What’s a Company
A business entity registered under the Companies Act, Chapter 50 and treated as an independent legal entity, i.e. separate from its directors and shareholders. Once incorporated, the company has perpetual succession and it can own properties, enter contracts and sue and be sued. It usually has the words “Pte Ltd” or “Ltd” as part of its name.
Types of Companies
- Public Company Limited by Shares
– More than 50 shareholders
– Offers shares to the public
- Public Company Limited by Guarantee
– Not-for-profit, religious and charitable organizations
– Has a board of trustees
- Private Company
– Up to 50 shareholders
- Exempt Private Company
– Not more than 20 shareholders
– No corporate shareholders
Who Can Set Up a Local Company
- Singapore Citizens
- Singapore Permanent Residents (PRs)
- Foreigners: Those residing local and managing the operations must apply for an Entrepass. Those residing overseas must have at least one locally resident director.
The proposed name of the Company should not be identical or similar to any registered company or business. If a certain name is not available, an appeal can be submitted stating reasons or no objection letter from existing business owners/directors stating that they have no objection to use of such similar names. ACRA may take a few days for outcome in appeal cases. Otherwise, name approval is normally instant. However, names containing certain words such as “bank”, “insurance” or “financial services” and/or certain SSIC codes may require approval of other government bodies which may take 2 to 14 days.
Memorandum and Articles of Association
Memorandum and Articles of Association is considered as a statutory contract between a company and its members, and among the members themselves. It binds even new members entering the company after incorporation of the company. Non-compliance with the Articles is amount to procedural irregularity.
If a provision of a company’s Memorandum or Articles of Association is not observed then:
- in case of non-compliance by a company, a member may be able to obtain a declaration or injunction requiring the company to comply
- in case of non-compliance by a member, another member of the company may be able to obtain declaratory or injunctory relief or damages.
Companies currently have a choice to use their custom Memorandum or Articles of Association or adopt Model Memorandum or Articles of Association.
Singapore companies must have a local address as a registered office address.
Residential addresses can be used as a business address under the Home Office Scheme. However, prior approval from the Housing Development Board (for HDB flats) or Urban Redevelopment Authority (for private properties) must be obtained in order to use residential premises (owned or rented) for home office use.
Paid-up capital: This refers to the issued capital that is paid up by the shareholders.
Issued capital: This refers to the share capital which has been allotted to the shareholders.
The Company needs to have at least one director ordinarily resident in Singapore. If a foreigner wishes to act as a local director of the company, he can apply for an Employment Pass from the Work Pass Division of the Ministry of Manpower under the Entre Pass scheme. Only individuals can be a director (i.e. corporate directorships are not allowed). Minimum age for being a director is 18 years.
The Company needs to have at least one shareholder.
Either an individual (more than 18 years) or a corporate entity can be shareholder. No minimum local shareholding requirements. 100% ownership of Singapore companies can be owned by foreign persons or entities.
Every company must appoint a secretary within 6 months of the date of its incorporation. The company secretary must be residing locally in Singapore. He/She must not be the sole director of the company. A private company is not required to appoint a properly qualified person as a company secretary unless mandated by the Singapore Company Registrar, ACRA.
The secretary of a public company must comply with section 171(1AA) of the Companies Act i.e. must possess at least one of the following qualifications:
– Been a secretary of a company for at least 3 of the 5 years immediately before his appointment as secretary of the public company.
– Qualified person under the Legal Profession Act (Cap. 161).
– Public accountant registered under the Accountants Act (Cap. 2).
– Member of the Institute of Singapore Chartered Accountants.
– Member of the Singapore Association of the Institute of Chartered Secretaries and Administrators.
– Member of the Association of International Accountants (Singapore Branch).
– Member of the Institute of Company Accountants, Singapore.
Prior to the Companies (Amendment) Act 2004, the Memorandum requires object clauses to clearly define the trade and business activities that the Company can operate in. However the 2004 Amendment Act removed this requirement and object clauses have been made non-mandatory, leaving the Company to be free to do any business activities so long as the Company has obtained the relevant and applicable business approvals, permits and/or licenses.
The types of business activities assigned to the Company are categorically classified in the Singapore Standard Industrial Classification (SSIC) 2010, which is the tenth edition of such business classification administered by the Department of Statistics Singapore.
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