Private Limited Company is the most popular and preferred form of business entity due to its separate legal entity status and ease of formation.
A Private Limited Company usually has the words “Pte. Ltd.” as part of its name, which are the abbreviations for Private Limited.
Features of Private Limited Company
- An individual or a company, whether local or foreign, can be the owner (shareholder) of a Private Limited Company.
- It is a separate legal entity, therefore:
- The shareholder’s liability is restricted to the share(s) subscribed;
- It can sue or be sued in its name;
- It can acquire and hold property in its name;
- It can have a common seal in its name;
- It may do any other legal activities in its name.
- There must be at least 1 shareholder and shall not exceed 50 shareholders.
- There must be at least 1 director appointed to run the business for the shareholder, however, the shareholder can be appointed as the director simultaneously.
- It is entitled to the tax incentives, namely:
- *Tax exemption scheme for new start-up companies – For the first 3 years from incorporation, the tax rate is effectively 5.67% on the first S$300,000 of chargeable income, provided there is an individual shareholder holding at least 10% shares throughout the basis period.
- *Partial tax exemption scheme for companies – In the event that a company is not qualified for the “tax exemption scheme for new start-up companies”, it will be given partial tax exemption. The tax rate is effectively 8.36% on the first S$300,000 of chargeable income.
*For both of the tax exemption schemes, chargeable income in excess of S$300,000 will be taxed at the prevailing corporate tax rate, which is currently at 17%.
Requirements of setting-up a Private Limited Company
- There must be at least 1 director and 1 secretary, who are ordinarily residents in Singapore.
- The company must have a registered office address in Singapore.
- The minimum paid-up share capital is S$1.
- Desired name of business entity
- Brief description of principal activities
- Particulars of shareholders
- Particulars of directors
- Registered business address
- Particulars of company secretary
- Memorandum & Articles of Association
- Completed application forms
- Application for Entity Name (subject to availability and approval by ACRA required)
- Registration of the business