Overview of Singapore Public and Private Limited Company

Overview of Singapore Public and Private Limited Company

If you are an entrepreneur interested in expanding your business overseas, you can consider reaching the Asian region by establishing a company in Singapore. Singapore has become widely known to be a financial and economic hub and fast growing to be an ideal location to set up a business. There are two major types of companies recognized in Singapore: the public limited companies and the private limited companies. Limited companies are companies limited by shares and are called as such because of one unique characteristic they feature limited liability as to their shareholders when it comes to company losses or liabilities. This means that a company of this type is given a separate legal personality from its shareholders such that whatever losses, debts or any liabilities the company encounters, the shareholders are liable only as to the extent of the amount of investment they made on the company and they cannot be held personally liable.

What is a Public Limited Company? A Public Limited Company in Singapore is a type of a limited liability company usually of a medium to large scale and is well-established and recognized. It is allowed to have more than 50 shareholders and are often listed in the stock exchange. It is allowed to raise capital through issuance of shares and debentures. Before it can be allowed to offer to the public its shares and debentures, a public limited company is required to register first a prospectus with the Monetary Authority of Singapore. The other features of a Public Limited Company are as follows:

It can easily raise additional capital by issuing more shares and debentures and thus ensures company liquidity.

Due to its higher value of shares and because it is a listed company, it maintains an image of being a reputable and trusted company.

Enhances the confidence of its trading and financing partners because of its image as a strong company.

Since shareholders can easily acquire or sell shares, acquisitions are easily made.

Company directors are accountable to a much larger number of shareholders.

The value of the company is determined by financial markets by reason of company shares trading.

Financial affairs are compelled to make public disclosures.

On the other hand, a Private Limited Company is a locally incorporated limited liability company in Singapore and is considered to be ideal for a start-up company. It is required to include the suffix "Private Limited", "Pte. Ltd.", or "Ltd." in the company name. The number of shareholders cannot exceed 50 but full foreign ownership of shares is allowed. It is required to appoint a local director who must be a Singapore resident and must be a Singapore citizen or Employment Pass holder. A Singapore Private Limited Company in Singapore is considered a tax resident, and therefore eligible for tax exemptions. New start-up companies are charged a Zero Tax on the first S$100,000 of chargeable income for the first three consecutive years. A 50 percent exemption is given on the next S$200,000 of the chargeable income. As opposed to a Public Limited Company, a Private Limited Company cannot offer to the public their shares or debentures, and so the company can raise capital only from among the shareholders or through debt financing. Singapore laws, however, also allows a private company to convert to a public company either voluntarily or involuntarily, subject to certain procedures.

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