Characteristics of Private Limited Companies in Singapore
Updated on Tuesday 24th March 2020
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The private limited company in Singapore is one of the business forms that can be incorporated by investors, local and foreign alike. It is a type of corporation that can be founded by individuals, by another business or a combination thereof and it is the most widely chosen business form.
The characteristics of private limited companies in Singapore include, as the name suggests, limited liability for the founders, the advantage of having a separate legal entity and the fact that this business form offers a good business image.
Setting up a private limited company in Singapore is a straightforward process and one that is accessible to foreign investors. This type of company is preferred because of its flexibility and the fact that it is better perceived by the general public and the business partners, unlike the sole proprietorship, for example.
Investors who wish to open this type of legal entity can reach out to one of our agents who specialize in company formation.
Private Limited Company Singapore – main features
The private limited company in Singapore is a preferred business form for a number of reasons, starting with the fact that the founders are not exposed with their own assets should be business fail, like in the case of the sole trader. It is the equivalent of the LLC in other countries and it is a business form that is suited to companies irrespective of the business field in which they activate.
Below, we describe the main characteristics of the private limited company in Singapore as well as provide additional details about the general registration and management requirements.
- Legal identity: the company has a separate legal entity from its founders, it can enter into agreements, sue or be sued in its own name; it is the one to enter into debt.
- Limited liability: as clearly suggested by the name, the founders are only liable to the extent of the capital they invest in the company.
- Succession: the company remains into existence regardless of whether or not the initial members remain in the business; the shares can be changed or transferred.
- Ease of obtaining capital: the company can raise capital by bringing in more members (limited to a certain number) and it can also apply for a credit from banks.
- Image: the private limited company in Singapore offers a credible business image and other businesses will willingly work with the company.
- Tax advantages: the private limited company benefits from the tax regime in Singapore, especially the reduced corporate income tax and the lack of capital gains tax.
As part of the succession advantage, the transfer of ownership is a facile process and a characteristic that can further determine investors to open this type of company. The ownership of the company can be transferred through a share transfer, either partly or in their entirety.
One important characteristic of the private limited company of Singapore is the fact that it can have a maximum of fifty shareholders. There are no restrictions on the number of foreign shareholders.
Registration requirements and other details
In order to register a private limited company in Singapore, investors need to:
- Choose a company name: the name needs to be a unique one and approval for usage is obtained before registration.
- Have a secretary: the business needs a company secretary, however, the appointment can take place after the registration.
- The registered address each private limited company in Singapore needs to have a local registered address.
- Company documents: the constitutive documents for the company will include details about the business activities, the identities of the directors, the address and name of the company, etc.
- Apply for registration: once the documents are complete, the registration of the company is a quick process.
The private limited company in Singapore is a popular business form and Singapore remains a top investment destination in the Asian region. According to the Department of Statistics, the foreign direct investment amounted to more than 1,560,000 million USD in 2017, signaling a year on year growth of approximately 15.7% (change recorded over the same period one year prior).
Choosing the right business structure is an important step when deciding to invest in Singapore. A private limited company has a number of features, as shown in this article that can present important advantages for investors in many business fields.
For more information about the private limited company in Singapore, please contact our agents who specialize in corporate formation and registration.