain any words that can be considered inappropriate or vulgar.
Filing of Documents
The two crucial documents filed are Memorandum of Association (MOA) and Articles of Association (AOA) with the Registrar of Companies.
Approval by Registrar
Once the documents filed by the applicant are approved, the registrar will notify the same to the applicant.
Unique Entity Number
They would provide you with a Unique Entity number as an identity number. A formal certificate of the incorporation shall be given as a proof of affiliation.
Issue of Certificate of Incorporation
The Company Secretary issues share certificates to each shareholder, stating the number of shares allotted to them. The Secretary conducts the first board of directors meeting. In this meeting, a resolution is taken. A resolution for opening a bank account also is taken in this meeting.
Advantages of Exempt Private Limited Company in Singapore
The advantages of Exempt Private Limited Company in Singapore are as follows:
- Less Compliance.
- Financial loan activities allowance.
- Newly setup stage tax exemption.
- Limited Liability.
- A Shareholder is free from the obligation of EPC debts, obligations, and losses except for his amount of share capital contribution.
- The memorandum states the type of activities followed in Exempt Private Limited Company.
- The Articles of Association would provide rules about the management of the company.
Disadvantages of Exempt Private Limited Company in Singapore
The disadvantages of Exempt Private Limited Company in Singapore are as follows:
- Organizations are incorporated by strict rules and regulations compared to partnerships.
- They face greater disclosure and administration requirements.
- The setup of the Exempt Private Limited Company in Singapore can be more expensive than partnerships.
How can we Help?
Our team at Enterslice is a one-stop solution if you are planning to obtain a Registration for an Exempt Private Limited Company. We ensure smooth implementation of your assistance and work in international registration and include the procurement of an Exempt Private Limited Company.
We follow these simple steps for the effective execution of your order with us at Enterslice:
STEP 1: Once you post your inquiry, we understand your requirement through one on one discussion with our professionals and suggest you the most apt service package offered by us at our company. The professionals at Enterslice will look for the best possible solutions for your questions and help you in the best possible ways. Based on the discussion, we will generate your order.
STEP 2: Once your order is created, you will be required to make the required payment along with necessary documentation. The amount of payment will include our services fees as well as the other relevant government fees. The list of all the necessary documents will be provided to you by our professionals.
You can make the required payment through any of the following modes:
- Bank Transfer- NEFT or IMPS
- M Swipe (Credit or Debit Card)
- Paytm or Razor pay
STEP 3: Once the payment is received, we will start working on the process. You will be notified at every stage in the process.