Guide on Setting up a Pte Ltd in Singapore

Updated on Monday 20th April 2020

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The Pte Ltd or the private limited company is among the most popular business forms in Singapore. It is a type of legal entity that can have a limited number of shareholders, and its shares are not available to the public. However, it has a set of clear advantages to investors and it is subject to a simple incorporation procedure.
 
We present essential information about the Pte Ltd in Singapore, the requirements for investors and details about the post-registration phase. For more comprehensive information, we invite investors to contact our experts in the registration of a private limited company in Singapore.
 

What are the main features of the Pte Ltd Singapore?


The private limited company, or Pte Ltd, is a business form that has many advantages, therefore it is widely used by investors who are interested in starting a small or medium-sized business. In order to register a private limited company in Singapore, investors need to follow a few simple rules regarding the minimum number of founders as well as the requirements for registration and obtaining additional permits for functioning. 

Our Singapore incorporation experts detail the Pte Ltd requirements further in this article. However, it is useful to remember that this business form requires one of the following elements: one shareholder, one director, one secretary, 1 SGD capital as well as one registered address in Singapore. We detail these requirements below and our agents are able to answer any other questions that investors may have and are not covered in this article.
 

What are the requirements for shareholders and directors in Singapore?

 
Company shareholders and directors in Singapore must be at least 18 years of age. The company has a minimum of one shareholder who can be a natural or legal person and at least one director. A company secretary is also required, who is a local resident in Singapore (this position needs to be filled in within 6 months). The sole director cannot act as a company secretary. 

The company director needs to have full legal capacity and be a Singapore citizen, permanent resident or hold an EntrePass (a type of permit that allows entrepreneurs to start and operate a new business, provided that they meet the eligibility criteria). A foreign company director can also occupy this position is he holds an Employment Pass, however, a special letter of consent from the Ministry of Manpower is required in this case.

The company director has a number of duties towards the good functioning of the company. Among these, we can mention the fiduciary duty, according to which the director acts to the best interest of the company as well as the duty of diligence that refers to the care and skill used to manage the business.
 
These requirements for the Pte Ltd in Singapore are only briefly discussed in this guide. You can reach out to one of our company formation agents for complete details.
 

What are the requirements for the minimum share capital for the Pte Ltd?

 
The Pte Ltd Singapore is a type of company that does not require a large minimum capital. In fact, investors can start this type of business with one 1 SGD. The conditions for the minimum share capital do change however if the company is a regulated business, such as a financial services agency or a recruitment agency or even a travel agency. In these cases, the minimum paid-up requirements will change. Another situation in which the minimum capital has a minimum value of 50,000 SGD is when the investor is also applying for a relocation visa, the Entrepreneur Pass. 
 
One of our agents who specialize in setting up a private limited liability in Singapore can give you complete details on these requirements.
 

What are the business details requirements for a Pte Ltd Singapore? 


When opening a business in Singapore, investors are required to draw up a comprehensive business plan as well as follow the general rules for incorporation. This means that they will need to prepare a set of documents and make several decisions as to the structure of the company. Some of the document requirements and decisions are listed below:
  1. Company name: the Pte Ltd Singapore needs to have a unique name, one that does not infringe any existing ones.
  2. Registered address: this is the address included in the company’s constitutive documents that needs to be located in Singapore; this is where the company’s communications and notices are sent to and where the register and records are stored.
  3. Business activities: the company needs to select a business activity or activities that will be included in the company documents.
  4. The shareholding structure: this company can be incorporated with only one shareholder, however, when this is not the case, the shareholding structure is to be defined. 
  5. Articles of Association: these are the company’s constitutive documents, the ones that outline the scope of the business, the activities, the names of the shareholders and directors, the address of the registered office and others.
Choosing an available company name, preparing the Articles of Association and filing in the registration form are essential when setting up a private limited company in Singapore. The name of the company needs to be a unique one, thus the first step for company registration is to reserve the chosen name. The registration process cannot advance unless the company has its name approved. The registered office needs to be accessible to the public during normal office hours, however, it does not need to be the sole place where the company conducts part or all of its activities. 
 
Setting Up a Pte Ltd in Singapore

The registration of a private limited company in Singapore is a simple process and one that starts with checking and reserving the company name. Our agents can help investors go through all of these mandatory steps as well as draw up the required documents. It is advisable to also draw up a shareholder’s agreement in those situations in which the company has more shareholders. This agreement can be a useful instrument in cases that involve different types of shareholder disputes. As a particularity of company registration in Singapore, investors should note that the names of the company shareholders and directors are disclosed when registering the business.

There are two types of shares that can be used when opening a Pte Ltd in Singapore: ordinary shares (with voting rights and certain rates of remuneration as per the rates of the dividends) and preference shares (that can offer preferential rights over ordinary ones, most notably in terms of dividend distribution).

A company, once incorporated, is assigned a unique entity number. This is the UEN and it is used when engaging in transactions with government agencies. 
 

What are the taxation and accounting compliance principles for the Pte Ltd Singapore?

 
Singapore is a preferred location for company formation because of the low tax regime. The Pte Ltd Singapore is subject to a corporate income tax rate of 17%. New companies can also qualify for an exemption where the first 100,000 SGD of the normal chargeable income and 50% of the next 200,000 SGD of chargeable income are exempt from tax, for the first three consecutive years of assessment. 
 
