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Learn more about Private Limited Company in Singapore

Learn about the Private Limited Company, Singapore’s most prevalent business entity, including its varieties, characteristics, benefits, and drawbacks. This will also cover the prerequisites, method, and schedule for registering a Singapore Private Limited Company, as well as post-incorporation concerns and ongoing compliance obligations. Please visit our Singapore Company Registration page for additional information on the different incorporation choices.

Table of contents

What is a Singapore private limited company?

The majority of businesses in Singapore are registered as Private Limited corporations. The suffix “Private Limited”, “Pte Ltd”, or “Ltd” is normally needed as part of the company name for such Private Limited corporations.

Private Limited firms are known as corporations, Incorporated (“Inc.”), limited liability companies, and limitless companies in various areas of the globe, albeit the latter cannot be used in Singapore. The Accounting and Corporate Regulatory Authority is in charge of company registration in Singapore (ACRA).

Minimum Setup Requirements for a Pte. Ltd. Company:

➤ 1 Shareholder (individual or corporate entity)
➤ 1 Resident Director
➤ 1 Company Secretary
➤ Initial paid-up share capital of at least SG$1
➤ A physical Singapore registered office address

What are the types of private limited companies?

1. Private Limited Company

It is a locally incorporated corporation with a maximum number of shareholders of 50. A private limited company has a memorandum or articles of association that restricts its members’ ability to transfer their interests in the firm.

A limitation on the right to transfer shares in a private business often takes the form of a requirement that the transfer be first approved by the company’s board of directors or that the shares be first offered to current owners for transfer.

2. Public Limited Company by Shares

A public limited company by shares is a locally incorporated company that can have more than 50 shareholders. A stock exchange may or may not list public firms. They are frequently referred to as “listed corporations” where they are so listed. The corporation may raise funds by selling public shares and debentures. Before conducting a public offering of shares or debentures, a public business must register a prospectus with the Monetary Authority of Singapore.

3. Public Limited Company by Guarantee

A Public Company Limited by Guarantee is one that engages in non-profit activities of national or public interest, such as art promotion or charitable giving. The Minister may authorize the company’s registration without adding the words “Limited” or “Berhad” to its name.

Why register a private limited company?

It is a different legal entity from its owners; it may sue and be sued in its own name, and its directors and stockholders are not accountable for the company’s obligations. Company directors and stockholders are only liable to the company to a limited extent. As long as the shares are paid up, the members/shareholders have no additional responsibilities to the company’s creditors, and their personal assets are safe from these creditors. It is capable of acquiring property.

Advantages of a private limited company

One of the benefits of forming a private limited business is that the entrepreneur expresses a professional commitment, enhancing the firm’s chances of acquiring commercial loans from banks/financial institutions. A private limited company is also a vehicle that benefits from unique tax deductions and incentives; for example, the first SG$100,000 of taxable income is tax-free, and effective tax rates on taxable income up to SG$300,000 can be as low as 5.6 percent. There can be no more than 20 individual stockholders. Where there are corporate shareholders, at least one shareholder must be an individual with a minimum ownership of 10%.

➤ Shareholders are not individually accountable for the company's debts or losses; and profits are taxed at corporate tax rates. Dividends paid to shareholders are tax-free.
➤ Newly formed businesses are eligible for tax breaks and exemptions.
➤ A company's ownership can be transferred, and more shareholders can be nominated.
➤ As a separate legal entity, the corporation does not cease to exist if one or more of its stockholders die.
➤ Personal assets of shareholders are safeguarded because they are not individually accountable for the company's debts and losses.
➤ Ownership is transferable, and other shareholders can be appointed, allowing for extra capital injection for expansion objectives.
➤ Demonstrates a professional dedication and vision, maximizing the possibility of loans from banks and other financial institutions while also establishing a respectable image in the business community.
➤ The company is eternal, and changes in shareholders or holding patterns have no effect on corporate activities.

