Reasons for Setting up a Private Limited Company in Singapor
Updated on Monday 29th July 2019
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Some of the main reasons for setting up a private limited company in Singapore include easy company formation, good business conditions, and low taxation. When investors decide to incorporate a type of legal entity in Singapore they will look at a number of particularities and the chosen form will influence the business’s ability to grow in time as well as the manner in which it may be perceived by clients and business partners. Moreover, the characteristics of the business form will also determine the degree of liability for the founders.
The Singapore limited company may be private or public and the differences lie in the ability to offer the shares to the public (for the latter) as well as the number of shareholders and other traits. Most business owners are interested in setting up a private limited company in Singapore because they do not necessarily intend to list their company publicly and this business form is suited to small and medium companies alike.
Below, we list some of the top reasons why investors choose this type of company:
- Low taxes: Singapore has one of the lowest corporate tax rates in the region applicable to this business form.
- Easy incorporation: this business form can be easily set up by observing only a few key and mandatory steps.
- Distinctiveness: this refers to the fact that the company, the private limited company, is a separate legal entity from its founders.
- Ease of doing business: apart from the company’s characteristics, investors may wish to open a company in Singapore because of the favorable business climate.
Investors may find that one or more of these listed reasons for setting up a private limited company in Singapore also applies in their case. However, it is advisable to reach out to our team of experts before choosing the business form and starting the incorporation procedure. One of our agents will be able to answer any other additional questions about this business form.
What are the benefits of setting up a private limited company in Singapore?
The low taxes applicable to companies as well as the fact that the founders are only liable up to the extent of the invested capital are important characteristics. Likewise, investors benefit from the fact that the company has a legal personality, thus it is treated separately from its founders and directors. It can also enter into debt and enter into contracts and commence legal action against other parties in its own name.
The following list includes four more reasons for setting up a private limited company in Singapore:
- Facile succession: the company survives in time is not dependent on whether or not its initial members remain within the company,
- Easy capital raising: the corporation can increase its capital by admitting new shareholders or issuing more shares to existing ones.
- Easy ownership transfer: the ownership of the company can be transferred as needed (partially or in its entirety) without the need to pause the activities.
- Credibility: this business form is one that offers a credible image to clients and business partners, as opposed to the sole trader, for example.
What are the steps for the registration of the private limited company in Singapore?
The following steps are important when setting up a private limited company in Singapore:
- reserve the name: proposed names are quickly approved or dismissed through an online system.
- prepare the company documents: these will contain the company name, the business activities, the shareholding structure, the registered address, and other information.
- provide shareholder ID: the founders must provide ID copies and for non-residents a passport copy.
- register the company: this step is performed with the Accounting and Corporate Regulatory Authority and it is computerized.
- open a bank account: this is a post-registration step and the company founders can choose to open it with any of the bank branches available in Singapore.
- obtain a business license: this will only be required for some business activities, for example when opening a restaurant, travel agency or others.
How can investors receive personalized assistance?
By working with our team of specialists, investors can receive complete assistance for the incorporation of the private limited company. We will help draft the incorporation documents and prepare the file for registration.
Singapore is a popular location for company formation, as seen from the following statistics:
- 15,901 new businesses were incorporated in the first quarter of 2016;
- the private limited company is the most popular business form, 8,228 of the new companies formed.
- the exempt private companies were the most numerous out of the private limited companies, their number is 7,333.
Investors who wish to know more about setting up a private limited company in Singapore can contact us. We can answer any pre-incorporation questions as well as assist the founders throughout the company registration procedure.