The Best Procedure for Incorporation of a Private Limited Company: A Step-by-Step Guide
- Published: 2 February 2025
- 12 min read
- Starting a Company
Heather Cameron
Business Writer
From expert guidance and helpful accounting tips to insights on the latest trends in fintech, Heather is here to empower entrepreneurs and small business owners in Singapore with great content. With a background in digital marketing spanning eight years, she has experience writing for various industries and audiences. As Osome’s copywriter, she’s here to inform and inspire our readers with great storytelling.
Imran Marican
Reviewer
Imran Marican, ATA SCTP member, is our Corporate Tax Assistant Manager based in Singapore.with almost a decade of expeience on Singapore corporate tax. With in-depth knowledge about Singapore corporate tax law and regulations, he can help with corporate tax compliance that matters to every company. While our business writers transform complicated tax jargon into easy-to-understand concepts, as a reviewer for the Osome blog, Imran ensures our content is accurate and relevant, helping our readers boost their businesses with helpful tips and insights.
Nisah Rahim
Reviewer
Nisah Rahim is our go-to expert reviewer for all things Corporate Secretary-related in Singapore. As the Corporate Secretary Team Lead and content reviewer, Nisah meticulously examines our blog posts to ensure we provide comprehensive information on Corporate Secretary services such as local regulatory compliance, managing board meetings, maintaining company records, and providing expert advice on corporate governance matters.
Incorporating a private limited company is a crucial step for many entrepreneurs. This guide breaks down the procedure for incorporation of private limited companies into clear, manageable steps. You will learn about the legal requirements, necessary documents, and key stages of the incorporation process. Let’s get started.
Key Takeaways
- A private limited company in Singapore operates as a separate legal entity, providing limited liability protection for shareholders and allowing for a long-term business structure.
- Incorporation requires at least one resident director, a minimum of S$1, and a registered office address; compliance with statutory requirements is essential.
- Incorporating a private limited company offers benefits such as limited liability company protection, tax breaks, and enhanced credibility, thereby facilitating business growth and investment opportunities.
What Is a Private Limited Company in Singapore?
A private limited company in Singapore is a distinct legal entity that operates separately from its shareholders. This type of corporate structure is highly favoured by both local and foreign investors due to its numerous advantages. When you see company names ending with ‘Ltd’, ‘Pte Ltd’, or ‘Private Limited’, you are looking at private limited companies. This business entity is not only the most preferred business structure in Singapore, but it also provides a robust shield of liability protection, ensuring that shareholders’ personal assets are safeguarded from the business's debts because of their status as separate legal entities.
One of the defining characteristics of a private limited company is its independent legal status. This means that the company can own property, enter into business contracts, and incur debts in its own name. Private limited companies benefit from perpetual succession. This means the company continues to exist even if there are changes in its shareholders or company directors.
Aspect | Details |
|---|---|
| Legal Entity | A private limited company is a distinct legal entity, separate from its shareholders, capable of owning property, entering contracts, and incurring debts. |
| Company Name | Identified by suffixes such as ‘Ltd’, ‘Pte Ltd’, or ‘Private Limited’. |
| Limited Liability | Shareholders’ liability is limited to their investment, safeguarding personal assets from company debts. |
| Perpetual Succession | The company continues to exist regardless of changes in shareholders or company directors, ensuring stability for long-term business operations. |
| Tax Incentives | Private limited companies enjoy tax benefits that make them attractive to both local and foreign investors. |
| Capital Raising | Ability to raise funds through share issuance, facilitating growth and expansion. |
| Global Market Access | The structure allows easier access to international markets, supporting business scalability. |
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Key Features of a Private Limited Company
A Singapore private limited company is characterised by several key features that distinguish it from other business entities. One of the most significant features is thelimitation on the number of shareholders. A private limited company can have a maximum of 50 shareholders (and at least one shareholder) with share capital, which allows for private control of share capital without public trading. This structure is advantageous for those who wish to maintain control over the existing company while still being able to raise capital by issuing shares.
Shareholders in a Pte Ltd company enjoy limited liability protection, meaning they are only personally liable for debts to the extent of their share capital.
The directors of a Singapore company must be natural persons, ensuring compliance with regulatory requirements.
Additionally, the suffix ‘Pte Ltd’ in the company name denotes its status as a private limited company, which enhances its credibility and attractiveness to potential investors and business partners.
Essential Requirements for Incorporation
Incorporating a company in Singapore involves meeting several essential requirements. Compliance with regulatory requirements is paramount to ensure a smooth incorporation process and avoid any legal complications. The Accounting and Corporate Regulatory Authority (ACRA) requires specific documents to be submitted during the incorporation process.