The tax year is usually the same as the calendar year and companies must submit the estimated chargeable income with the IRAS. As far as accounting is concerned, any relevant documents are to be kept for at least three years after the completion of the transaction. 
 
One of our agents can provide you with more details on taxation, other than the ones highlighted in this guide on setting up a Pte Ltd in Singapore.
 
Companies are required to appoint an auditor within three months after they have been incorporated. However, certain types of companies may be exempted from this requirement when they are treated as a small company, as per the Companies Act. a company is a small one, and therefore exempted from appointing an auditor, when it is a private company for the financial year in question and when it meets at least two of the following three criteria: has a total revenue of less than 10 million SGD, is has total assets with a value of less than 10 million SGD and has fewer than 50 employees.

The Companies Act also provides for several other requirements that need to be fulfilled by the company director. These include the following:
  • Hold the general annual meeting, unless the company is exempt from this;
  • File the annual return within seven months after the closing of the financial year;
  • Maintain the register of registrable controllers: the information on the beneficial ownership of the company that may be available to the public upon request;
  • Maintain the electronic register of members: this is a list of all shareholders that needs to be updated as any changes in ownership take place.
  • Maintain other registers, such as those for the secretaries, auditors and chief executive officers;
  • Notify of any change in the company information within 14 days of their occurrence (these can refer to the company’s name, activity or address).
 
Our team of agents can guide you on setting up a Pte Ltd in Singapore and can give you more details on each of the steps for opening this type of company as well as the general requirements for management and reporting. 
 

Company licensing in Singapore 


Certain companies incorporated under the Pte Ltd require special permits or licenses in order to legally engage in business activities. A number of agencies in Singapore govern the manner in which activities in a certain business field may take place. For example, cafes are licensed by the National Environmental Agency while the Agri-Food Veterinary Authority licenses businesses such as pet shops. Trade companies will need to apply for a special permit from the Singapore Customs. Other common examples of licenses include those for food shops, liquor stores (with a separate one for shops with extended operating hours), for tobacco retailers, petroleum or flammable materials storage or public entertainment. 

When requesting a license for these regulated business sectors, the applicant must have a certain position within the company (managing director, director, secretary or chief executive officer). Licenses are subject to certain fees and in some cases, payment is done in two separate stages (one upon submission and one upon approval). 

It is advisable to determine whether a business requires additional licensing before commencing the registration procedure with ACRA. One of our agents can help you with more information on licensing a Singapore limited company.
 

Additional information for opening a Pte Ltd in Singapore


Once the company is registered and licensed, investors will need to hire employees. This is an important step and an action that is governed by the Employment Act, the legislative document that contains information on working conditions. Foreign talent is welcomed and in demand and the policies for hiring overseas workers are simplified ones, starting with making the necessary applications with the Ministry of Manpower, the Work Pass Division. 

Hiring foreign employees may be a lengthier process in some cases as the Ministry evaluates the applications and issues a reply within approximately three weeks. In some cases, the approval for hiring a foreign national may only be obtained once the employer has shown that there were no options for finding a qualified individual for the position among the local pool of workers. This recruitment process, along with the tax compliance for reporting employee earnings and others should also be taken into consideration during the early stages of company formation. 
 

Investing in Singapore 

 
Many foreign investors seek a personalized guide on setting up a Pte Ltd in Singapore when they decide to incorporate in the city-state.
 
The development of the corporate sector in Singapore is highlighted in the statistics below:
 
  • - the main industrial sector is finance and insurance, with approximately 5,804.1 billion SGD or 69.7% of the total assets;
  • - the second sector is wholesale and retail trade, with 10.3% of the assets or approximately 850.9 billion SGD;
  • - the third sector by total assets value is the manufacturing sector, with  4.8% or 400.6 billion SGD.
 
The data mentioned in this article is issued for the year 2017 by the Department of Statistics Singapore
 
Apart from the developed industries and the easy set up for a private limited company in Singapore, investors can also benefit from a number of tax incentives. These include the following:
 
  • Exemption of income for venture companies or for international shipping profits;
  • Exemption of income of shipping investment enterprise;
  • Deductions for expenditure on research and development projects and for expenses related to trade fairs, exhibitions, trade missions of the maintenance of an overseas trade office;
  • an exemption and concessionary rate of tax for insurance and reinsurance businesses;
  • concessionary tax for a financial sector incentive company or for a global trading company;
  • development and expansion incentive as well as investment allowances.
 
Please keep in mind that this is only a short summary of the tax incentives that are available in Singapore and are governed by the Singapore Income Tax Act as well as the Economic Expansion Incentives Act. We recommend getting in touch with our agents for more information on how a private limited company can access these.
 
Local and foreign investors may find that the Pte Ltd is a suitable business entity choice for investing in any of these mentioned sectors, provided that the company will have a small or medium-size and that it will not be listed on the stock exchange. When needed, a private limited liability company can be converted into a public limited liability company with the help of our experts.
 
Contact us if you have any further questions or if you need complete specialized assistance for the registration of a private limited company in Singapore.