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[ESTABLISHING A BUSINESS ENTITY IN SINGAPORE]
Private Companies
Public Companies
Exempt Private Company (EPC) Maximum of 20 individual shareholders. (The shareholders cannot be a corporation)
Private Company Limited by Shares Maximum of 50 shareholders. (A shareholder may be a corporation)
Company Limited by Shares
Company Limited by Guarantee (CLG) No shareholders - have members instead The members must agree to pay a fixed sum in the event the company is wound up Such structure is usually adopted for non-profit driven organisations such as charities and performing arts groups
No limit on the number of shareholders May raise capital by offering shares or debentures to the public
Separate Legal Entity A company is a separate legal entity from its shareholders/members and directors. The company may own property and may sue or be sued in its own name. Shareholders’/members’ liability is limited, and they are not personally liable for debts and losses of the company. Share capital A company can be registered with a minimum paid up capital of SGD 1 (or its equivalent in any currency). The capitalisation may be increased by the issuance and allotment of further shares. Shareholding There is no requirement for local shareholding. Subject to its constitution, a company may have a minimum of one shareholder. As Singapore allows 100% foreign ownership of locally incorporated companies, no control is lost in setting up a subsidiary company in Singapore and a foreign parent-company can enjoy the numerous tax benefits applicable to local resident companies. Hence, incorporating a subsidiary company is often the preferred
option for small to mid-sized foreign -owned companies. Under the single-tier corporate tax system, profits are taxed at the company level. Dividends received by shareholders are not taxable. Minority shareholders’ rights and protection Minority shareholders may rely on Section 216 of the Companies Act 1967 to apply to the Singapore Courts for remedies in cases of oppression, injustice in the conduct of the company’s affairs or where shareholder’s interests have been disregarded. The Court may make orders to undo the unfairness. This includes imposing injunctions to direct or prohibit an act, varying the terms of the transaction(s) or resolutions in question, giving directions on how future affairs are to be conducted or ordering the company to be wound up (especially in a deadlock situation). The Court may even modify the constitution of the company if it is deemed necessary to avoid similar unfair outcomes or mandate the purchase of the minority shareholders’ shares
ILN Corporate Group – Establishing a Business Entity Series
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