Disadvantages of a private limited company

One of the drawbacks of registering a private limited business is that Directors must disclose to the company information about their interests in the company’s shares, contracts, and debentures. The memorandum and/or articles of association of a Private Limited company are also supposed to limit the right of its members to transfer their shares in the company by requiring that any transfer be first approved by the company’s board of directors or that the shares be first offered to be transferred to existing shareholders.

➤ It is regulated by the Singapore Companies Act's laws and regulations. Penalties will be imposed for violations of rules and regulations.
➤ Annual Returns and Directors' Reports are required and must be filed, requiring the company to have at least one director and one company secretary.
➤ Greater transparency and administrative requirements need greater operational expenditures.
➤ Directors must disclose to the company information about their interests in the company’s shares, contracts, and debentures.
➤ Starting a business may be costly.
➤ Companies must maintain ongoing ACRA/IRAS compliance.

How to register a private limited company in Singapore?

A Singapore Company is formed when it is registered under the Companies Act. It can have as little as one person. Individuals or companies can be members. Members of a corporation are often referred to as’shareholders.’ The Singapore Companies Act governs the Private Limited company, and it must also follow the laws, rules, and regulations of ACRA and the Inland Revenue Authority of Singapore, among others.

1. Singapore Company Name

Before the Singapore Company may be formed, ACRA must approve the company name. ACRA will reject a proposed business name for incorporation if:

➤ It is similar to another existing company name.
➤ It is unfavorable.
➤ Names or trademarks that are comparable to well-known brands.

2. Shareholders

It is necessary to have at least one corporate or individual shareholder. A director and a shareholder might be the same or separate people. It is permissible to own 100 percent of the company’s stock in either domestic or foreign hands. A Singapore Private Limited Company can have as few as one shareholder and as many as 50, according to the Singapore Companies Act. Shareholder information will be made public.

3. Resident directors

A Singapore Private Limited Company must have at least one director who is a Singapore citizen, a Singapore permanent resident, or a person who has an Employment Pass/Entrepass or a Dependants’ Pass with a residence address in Singapore.

A Singapore Private Limited Company may nominate an unlimited number of extra local or overseas directors. The director must be at least 18 years old and must not have been bankrupted or convicted of any criminal offense in the past. The information of the directors will be made public. Shareholders can be directors and vice versa.

The following individuals are ineligible to serve as company directors:

➤ Undischarged bankrupts (unless they get authorization from the High Court or the Official Assignee).
➤ Persons subject to Court-issued disqualification decrees.
➤ Persons convicted of certain offenses or offenses involving fraud or dishonesty punishable by three months or more in jail. (The disqualification lasts five years from the date of conviction for the relevant offence, or five years from the date of release if the individual was imprisoned.).

4. Company secretary

All Singapore corporations are required to select a qualified Company Secretary. The company secretary must be a natural person who resides in Singapore “on a regular basis.” According to the Singapore Companies Act, each business must appoint a company secretary within six months after establishment.

As a company secretary, you will become an officer of the business, sharing legal responsibility for specific activities mandated by the Companies Act with the directors. The company secretary is responsible for the effective administration of a business, notably for ensuring compliance with statutory and regulatory obligations and ensuring that board of directors decisions are carried out.

5. Appointment of auditors

Unless the firm is exempt from audit requirements, all Singapore-incorporated corporations must engage an auditor within three months of establishment. As of July 1, 2015, the Singapore Companies Act introduced a new concept that now allows qualifying companies to reduce regulatory costs by having fewer audit requirements to comply with, such as:

➤ No requirement for its profit and loss accounts, or consolidated accounts and balance sheets to be audited by an approved auditor.
➤ No requirement to provide members of the company with copies of the auditors' report.
➤ No requirement to present copies of the auditors' report.

A corporation qualifies as a “small company” and is free from audit under the new system provided it fulfills at least two of the following three criteria:

1. No more than S$10 million in total revenue;
2. No more than S$10 million in total assets; or
3. No more than 50 workers.

The audit exemption for small firms criterion will apply to companies for fiscal years beginning on or after the implementation date of the legislative amendment.

