Singapore government has worked smart to come up with generous incentives to international companies that want to set camp in the country. It is now possible to register a private limited company in the country without spending a fortune.
Ideally, a private limited company in Singapore is an LLC whose shares are not available to the general public but can be held by no more than 50 persons. The shareholders can either be corporate entities or individuals or both.
One of the main reasons why most entrepreneurs prefer a private limited company is because it is more flexible than a sole proprietorship. Before embarking on the company registration processes, keep in mind the following factors to avoid any surprises down the road.
Meaning of Limited Liability
The term “limited liability” means that the individual shareholders’ contribution towards the company debts is limited. That is, it should not exceed the amount agreed upon as personal contribution to the capital of the company.
Legal Entity and Identity
As long as the private limited company is registered fully with Singapore company registrar and allowed to do business in the country, it is considered to legal identity that is different from its directors and shareholders. This means that the company can purchase assets in the country, enter into contracts with service providers, go into debt, be sued or sue other parties in its name.
Raising Additional Capital
As the company scales up, you will need more capital to support its daily operations. It is possible to raise this capital to support the expansion by bringing onboard new interested shareholders. Alternatively, you can offer more shares to the current shareholders.
The existence of a private company in the country is not dependent on the continued membership of the shareholders. It can continue to operate in the country even after transfer of shares from one member to another or if some of the shareholders opt out as a result of death, illness, resignation, and insolvency.
Transfer of Company Ownership
Ownership of a private limited company can be transferred from one person to another either partially or wholly without compromising its normal operations. The process can be done through issuance of new shares to new investors or selling part or all the company shares to shareholders.
Finally, as long as the private limited company is registered and continues to adhere to the set rules and regulations, it qualifies for the various Singapore Government tax incentives. One such incentive that you can take advantage of is the single-tier policy which states that accrued dividends can be distributed to shareholders at no extra tax fee provided the annual income be taxed at the corporate level.