In Singapore, corporations typically have limited liability, not unlimited liability. This means that the shareholders of the corporation are only liable up to the amount they have invested in the company’s shares. Their personal assets are generally protected and are not at risk for the debts and liabilities of the corporation. This is one of the fundamental advantages of incorporating a business.
Here are some key points about liability in different types of corporate structures in Singapore:
- Private Limited Company: This is the most common form of incorporation in Singapore and offers limited liability to its shareholders. The company is a separate legal entity, which means it can sue or be sued in its own name. The personal assets of the shareholders are protected.
- Public Limited Company: Similar to private limited companies, public limited companies offer limited liability protection to their shareholders. These companies can raise capital by offering shares to the public.
- Sole Proprietorships and Partnerships: In contrast to limited companies, sole proprietorships and general partnerships do not offer limited liability. The owners or partners in these types of businesses have unlimited liability, meaning their personal assets can be used to settle business debts.
- Limited Partnerships and Limited Liability Partnerships (LLP): In a limited partnership, there are both general and limited partners where limited partners enjoy limited liability while general partners have unlimited liability. An LLP provides limited liability to all partners, protecting each partner’s personal assets from the debts of the partnership, liabilities, or negligence of other partners.
Thus, for corporations in Singapore, the structure typically protects shareholders from personal liability beyond their investment in the company. This setup encourages entrepreneurship by reducing the risk associated with starting and running a business.