The share capital of a Singapore company refers to the sum of money invested in the business in order to carry out its undertakings. According to Chapter 50 in the Singapore Companies Act the share capital of a company is subject to alterations such as increases or decreases if certain conditions are satisfied. The shares of a company can be separated into classes that will offer different rights to its owners. Before opening a company in Singapore, investors must know that all the information about the share capital must be stated in the company’s Articles of Association.
A Singapore company’s share capital
Companies in Singapore will have an issued capital which represents the value of the shares subscribed by the company members. Companies may also have an unpaid capital which resides in issued shares which are not paid in full. The last type of share capital a company in Singapore can have is the paid capital which is the amount subscribed by the founder upon incorporation with the Accounting and Corporate Regulatory Authority.
It is also important to know that Singapore abolished the term “authorized share capital”. Another interesting fact to know is that a company may not buy its own shares or use them as a guarantee when contracting loans.
Our Singapore company formation agents can help foreign investors open companies in the city-state.
Is there a minimum share capital in Singapore?
The minimum share capital in Singapore is 1S$ and it must be deposited by all companies limited by shares. The ownership of a company is delimited by the shares. Buying shares in a company grants a person the right to receive a part of the distributed profits of a company. These profits are known as dividends. A person can subscribe for a share in a company with money or assets. The share capital is important for companies because it is the main source of money for private limited companies. Singapore has abolished the notion of authorized share capital.
Types of shares and their attached rights – explained by our specialists who can help you open a company in Singapore
Singapore companies are allowed to issue several types of shares that can bear different conditions. The most employed types of shares issued by companies in Singapore are ordinary and preference shares. Ordinary shares are the most common shares in a company and they offer voting rights to their owners and also give variable rates of dividends. Preference shares will offer preferential rights to their owners that usually refer to the distribution of dividends. Preference shares can be redeemable which means the holder can be repaid the amount of money invested in the company at a certain date or when the company decides to repay them. The provisions about redeemable preference shares must be stated in the Memorandum or Articles of Association of the company. Shares can be freely transferred unless restrictions appear in the company’s Articles of Association.
For details about the provisions of the Companies Law regarding the share capital of an enterprise you can contact our specialists who can help you open a company in Singapore.
What are the share capital requirements in Singapore?
The paid-up capital of a private limited company in Singapore is the initial value submitted for the formation of the company. This is the amount invested by the shareholders in exchange for shares in the company. The laws in Singapore allow the company to issue shares even when the share capital is not fully paid up. This means that the capital can be divided into paid-up capital and unpaid capital.
Investors who are considering setting up a company in Singapore, should know that most companies in Singapore are incorporated with a paid-up capital. Only in some cases, for small companies, for example, the share capital will remain partly unpaid. In case you need more information about the Singapore paid up capital, do not hesitate to get in touch with our team of incorporation agents.
The amount of the share capital will depend on the size of the business and the number of shareholders. This means that it is natural for the company paid up capital in Singapore to be larger in case of large companies. Those legal entities with a paid-up share capital of $500,000 and more become members of the Singapore Business Federation (this is an automatic process). The advantages for investors are primarily in terms of networking opportunities, as well as access to a wide range of events on different business topics. Members can seek advice on business branding, finance as well as business management. Some more details about membership according to the Singapore paid up capital is summarized below:
- Capital of SGD 10 million and more: annual membership fee of SGD 856;
- Paid up capital of SGD 5 million and less than 10 million: the fee for membership is SGD 642;
- Capital of SGD 1 million to less than 5 million: the annual membership fee is SGD 428;
- Paid up capital of SGD 500,000 and less than 1 million: SGD 321.
These members who enter the Business federation based upon the Singapore paid up capital can vote at the annual general meetings.
Investors who open a company should also know that a separate category of associate members is in place, also depending on the paid up or authorized share capital value:
- When the company paid up capital in Singapore is less than SGD 500,000, the legal entity can pay an entrance fee of SGD 321 and the same amount as an annual fee;
- Sole proprietorships or partnerships and limited liability partnerships can also pay the SGD 321 entrance fee and an annual SGD 535 fee.
Foreign companies can become associate members, however, these foreign associate members are not permitted to vote at the general meetings.
Member local Singapore companies can be exempted from the payment of the fees when they do not have any employees, however, during this time they will not enjoy the benefits that are offered to other companies in terms of opportunities, business training, mentorship and networking. Companies that wish to maintain their exemption will need to apply for this annually within the prescribed time limit.
What are the types of shares for a Pte Ltd in Singapore?
