Things to consider while starting a Private Limited Company
Setting up a new company in Singapore is the start of an exciting venture. A Private Limited company in Singapore is the most popular because of the flexibility of setting it up.
- It is considered as a separate legal entity from its shareholders.
- A limited company is recognised as a taxable entity, which means shareholders are not liable for any of the debts and losses except for the amount of share capital.
How do I set up a Private Limited Company in Singapore?
If you are willing to start a Private Limited company in Singapore, this guide shall come in handy. We can assist you in the company incorporation procedure.
A company willing to do business in Singapore should register with the Accounting & Corporate Regulatory Authority (ACRA). ACRA is the statutory body that governs how a company should set up in Singapore under the Ministry of Finance.
A foreigner interested in registering a company in Singapore is not allowed to self-register. It is important to get assistance from a local business registration provider in order to do so.
The 5 requirements to start a business in Singapore:
- One resident director
- A physical office address in Singapore
- At least 1-50 shareholders – which may be an individual or a corporate entity
- A minimum initial paid-up share capital of S$1
Things to consider while starting a Private Limited Company
1. A company name
All companies interested in registering in Singapore must select a unique company name. Any name already in use will not be accepted. So it is important to choose your company name wisely. Your business name in Singapore could become your brand. It must get approval from ACRA before its incorporation. ACRA rejects a proposed company name if it is:
- Identical to an existing company name
- Names or trademarks identical to established names
The name must be easy to read, unique, and devoid of any vulgar or obscene words. There should be no copyright violations when it comes to choosing a company name, nor should there be a trademark infringement issue.
Some names of companies require special approval from an external authority. This includes specific words, such as media, finance, bank, finance, and education.
After the approval of a company name, it is reserved for 60 days from the date of submission of the application. Following the approval, you are advised to go ahead with the company registration Singapore within a specified period.
2. Business activities
What type of business activities do you plan to do? All of the business activities in Singapore are covered under the Singapore Standard Industrial Classification Code 2010. This is the code that serves as a guideline for the type of business activities you can engage in.
3. Memorandum & Articles of Association
Another important step to set up a business in Singapore is to draft an MAA. A standard MAA document can be obtained from the Singapore Company Registrar regarding the rules governing the company management and activities.
4. Incorporation Certificate
One crucial step in starting a Private Limited company in Singapore is to file the incorporation request and get ACRA’s approval. ACRA sends an email with the confirmation of incorporation along with the registration number. The process can be completed early if the incorporation documents are ready and duly signed by those involved. The email is considered as a soft copy of the incorporation certificate.
A company incorporated in Singapore can purchase a hard copy if needed by submitting an online request to the authority. You will need to pay a nominal fee for this service.
5. Shareholder agreement
The company should have a proper shareholder agreement in place. This is essential to avoid any potential disputes.
6. Shareholding pattern
A Private Limited company in Singapore must issue at least one subscriber shares to its initial members.
7. Company secretary details
It is important for a Singapore Private Limited company to have a company secretary within six months of its incorporation.
8. Shareholder details
Every company is required to have at least one individual or corporate shareholder to form a Private Limited company in Singapore.
9. Company Business Profile
A Singapore company gets the confirmation of incorporation only when it receives an email from the Singapore Company Registrar. The email includes the Unique Entity Number issued by the government to any Singapore incorporated company.
A company can pay a small fee to obtain a business profile with the company name, registered address, incorporation date, registration number, paid-up capital, business activities, and details of shareholders, company secretary, and directors.
10. Director’s Details
A limited company in Singapore must have a director, with a residential address. This means they should be a Singaporean Citizen, Permanent Resident, or on an Entrepass work visa.
11. Registered Address Details
A company requires a registered address for incorporation in Singapore. This is the physical address where all official correspondences are sent. The registered address cannot be a P.O. Box.
12. Auditor appointment
All Singapore-incorporated companies must appoint an auditor within 3 months of incorporation unless exempted from auditing requirements. In order to get an exemption, the company should have less than 20 individual shareholders and no corporate shareholders. Additionally, the company’s annual turnover should not be more than S$5 million.
13. Share Certificate
This is the proof of ownership of company shares. The certificate is proof of the shares allotted to each shareholder. The company secretary is responsible for issuing the certificate.
14. First Board Resolution
The resolution is a confirmation that shareholders and directors are officially appointed.
15. Bank Account Opening Resolution
A company needs a separate bank account since it is a separate legal entity. The Board of directors sanctions the account opening while specifying the signatories to the account.
During the formation of the company, the choice of a corporate bank account is critically important. With numerous banking options available, the application procedure and banking requirements might vary from one private bank to another.
In order to open an account, you will need:
- Proof of the incorporation certificate
- Copy of the business profile
- Proof of the MAA
- Copy of the passport
- Proof of residential address
After the company registration in Singapore, the next step is to complete all post-incorporation obligations, including:
- Securing necessary business licenses applicable to the company’s activities
- Getting an office space
- Recruiting staff if needed
- Setting up a bookkeeping system for managing the financial affairs of the company or engaging the services of a professional accountant.
When you register for a company in Singapore, it is important to appoint a Company Secretary within six months of incorporation under the Singapore Companies Act. The company secretary has to be an individual who is “ordinarily” a resident of Singapore. A company secretary is an officer with legal responsibilities. They share their responsibilities with the directors for specific tasks as required by the Companies Act.
One of the key responsibilities of a company secretary is to administer the company efficiently. This includes ensuring compliance with statutory and regulatory requirements. A secretary must ensure proper implementation of the decisions made by the board of directors.
Company license and permit
You would need to obtain one or more licenses and permits depending on the company’s business activities. A newly incorporated company must obtain a license before commencing its business operations. However, a license is not required for all types of business activities. Only a few operations need to secure a license. This includes travel agencies, cleaning, import/export services, restaurants, educational institutes, and financial services.
A company with an expected annual turnover of more than S$1 million must register for GST. The indirect tax is levied on goods and services consumption in Singapore.
A GST-registered company must charge the consumers of your goods and services a GST rate of 7%. Following your company registration, you need to take care of the following:
- Company Seal: A registered business in Singapore must have a company seal on its legal documents and share certificates.
- Share Certificates: Each shareholder receives share certificates from the company secretary. A share certificate is proof of a shareholder’s ownership in the company. It shows the distribution of shares among shareholders.