In Singapore, the public limited company (PLC) is a preferred business structure for larger organizations that aim to access capital markets. This form of business entity not only allows companies to raise funds from the general public through the sale of shares but also offers a robust structure to support expansion and sustainability. This article provides a comprehensive overview of the benefits, types, and registration process of public limited companies in Singapore, along with a comparison with limited companies.
Benefits of a Public Limited Company
Access to Capital: One of the most significant benefits of a public limited company is its ability to raise capital by issuing shares to the public. Unlike private limited companies, which have restrictions on share transfers and the number of shareholders, PLCs can sell shares to the public on a stock exchange, providing substantial opportunities for growth and expansion.
Benefits of a Public Limited Company
Market Prestige and Credibility: Listing on a stock exchange enhances a company’s visibility and prestige. This often leads to increased trust among consumers and can improve business relations. It also provides a measure of credibility not necessarily available to private limited companies, which can be advantageous in negotiations and business deals.
Perpetual Succession: A PLC has the advantage of perpetual succession, meaning the company continues to exist even if the original shareholders or founders pass away, retire, or leave the business. This stability is crucial for long-term contracts and ongoing business relationships.
Shareholder Flexibility: Public limited companies offer shareholders flexibility in buying and selling their shares, which is not as straightforward as private limited companies. This liquidity is appealing to investors who may wish to diversify or liquidate their holdings.
Enhanced Transparency: PLCs are subject to stringent regulatory requirements, including detailed disclosures and frequent reporting. This level of transparency ensures that all stakeholders, including shareholders, regulators, and the public, are well-informed about the company’s financial health and business activities.
Types of Public Limited Companies in Singapore
In Singapore, public limited companies are typically categorized based on their listing status (1):
- Listed Public Companies: These are PLCs that are listed on the Singapore Exchange (SGX), making their shares available to the general public. Listed companies must adhere to high standards of accountability and transparency.
- Unlisted Public Companies: While they are still able to raise capital from the public, these companies do not list their shares on a public exchange. This might be suitable for companies that seek more privacy or those that are in the process of meeting the listing criteria.
Types of Public Limited Companies in Singapore
Public Limited Company Registration Process in Singapore
The process of registering a public limited company in Singapore is more complex compared to other business forms due to the additional regulations and requirements involved. Here’s a step-by-step outline:
Public Limited Company Registration Process in Singapore
- Company Name Approval: The first step is to get the company name approved by ACRA. The name should be unique, desirable, and not similar to any existing businesses.
- Preparation of Company Constitution: A PLC must have a constitution that outlines its objectives, rules and the rights and responsibilities of its shareholders. This document must be prepared and signed by the company’s founders.
- Registration with ACRA: With the name and constitution ready, the company can register with ACRA. This involves submitting various documents, including details of the company’s officers, the registered address, and a description of business activities.
- Meeting Regulatory Requirements: After registration, the company must meet further regulatory requirements such as obtaining a business license, registering for Goods and Services Tax (GST), and preparing for the initial public offering (IPO) if the company chooses to be listed.
Limited Company vs. Public Limited Company in Singapore
The primary difference between a limited company (typically a private limited company) and a public limited company in Singapore lies in their ability to raise capital and the level of regulatory oversight.
Limited Company vs. Public Limited Company in Singapore
- Capital Raising: As mentioned, PLCs can raise capital publicly which is not possible for private limited companies. This makes PLCs more suitable for large-scale operations needing substantial capital.
- Regulatory Requirements: PLCs face more stringent regulatory requirements, including regular reporting and disclosure obligations that provide greater transparency.
- Shareholder and Ownership Restrictions: Private limited companies are limited to a maximum of 50 shareholders and cannot offer shares to the public, whereas PLCs can have an unlimited number of shareholders with shares that can be freely traded on the stock market.
Conclusion
Singapore’s public limited company structure offers significant advantages to businesses looking to expand through public capital. Enhanced visibility, credibility, and access to capital support large-scale operations and long-term growth. However, increased regulatory requirements and the complexity of managing more shareholders and market expectations mean this structure is best suited for companies with significant resources and management capabilities. Understanding these nuances is crucial for any business considering adopting a PLC structure in Singapore’s dynamic market environment.