Engaging a registered filing agent, such as a corporate secretarial company, law firm, or accounting firm, is recommended, especially for foreign investors.
Minimum paid-up capital
One of the key aspects of incorporating a Singapore private limited company is the minimum paid-up capital requirement. The good news is that the capital required is just S$1. This low entry barrier makes it accessible for both local and foreign investors to set up a business in Singapore.
The share capital must be issued during the incorporation process, ensuring a basic level of financial commitment from the shareholders.
Shareholders and directors
A private limited company must have at least one director who is a resident of Singapore and at least one shareholder. This could be a Singapore citizen, permanent resident, or an EntrePass holder. Employment Pass holders are allowed as well, if the pass is issued under the entity. The director must have a residential address in Singapore to meet the statutory requirements, and this role can be held by the same or different person that is a shareholder. Besides the Singapore citizen director, a Singapore private limited company can have additional company directors who may be foreign nationals
Shareholders of a private limited company can be individuals or corporate entities, allowing flexibility in ownership structure. During incorporation, the company is required to issue at least one subscriber share.
Registered office address
Every Singapore company must have a physical Singapore office address. This address must be a physical location in Singapore, not a P.O. Box, and it must be accessible during normal business hours for official communications.
For businesses without a dedicated office space, a virtual office address can be used to fulfil this requirement. A virtual office address provides a physical location for official correspondence while offering flexibility and cost savings, making it ideal for small businesses and startups.
Company secretary
Appointing a competent company secretary is a mandatory regulatory requirement for a Singapore company, and ensures corporate entity compliance with the Singapore Central Provident Fund. The company secretary must be appointed within six months of incorporation.
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Step-by-Step Procedure for a Private Limited Company Incorporation
Becoming a Singapore incorporated company involves a series of well-defined steps. The process is streamlined and efficient, thanks to ACRA’s online portal. The first step is to gather all the necessary documents and information required for incorporation.
Choosing and reserving a company name
Selecting a unique and approved company name is a critical first step in the incorporation process. This name must be approved by the Accounting and Corporate Regulatory Authority, ensuring that it is not identical or too similar to existing names and does not infringe on any trademarks.
Before submitting your proposed company name, use the Company Name Check Tool to verify its availability and compliance with ACRA’s requirements. This can help you avoid delays and ensure your name is unique and suitable for approval.
Preparing necessary documents
Preparing the necessary documents for incorporation is an essential step. The company’s constitution, a legal document outlining the rules for governance and the rights of key personnel, must be drafted and submitted to the Singapore company registrar during the private limited company registration process.
Submitting the application
Submitting the incorporation application through ACRA’s online portal is the next step after preparing the company's constitution. After submission, you will receive a confirmation, and ACRA will process your application, getting your company registered.
Receiving the Business Profile and Certificate of Incorporation
Upon successful private limited company registration, ACRA automatically issues the company's Business Profile, which serves as a comprehensive summary of the private limited company’s registration details. This company business profile document is crucial for various business activities, such as opening a corporate bank account or entering into contracts.
If required, you can purchase the Certificate of Incorporation from ACRA. This certificate officially confirms the existence of your company and includes the Unique Entity Number (UEN), a standard identification number for all entities registered in Singapore.
Post-Incorporation Compliance
After incorporating your private company, it is crucial to adhere to post-incorporation compliance requirements, including the Companies Act. Compliance includes holding annual general meetings (AGMs), submitting annual returns, and maintaining proper financial records.
Annual general meeting and annual returns
Even if your company is classified as dormant, you are still required to hold AGMs and submit annual returns. The company secretary plays a crucial role in ensuring compliance with the Companies Act and other local corporate laws.
For any financial year ending in 2024, the annual tax filing deadline will be 30th November 2025.
Financial statements and tax filing
Companies in Singapore can choose their own financial year-end, which does not have to coincide with the calendar year or their incorporation date. Estimated Chargeable Income (ECI) must be submitted to the Inland Revenue Authority of Singapore (IRAS) within three months following the financial year’s conclusion.
If the ECI is submitted within three months (e.g., on the 26th of the 3rd month) and the company is on GIRO (application required beforehand), IRAS will offer an installment plan for tax payment.
- Financial Year-End (FYE): 31st December 2024
- ECI Submission Deadline for GIRO Installment Plan: 26th March 2025
- Installment Plan: 3 months
Corporate bank account
A corporate bank account is crucial for a private company and must be established shortly after the incorporation date. Because this type of company is a separate legal entity from its owners, a corporate bank account opening resolution is key. Various options for your company's own bank account are available in Singapore, including traditional banks, digital banks, and neobanks, offered by a corporate service provider.