In addition to the Singapore paid up capital requirements, investors should also know that there is more than one type of share available. A company in Singapore can issue a number of types of shares, as listed below:
- Ordinary: these are the ones that are issued by all companies; they offer the right to vote, receive dividends and claim remaining assets if the company is liquidated.
- Preference: these can allow the shareholders to have special rights, such as for the payment of dividends.
- Non-voting: while the ordinary shares allow voting, these do not allow the holder to participate in the general meetings and vote.
- Redeemable: issued when the company will buy back the share in the future.
- Others: these can include management shares with additional voting rights or deferred shares when no dividend payment is made until a minimum amount has been paid to other shareholders.
In order to open a Singapore limited company, a minimum of one shareholder is required. The maximum number is 50. The shareholders can be natural persons, as in most cases, or they can be other corporations. The shares of a company can be issued in any currency. However, in practice, companies will issue their shares in Singapore dollars.
The shares are issued when an ordinary resolution of the shareholders is passed and the company files a return of allotment. The latter is filed with the Accounting and Corporate Regulatory Authority within 14 days after issuing the shares. This document includes information about the number of shares in the allotment, the class of shares, the name and identification details for the shareholders and the number and types of shares owned by each of the shareholders. One of our agents who specialized in setting up a company in Singapore can provide investors with more details on the issuance of shares and about the company paid up capital in Singapore.
A company in Singapore can be fully owned by foreign shareholders. We can give you more information about the types of shares as well as about the Singapore paid up capital.
PLC Singapore share capital changes
A limited company in Singapore may need to alter the initial share capital for a number of commercial reasons. The manner in which this is permitted is outlined in the constitutive documents, namely the Articles of Association. This means that the capital may be altered (increased or decreased) only as stated in the constitution. If you need to make changes to the company paid up capital in Singapore, our team can give you more details as per your particular situation.
When this is the case, some of the following actions are possible:
- the capital can be increased by issuing new shares;
- all of the fully paid up shares can be converted into stock;
- stock can be reconverted into fully paid up shares;
- the share capital can be divided (either wholly or partly) into larger denominations, effectively reducing the number of shares but not changing the value of the share capital;
- subdivide all of the shares into smaller denominations; this is also called the share split and like in the case of larger denominations, the actual value of the share capital remains unchanged;
- another possible alteration to the share capital is to cancel those shares that have not been taken up or those that have been forfeited; this means that the share capital value will be reduced by the number of shares that were canceled, however, this is not the equivalent of reducing the share capital, thus it is not subject to the exact procedures.
When the owners decide to reduce the company paid up capital in Singapore, it can be accomplished for the following reasons:
- simplify the capital structure for efficiency purposes;
- eliminate losses;
- reduce the unpaid shares;
- pay up dividends, buy back shares or produce the funds needed to perform other corporate actions;
- cancel share capital no longer supported by the company’s available assets;
Investors should note that the company needs its members’ approval when ready to reduce the company paid up capital in Singapore. A special resolution is passed for this purpose and the creditors have the right to object to the capital reduction.
Any changes to the company’s share capital are commenced by filing a special Notice by Local Company of Alteration in Share Capital.
What are the general requirements for a private limited company?
As highlighted in this article, setting up a private limited company in Singapore is a simple process and one that does not imply a minimum share capital with a high value. Nevertheless, although there is no mandatory requirement for minimum capital, investors do need to follow some general rules:
- company name approval: the proposed name for the company needs to be approved before registration; it needs to be a unique one.
- company director: it is mandatory to appoint at least one resident director for the company.
- company secretary: investors are required to appoint a qualified company secretary who is a resident within six months from registering the company.
- registered address: the company needs to have a local address in Singapore; this can be a residential or a commercial address.
Apart from the value of the company paid up capital in Singapore, the basic costs for opening a private limited company in Singapore are listed below:
- SGD 1: as previously stated, this is the common value for the share capital upon incorporation; it can be increased afterward.
- SGD 15: the name application fee for the proposed company name.
- SGD 300: the company registration fee with the Accounting and Corporate Regulatory Authority (ACRA).
These are only the fees for the incorporation of the company. Businessmen interested in setting up a company in Singapore should know that during the year, the company will also pay the annual filing of SGD 60 and other taxes. If you need details about another type of company and its paid up capital in Singapore, our agents are at your disposal.
Our team of agents who specialize in the registration of a private limited company in Singapore can provide investors with complete details related to the startup costs (the Singapore paid up capital, the registration fees, etc.). Contact us for more information about the incorporation procedure and details about our services.