Open a Public Company Limited by Guarantee in Singapore

Updated on Tuesday 24th March 2020

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The public company limited by guarantee is used to set up a non-profit business in Singapore. The main goal of the company will be to engage in different activities that are of public interest but that yield no profit. When the business does earn a surplus from its activities, it is used to fund future projects. Unlike a regular, for-profit company, the earnings are not distributed among its members.
 
This type of business entity is understandably very different from the private limited company in Singapore. Nevertheless, it is a suitable business type for investors who wish to engage specifically in these types of activities that are not profit yielding. 
 
The non-profit business can, depending on its activities and its range, have a positive impact on the community and on a large number of individuals. Entrepreneurs can choose to register this type of company as a second step after setting up a private limited company in Singapore.
 

The main traits of the public company limited by guarantee

 
This type of company is used for different purposes, however, their one common trait is that they are non-profit purposes. The following characteristics apply to the types of activities in which this company is commonly involved:
 
  1. Independence: this business is not related in any manner to the Singaporean Government
  2. Self-governance: the company is generally self-governing and a body of members acts in a fiduciary capacity within the company.
  3. Beneficial: the company’s goal is to aid the community or a special category of individuals; most often the beneficiaries are not part of the organization (they are not members of the company).
  4. No profit: the company is not allowed to derive profit from its activities like a Singapore limited company would.
On a separate note, as a legal entity, the public company limited by guarantee can be characterized as follows:
 
No capital: unlike other business forms, like the Pte Ltd, the public company limited by guarantee has no share capital.
No shareholders: as there is no share capital, the company does not have shareholders, instead it has members.
Legal separateness: the public company limited by guarantee is separate from its members or founders; it acts in its own name, can be sued or it can sue.
Others: the company must include the word “Limited” in its name upon incorporation. 
 
The public company limited by guarantee must have at least 2 directors and 2 members and a qualified company secretary. It is required to submit annual account audits and it must file the annual returns. The members will agree to pay a fixed amount if the company is wound up.
 

The use of a public company limited by guarantee for non-profit purposes.

 
We have already mentioned the fact that the public company limited by guarantee is not used for business purposes. However, investors who are keen on starting a non-profit organization should know that they can do so in the form of a charitable trust or a society if they choose to do so.
 
However, the founders have a series of advantages when they choose to open a public company limited by guarantee and register it:
 
  • Entering into agreements: when it is registered, the public company limited by guarantee can enter into agreements with other legal entities that will provide services.
  • Tax exemptions: when it is registered, the company will be able to submit a tax exemption claim for the funds it gathers during its campaigns or actions.
  • Credibility: the registered company will be formally set up and this will project a credible image outside the organization and to stakeholders. 
  • Fundraising: when the company is registered, it will be easier to organize fundraisers from non-company members. 
 
According to a report from the Commissioner of Charities in Singapore:
 
- the total annual receipts in 2017 amounted to 20.5 billion SGD;
- there were 40 newly registered charities;
- in December 2018 there were 2,277 registered clarities in Singapore; this is an increase from the ones recorded at the end of December 2017 (2,263).
 
A public company limited by guarantee is usually involved in charity, religious, scientific, artistic or non-trade activities. Investors who wish to know more about this business form can contact our agents specialized in opening a private limited company in Singapore

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