Government entities in Singapore only recognise traditional banks. Non-traditional banks are not currently recognised by the Monetary Authority of Singapore (MAS), which can affect applications for GIRO arrangements with IRAS, CPF, and other agencies.
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Additional Considerations
In addition to the primary requirements and steps, there are other considerations to keep in mind when incorporating a Pte Ltd company in Singapore. These include obtaining necessary licenses and registering for Goods and Services Tax (GST).
Licences and permits
Depending on the nature of your business activities, you may need to obtain specific licenses or permits from relevant government authorities or government agencies or consult with a company auditor.
Registering for Goods and Services Tax (GST)
Businesses must determine whether their GST registration is compulsory or voluntary prior to applying. The company registration process involves submitting an application online through the IRAS website and completing an e-learning course on GST.
Benefits of Incorporating a Private Limited Company
Incorporating a Singapore private limited company offers several significant benefits, including:
- Limited liability protection
- Tax breaks
- Enhanced credibility
- Potential growth
Limited liability protection
One of the key benefits is the liability protection it offers to shareholders. Shareholders are only liable for the company’s debts up to their investment amount, safeguarding their personal assets.
Credibility and business growth
Incorporating as a Pte Ltd company boosts the credibility of your business in the eyes of clients, suppliers, and financial institutions such as a stock exchange.
Tax Incentives and Exemptions
Pte Ltd companies under the Singapore Companies Act are subject to a flat corporate tax rate of 17%. However, companies can benefit from various incentives and exemptions, including the Start-Up Tax Exemption (SUTE) and the Partial Tax Exemption (PTE).
Start-Up Tax Exemption (SUTE)
For eligible new startup companies, the following tax exemptions apply for the first three years of assessment:
- 75% exemption on the first S$100,000 of taxable income.
- 50% exemption on the next S$100,000 of taxable income.
After the first three years, companies will automatically transition to the Partial Tax Exemption scheme.
Partial Tax Exemption (PTE)
For all qualifying companies, including those not eligible for SUTE, the PTE scheme applies:
- 75% exemption on the first S$10,000 of taxable income.
- 50% exemption on the next S$190,000 of taxable income.
Companies Ineligible for SUTE
Certain companies are not eligible for the Start-Up Tax Exemption and will automatically qualify for the Partial Tax Exemption scheme. These include:
- Non-resident companies.
- Investment holding companies.
- Other holding companies.
Setting Up a Private Limited Company in Singapore With Osome
Osome simplifies the process of setting up a private limited company. Their services allow you to complete the incorporation process online in just a few steps. Osome assists with every aspect of the setup, including appointing a Nominee Director, Corporate Secretary, and registering a local office address.
Osome’s expertise ensures that your company is incorporated smoothly and efficiently, and compliant with all statutory and regulatory requirements. With a minimal initial capital requirement of just S$1, starting a business in Singapore has never been more accessible. Leverage Osome’s services to focus on your business activities while they handle the intricacies of the incorporation process.
Summary
Incorporating a private limited company in Singapore is a strategic decision that offers numerous benefits, including liability protection, tax breaks, and enhanced credibility.
By understanding the essential requirements and following the step-by-step procedure outlined in this guide, you can successfully incorporate a Pte Ltd company in Singapore. Partnering with a service provider like Osome can further simplify the process, allowing you to focus on business activities. Embrace the opportunity and take the first step toward establishing a thriving business in Singapore.
FAQ
What is the minimum paid-up capital required to set up a private limited company in Singapore?
To incorporate a Singapore private limited company, the minimum paid-up capital required is S$1. This ensures a flexible entry point for entrepreneurs looking to start their business.
How many shareholders can a private limited company in Singapore have?
A Singapore private limited company may have a maximum of 50 shareholders. Therefore, it is essential to consider this limit when planning the company's ownership structure.
Is it mandatory to appoint a company secretary for a private limited company in Singapore?
It is mandatory to appoint a competent company secretary within six months of incorporation for a Singapore company. This ensures compliance with regulatory requirements.
What are the benefits of incorporating a private limited company in Singapore?
Incorporating a Pte Ltd company in Singapore provides liability protection, tax benefits, enhanced credibility, and opportunities for growth. These advantages can significantly contribute to the success and stability of your enterprise.
Can a foreigner register a private limited company in Singapore?
Yes, a foreigner can incorporate a Pte Ltd company in Singapore by engaging a registered filing agent to assist with the process.
What is the cost of setting up a private limited company in Singapore?
The cost of setting up a private limited company in Singapore typically starts at around S$600. This usually includes local company registration fees from the company registrar, the company's constitution preparation, and one year of corporate secretary services to ensure compliance with local regulations. Prices may vary depending on the service provider and specific requirements.
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