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When it comes to establishing a business in Singapore, one of the most popular and versatile options is forming a company. Companies offer distinct advantages, including legal separation from shareholders and directors, limited liability, and a clear framework for governance. In this comprehensive guide, we’ll explore the essential aspects of companies in Singapore, covering ownership, legal status, registration, taxation, and more.
Ownership:
Companies in Singapore can take different forms based on their ownership structure:
- Exempt Private Company: Limited to 20 members or less, with no corporation holding beneficial interest in the company’s shares.
- Private Company: Limited to 50 members or less.
- Public Company: Can have more than 50 members.
Legal Status:
Companies are recognized as separate legal entities from their members and directors:
- Members (shareholders) enjoy limited liability, protecting their personal assets from business debts and losses.
- A company can initiate legal actions or be subject to legal actions in its own name.
- Unlike some other business structures, companies can own property in the name of the company.
- Members are not personally liable for the company’s debts and losses.
Yearly Statutory Obligations:
Operating a company in Singapore involves specific annual obligations:
- Companies must appoint a company secretary within 6 months of incorporation.
- An auditor must be appointed within 3 months after incorporation, unless the company qualifies for exemptions from audit requirements.
- Annual returns must be filed, and statutory requirements for general meetings, directors, company secretary, share allotments, and more must be complied with.
Registration Requirements:
To establish a company in Singapore, certain registration criteria must be met:
- At least one shareholder is required.
- At least one director must be ordinarily resident in Singapore, aged at least 18 years.
- Foreign individuals who wish to act as local directors can apply for an EntrePass from the Ministry of Manpower.
- Undischarged bankrupts are ineligible to be directors and cannot manage a company without approval from the Court or the Official Assignee.
Taxes:
Taxation for companies in Singapore follows specific rules:
- Profits are taxed at corporate tax rates, providing potential tax advantages for businesses.
Continuity in Law:
A company enjoys perpetual succession until it is wound up or struck off, ensuring its continuous legal existence.
Closing the Business:
Closing a company can be done through two primary avenues:
- Winding up can be voluntary, initiated by members or creditors, or compulsory, ordered by the High Court.
- Striking off is another option for closing a company.
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