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Open an Exempt Private Company in Singapore

Open an Exempt Private Company in Singapore

Foreign enterprisers choosing to open a company in Singapore have the possibility to select from several business structures according to their needs. One of the most sought and advantageous types of companies one can set up in the city-state is the limited liability company. The exempt private company is one of the most advantageous types of companies to be set up in Singapore.

Our company formation agents can provide you with more information about the Singapore exempt private company. You can also watch the video below in order to see what the main steps to open an exempt private company in Singapore are:

Types of limited liability companies in Singapore

The Singapore Company Law makes a clear distinction between the three types of limited liability companies one can incorporate based on the number of shareholders:

  • –          the private company which can have a maximum number of 50 shareholders;
  • –          the public company which can have more than 50 shareholders;
  • –          the exempt private company which can have a maximum number of 20 shareholders.

Our company formation consultants can provide you with more information about the advantages of each type of company mentioned above and can assist you if you want to open a company in Singapore.

Features of Singapore exempt private companies

Apart from the fact that an exempt private company must have a maximum number of 20 shareholders, they must be natural persons, as no companies are allowed to own shares in this type of entity. The Singapore exempt private company must also have at least one resident director, a secretary and a registered address in the city-state.

The name of exempt private company comes from the fact that this type of business is not required to submit audited accounts if their yearly turnover is less than 5 million SGD. It is only required to file a solvency declaration.

Open a company in Singapore as an exempt private company

The registration procedure for a Singapore exempt private company is the same as for any other type of structure. The following steps must be followed:

  • –          selecting a company name;
  • –          preparing the incorporation documents;
  • –          submitting the incorporation documents together with an application form with the Accounting and Corporate Regulatory Authority;
  • –          filing for any additional or special licenses.

Once these steps have been completed and the company has received its Certificate of Incorporation, it must register for taxation. One must also pay attention to the fact that company registration is done through a local representative.

The advantages of the EPC in Singapore 

The private exempt limited liability company has the following advantages:

– High tax exemption: the EPC is subject to a tax exemption on the first 100,000 SGD in each of the first three years of operation.

– Reduced compliance requirements: this company does not need to file accounts with the Registrar of Companies.

– Foreign ownership: foreign investors can own 100% of the shares in a private exempt limited liability company.

– No capital: there is no requirement for the company’s minimum share capital – only 1 SGD is needed.

– Flexibility: this is in terms of business loans, where EPCs enjoy a greater degree of using the capital as per their business needs. 

This form of a private limited company in Singapore needs to submit the annual return within one month after is has held the Annual General Meeting. EPCs that have an annual turnover of less than 10 million SGD (and are solvent) are exempt from the requirements for an annual audit and annual accounts submission. However, investors should know that they are required to maintain the Singapore Financial Reporting Standards and will need to prepare the annual financial statements according to the Companies Act. For investment holding companies, this tax exemption is not applicable. Investors can reach out to our agents for more information.

Understandably, these characteristics make the EPC a very coveted business form. Investors who choose to open a Singapore limited company will usually choose this business form.

Conditions for the EPC in Singapore

Investors interested in setting up a private limited company in Singapore that is subject to the exempt principles need to follow a few general requirements that also apply to the LLC in general. These are:

– Management: the company is required to have at least one shareholder and one director.

– Residency: a company director needs to be a resident (can be a permanent resident, a citizen or an individual with an employment pass).

– Secretary: as part of the mandatory conditions, the EPC in Singapore will have one company secretary (which cannot be a corporate secretary).

– Office: also a mandatory requirement, the EPC needs to have a registered office in Singapore (a physical address).

– Maximum shareholder: the private company is required to have no more than 20 shareholders; beyond this number, it becomes a public company.

The EPC is a separate legal entity from its founders and they are not liable for the company’s debts and obligations beyond the amount they have contributed to the capital.

The general incorporation steps, starting with choosing a valid company name as well as preparing the company’s Articles of Association is the same for the EPC, the public company and the private limited company in Singapore. The time needed to open this type of company is usually one or two days.

Our agents who specialize in setting up a company in Singapore can help investors open this particular business form and understand the complete tax exemptions the EPC is subject to.

According to the Singapore Department of Statistics, foreign direct investment in Singapore had a value of 1,567,974 million SGD, a 15.7% year-on-year increase compared to 2016. As far as the corporate sector is concerned, the data is as follows:

– the financial and insurance sector is the largest one by total assets: 5,804.1 billion SGD in 2017.

– the wholesale and trade sector had a value of 860.9 billion total assets in 2017.

-the real estate sector was in third place in 2017 in terms of total assets, with 413.0 billion SGD.

Foreign investors can also explore the business opportunities in other business sectors such as manufacturing and other business services as well as transport and storage. The private exempt limited liability company can be a suitable business form given its attractive taxation regime for the first years of functioning. 

For assistance with the registration procedure of an exempt private company, do not hesitate to contact our Singapore company formation agents.