A business entity must be tailored to the specific needs of each organization. Learn which business structure is most suited to your company's needs before you incorporate.
1. Private Company limited by shares
(i) Private Company: Private Corporations Cannot Have More Than 50 Shareholders.
(ii) Exempt Private Company (EPC): A privately held company that has no more than 20 shareholders and no corporate shareholders. An EPC may also be a firm that has been designated as such by the Minister under section 4(1) of the Companies Act.
2. Public Company
(i) Public Company limited by shares
A public limited company may have more than 50 shareholders. The company may raise capital through the sale of shares and debentures. Prior to making a public offering of shares and debentures, a public company must file a prospectus with the Monetary Authority of Singapore.
(ii) Public Company limited by guarantee
The members of a public company limited by guarantee contribute or agree to contribute a fixed amount to the company's liabilities as a guarantee. It is typically formed to engage in non-profit activities, such as fostering art, charity, etc.
3. Requirements for Establishing a Company in Singapore
Directors
A company's director oversees the company's operations and provides strategic guidance. A director's duties require him to make impartial choices, serve the company's interests, and be forthright and conscientious in his work.
One director is necessary as a minimum under the Companies Act.
At least one director must be a Singapore resident in order for a corporation to legally operate in the country.
That the director is "ordinarily resident in Singapore" refers to the fact that Singapore is where the director makes his or her permanent home. Anyone who is a citizen or permanent resident of Singapore or who has an EntrePass can be considered a legal resident of Singapore. An Employment Pass holder may be approved as a resident director provided that they meet all of the requirements set forth by local law regarding the hiring of foreign workers. In order to register directorships with ACRA, EP holders who intend to take on secondary directorship roles in other companies (apart from the company his EP is approved for) must first apply for and be granted a Letter of Consent (LOC).
To serve as a company director, one must be at least 18 years old. The utmost age for a director is irrelevant. However, insolvent individuals and those with a criminal record for fraud or dishonesty are not eligible to serve as directors.
Secretary
Within 6 months after its incorporation date, any business must select a secretary. The secretary must be physically present in Singapore and cannot serve as the company's sole director. In some cases, the Secretary may be personally responsible for the company's failure to follow the law.
Auditor
Except for exempted Private Limited Companies, all companies are required to hire an auditor no later than three months after their incorporation date.
Guidelines for Audit Exemption Qualifications
Companies with annual revenue of $5 million or less qualify as "exempt private companies" and are therefore exempt from having their financial statements audited. The old method of determining whether a company is exempt from statutory audit is being phased out in favor of a new small company model. The need that a business be a private nonprofit in order to avoid audits has been removed.
It has met at least two of the three following requirements for the preceding two fiscal years:
(i) yearly revenue less than $10 million
(ii) total assets less than $10 million
(iii) staff count less than 50 (Singaporean)
