subject: Singapore Private Limited Company Registration [print this page] Since the private limited company provides the most advantages particularly in terms of taxation, this business entity is believed to be more popular compared to sole proprietorship and partnership.
One of the most notable advantages of a private limited company is that shareholders enjoy limited liability which protects their personal assets such as cars, houses, and properties from debts, losses, and liabilities related to business. With such arrangement, many businessmen register this Singapore company setup especially those who are operating in a speculative market.
In most cases, a private limited companywhich is more commonly called as corporation in the US and most European countrieshas suffixes such as Pte Ltd or Ltd as part of its name.
Being a separate legal entity from its shareholders and directors, a company can acquire properties and purchase supplies under its name. In addition, this can also be named in a lawsuit instead of a shareholder or director.
Under the Singapore Companies Act, a private limited company can have one up to 50 individual shareholders who may be a local resident or foreign businessman.
To encourage foreign and local businessmen and companies, the government is providing tax exemptions to any locally incorporated company as long as its management and control is exercised in Singapore and at least one individual shareholder has 10 percent of shareholdings.
The tax exemptions, which are valid within three years of incorporation, include 100 percent tax break on a companys first S$100,000 chargeable income and another 50 percent exemption on its succeeding S$200,000 chargeable income.
In case that a newly incorporated company did not meet the qualifying conditions stated above, it may still be qualified for a partial tax exemption.
Meanwhile, foreign business organizations planning to have a private limited company in Singapore are advised to register a subsidiary company which is almost like the formerthe only difference is that its main shareholder is a foreign company or individual.
To legally operate a subsidiary company, it is a requirement to appoint at least one resident director who may be a Singaporean citizen or a foreigner who holds EntrePass, Employment Pass, or Dependant Pass.
A foreign parent company is allowed to be the sole owner of its subsidiary company. And despite this arrangement, this entity is still eligible for all the local tax incentives and exemptions since it is incorporated in Singapore.
But since foreign entities and businessmen are prohibited to register their own business, it is a legal requirement to hire a professional registration firm.