6. Share/Paid-up capital

The minimum paid-up capital required to register a Singapore corporation is SG$1 or its equivalent in any currency. The minimum issued capital is one par value share. Shares with “No par value” or “Bearer” status are not authorized. After the company’s establishment, the share or paid-up capital can be raised at any moment. The total number of shares in the firm multiplied by the nominal value of each share equals the company’s issued share capital. Because shares in a private firm are not permitted by law to be offered to the general public, they are normally transferred by private agreement between the seller and the buyer.

7. Registered address

Every Private Limited company is required to have a registered office, which does not have to be the same as the firm’s ordinary business address. It is occasionally the company’s lawyers or accountants, for example. The registered address cannot be a PO Box and must be an actual address. Certain sorts of businesses may use a home address.

All official government letters and documents (including ACRA and Inland Revenue) will be sent to this address, which must be listed on all official company papers. If a company’s registered office address changes after establishment, the new location must be reported to ACRA.

8. Governance structure

The governance structure of a business, as well as the relationship between the company and its shareholders, are controlled by the company’s constitutional papers (the Memorandum of Association and the Articles of Association) and the rules of the Companies Act. It should be noted that, beginning of January 1, 2016, the memorandum and articles of association will be consolidated and renamed into a single document known as the “Constitution.” Existing firms that were formed previous to the date will not be needed to merge the paperwork and will be able to carry on with their present M&A. It is also fairly commonplace for business members (typically in joint venture arrangements) to sign into shareholder agreements among themselves to capture some of their essential rights and duties in respect to how the company will be constituted and administered.

How to open a corporate bank account?

After the business has been formed, you may create a corporate bank account with any of Singapore’s local or foreign banks.

When creating a corporate bank account, most banks need the account signatories and directors to be physically present in Singapore for paperwork signing. If you are unable to go to Singapore, certain banks may accept document signing at one of their foreign offices or at a Notary Public.

Certificate of good standing for Singapore companies

The Certificate of Good Standing establishes the existence of a Singapore-registered company and confirms that it is still active on the ACRA corporate registry. It contains the electronic signature of ACRA’s Assistant Registrar and is exclusively available to corporations. The certificate will provide the company’s name, incorporation date, status, and operations.

What to do after limited company incorporation?

1. Licenses and Permits: Some business operations in Singapore are governed by government authorities. Even though your company has been registered, you cannot begin operations unless you have received approval or a license from the appropriate government authorities.
Private schools, video stores, travel agencies, liquor distributors, moneylenders, banks, financial advisers, childcare centers, and importers, wholesalers, and retailers of liquor licenses are just a few of the enterprises that require permission to operate.

2. Registered Office Hours: You must have a registered office address and have the office available to the public for at least three hours each day during normal business hours on weekdays.

3. Registration Number: The ACRA company registration number must appear on all letterheads, invoices, billings, and other documents used for formal business interactions.

4. Custom Registration: If your company’s activities include import, export, and transhipment into and out of Singapore, you must register with Singapore Customs and get a CR Number, often known as Custom Registration. For Singapore corporations or organizations engaged in trade operations, the central registration number is required.

5. Singapore Goods and Services Tax Registration: The Products and Services Tax (GST) is a tax levied on the provision of items and services in Singapore as well as the importation of goods into the country. GST is not levied on goods exported from Singapore or on foreign services delivered from Singapore. The current interest rate is 7%.

All Singapore enterprises must register for GST if their annual taxable revenue exceeds S$1 million, or if they are actively making taxable supply and their annual taxable revenue exceeds S$1 million. The company is required to register for GST within thirty days after being judged liable.
You can also choose to register for GST on your own. The Comptroller in IRAS has the authority to approve voluntary registration. Once approved, you must stay enrolled for at least two years.

6. Registration of Singapore Central Provident Fund (CPF): The Central Provident Fund, sometimes known as CPF, is a mandatory pension fund program in which both the employer and the employee contribute a portion of their monthly wage to the fund. Employer CPF contributions are required for all local employees who are Singapore citizens or permanent residents and earn more than S$50 per month. The maximum CPF contribution rate for employers and employees is 17% and 20%, respectively, and can be lower based on criteria such as employee age, permanent residence status, and so on. Foreign employees are not required to contribute to CPF.

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