In Singapore, a unique corporate structure often utilized by non-profit organizations is the public company limited by guarantee (CLG). This article explores what a CLG is, the process of setting one up in Singapore, and the associated costs. This knowledge is crucial for anyone considering establishing a non-profit entity in this jurisdiction.
What is a Public Company Limited by Guarantee?
A public company limited by guarantee is a form of legal entity in Singapore, typically used for non-profit purposes such as charities, societies, and other types of organizations that require corporate status but do not plan to raise funds through public share issuance. Instead of shareholders, CLGs have members who guarantee to contribute a predetermined nominal amount towards the company’s liabilities in the event of its dissolution. This amount is usually very low, symbolizing the members’ commitment rather than a financial investment.
What is a Public Company Limited by Guarantee?
Key Features of a CLG in Singapore:
- No Share Capital: Unlike conventional companies, a CLG does not have share capital or shareholders. It functions relying on assurances given by its members.
- Limited Liability: The liability of the members is limited to the amount they have agreed to contribute.
- Used by Non-Profits: Typically utilized by non-profit organizations that need a separate legal identity. This structure suits organizations focusing on arts, charity, research, or education.
- Public Status: CLGs are considered public companies and must comply with stricter regulatory and reporting requirements compared to private entities.
Setting Up a Public Company Limited by Guarantee in Singapore:
The process of setting up a public company limited by guarantee in Singapore is more complex than forming a standard private limited company, reflecting its public nature and the accountability required. Here are the essential steps involved:
- Name Approval: Just like any other company, the proposed name of the CLG needs approval from the Accounting and Corporate Regulatory Authority (ACRA). The name should not be identical or too similar to any existing entity or trademark.
- Constitution Preparation: A CLG must have a constitution, which includes its objectives, rules about membership, and the structure of the organization. This constitution is crucial as it outlines the governance model and the specific activities for which the CLG is established.
- Appointment of Officers: At least three directors must be appointed, and at least one of them must be a Singaporean resident. A qualified company secretary must also be appointed within six months of incorporation.
- Member’s Guarantee: Members must provide a guaranteed amount, which is the maximum they will contribute in the event the company is wound up.
- Registration with ACRA: Once all documents are prepared and officers appointed, the next step is to register the CLG with ACRA. This process typically involves submitting the approved name, constitution, details of the directors and secretary, and the guarantee amounts.
- Post-Incorporation Requirements: After incorporation, the CLG must register with the Commissioner of Charities (if it’s a charitable organization) or relevant authorities depending on its activities.
Setting Up a Public Company Limited by Guarantee in Singapore
Costs of Setting Up a Public Company Limited by Guarantee:
The costs involved in setting up a public company limited by guarantee can vary depending on the complexity of the constitution, professional fees for legal and secretarial services, and the scale of operations. Here’s a breakdown:
- Name Approval and Registration Fee: ACRA charges a fee for name application and registration. The total cost is typically around SGD 300-400.
- Professional Fees: Engaging legal professionals or consultancy firms to draft the constitution and handle registration can range from SGD 2,000 to SGD 5,000 or more, depending on the complexity and the level of expertise required.
- Miscellaneous Costs: Additional costs may include fees for opening a bank account, initial member meetings, and potential registration fees if the CLG is also registering as a charity.
Costs of Setting Up a Public Company Limited by Guarantee
Conclusion:
A public company limited by guarantee in Singapore is a specialized corporate structure ideal for non-profit purposes requiring legal personality and limited liability without the need to issue shares. Setting up a CLG involves careful planning, adherence to regulatory requirements, and some initial costs, but it offers a robust framework for non-profits to operate efficiently and transparently. Understanding these steps and requirements is crucial for anyone looking to harness this structure for community, charitable, or other benevolent objectives.
