Changing a Sole Proprietorhip to a LLC in Singapore
Foreign enterprisers deciding to open a small company in Singapore usually start with a sole proprietorship which is the simplest form of doing business in the city-state. Once the business expands, it is advisable to change company types. The most common change in company structure is from sole proprietorship or partnership to limited liability company, which has become the most employed type of company in Singapore during the last few years.
Steps to change a sole proprietorship into a Singapore limited liability company
There is no direct way of transforming a sole proprietorship into a limited liability company (LLC) in Singapore, according to the law. The first step towards changing the sole trader into a LLC is to deregister the sole proprietorship. The second step implies registering a new company as a limited liability company with the Singapore Accounting and Corporate Regulatory Authority. Then the activities of the sole proprietorship must be transferred to the new business, while the last step is to notify the Trade Register about the cessation of the sole trader’s activities.
Deregistering the Singapore sole proprietorship
Entrepreneurs switching from sole proprietors to limited liability companies are required to deregister from the Companies Registrar within three months after the new company is registered in Singapore. ACRA will then notify the owner about the cessation of its activities, after which the owner will be able to transfer the assets of the old business to the new one.
Transferring business assets to the Singapore PLC
Once the change from sole proprietor to limited liability company is completed, the transfer of the old business’ assets can begin. The owner is required to transfer the following:
- the assets of the sole proprietorship;
- the corporate bank account;
- the registered address;
- the contracts.
The assets can be transferred once a resolution has been passed, while the bank account of the sole proprietorship must be closed and then a new one must be opened. Also, the Singapore limited company will be required to apply for additional licenses depending on the activities to be undertaken.
For assistance in changing a sole trader into a limited liability company, do not hesitate to contact our experts in setting up private limited companies in Singapore.