Setting Up an Exempt Private Company in Singapore
Are you an entrepreneur seeking flexibility and ease of business operation? Then, an Exempt Private Company is the answer. With a maximum of 20 shareholders and minimal reporting obligations, EPCs offer the ideal platform for small and medium-sized enterprises. Don’t miss out on the benefits – learn how to register your EPC in Singapore with our guide today!
Singapore is widely known for the variety of company structures prospective business owners can choose from. These include sole proprietorship, partnerships, limited liability companies (LLC) – commonly known as private limited companies (Pte Ltd) – and public companies. The most common type of business structure is Exempt Private Company (EPC), which is a simplified type of Private Company Limited by Shares. In this article, we will explain the main features of private limited companies and exempt companies in particular.
What is an Exempt Private Company Limited by Shares?
An Exempt Private Company in Singapore (EPC) is a company structure that falls in the category of private limited companies. The main feature of EPC that distinguishes it from all other private limited companies is that the number of shareholders is capped at 20 and they must be individuals and not corporations. In contrast, other types of private limited companies can have more than 20 shareholders that can be either corporations or individuals. In Singapore, all private limited companies have the suffix “Pte Ltd” in the company’s name; but EPCs’ abbreviation is not used as a part of the company name. Instead, it is commonly referred to by this abbreviation only in communications with regulatory authorities, such as ACRA.
You may now be wondering why Singapore has a separate EPC framework within the regulations for private companies. The key to understanding the benefits of an EPC comes from the name itself – “Exempt” Private Company” – as it implies that these companies qualify for numerous tax and audit exemptions, which make this structure a very attractive choice for businesses, as it helps them save substantial costs.
Benefits of Forming an Exempt Private Company in Singapore
Limited Liability
A limited liability is a well-known and widely adopted concept in which the liability of the owners of the business is limited by their contributed capital, and the business entity is a separate legal entity from its owners. An Exempt Private Company falls into this category and the shareholders of EPC can enjoy the same legal protection that this concept implies.
Tax Exemptions
Singapore has a wide spectrum of tax exemption schemes that are applicable to new companies (those that are not older than 3 years). All Exempt Private Companies are eligible for the tax exemption scheme for new start-up companies, which grants companies tax exemptions on a percentage of the initial S$200,000 of chargeable income for three consecutive years. The details are as follows:
- 75% of the first S$100,000 of taxable income is exempted
- 50% of the second S$100,000 of taxable income is exempted
This makes the effective rate of the corporate tax in Singapore within the income tiers 4.25% and 8.5% respectively.
It’s important to note, however, that EPCs that are real estate or holding/investing companies do not get to enjoy the tax benefits of this scheme.
Audit Exemptions
Additionally, an EPC is automatically exempted from undergoing annual audits if:
- Annual turnover does not exceed S$10 million
- Total assets are less than or equal to S$10 million
- The number of Employees is not greater than 50
Although an EPC is not required to be engaged in annual audits, it must still – per the Companies Act and the Singapore Financial Reporting Standards (SFRS) – maintain annual accounting records and prepare financial statements.
Foreign Ownership Policy
As with other private limited companies, Singapore law allows a foreigner to get ownership of all the shares of an EPC, which means that a foreigner could have complete ownership over the company.
Registration Requirements for Exempt Private Company in Singapore
Before we delve into how you can register an Exempt Private Company in Singapore, it’s important to understand all of the requirements for an efficient and hassle-free company formation process.
Shareholders
There must be at least one shareholder and there can be a maximum of 20.
Directors
EPCs are required to have a local/resident director, who can be either a Singapore permanent resident, citizen, or EntrePass/Employment Pass holder. If you are not able to find someone to fill this role, you can engage professional and reliable Nominee Director services such as those we provide at Intracorp.
Besides one local director, an EPC may have any number of foreign or local directors. There can be different directors, like Managing Director, CEO, or CFO, depending on the company’s own requirements.
Registered Address
The company must have a registered address (residential or commercial) in Singapore that is not a P.O. box. If you are unable to find a suitable registered address, you may adhere to the registered address of your registration agent, which is part of the services offered at Intracorp.
Paid-up Capital
You must pay at least S$1 in paid-up capital. The actual amount of paid-up capital depends on the company’s plans and financial needs.
Company Secretary
Once the company has been registered, you must appoint a company secretary within 6 months. At Intracorp, company secretary services are at the core of our expertise. Contact us today or check out our Company Secretary article to get started.
Registering an Exempt Private Company in Singapore
The process to register an EPC in Singapore is essentially the same as for any other private limited company in Singapore. For a complete step-by-step guide, please visit our Ultimate Guide to Register a Company in Singapore. With that said, an overview of the EPC formation procedures is a great way to get started. Here are the key steps to successfully incorporate an EPC.
Assign Shareholders and Directors
As part of the requirements we discussed briefly, your company must have the minimum number of shareholders and directors as required by law at the time of registration and at all times of existence of the company.
Additional directors can be appointed as needed during the course of business. Similarly, additional shareholders can be admitted to the company by way of selling (transferring) the existing or issuing new shares.
An important consideration to keep in mind is that shareholders and directors will play key roles in your company. Hence, you must ensure that you carefully choose trustworthy and qualified individuals.
The due diligence procedures are also required to be performed by your registered filing agent on all directors and shareholders. Therefore, copies of ID documents, proof of address, and contact details will be required to be produced before their appointment.
Choose a Company Name
There are various guidelines you need to follow when selecting a company name, such as the name having to be substantially different from existing company names. We suggest that you come up with multiple names in case a few do not satisfy the official naming criteria.
At this point, keep this information in hand for the following steps.
Engage a Registered Filing Agent
Although not required for the incorporation of local companies in Singapore, a registered filing agent (RFA) can help you navigate through all the intricacies of the Exempt Private Company incorporation process. If you choose to engage the services of an RFA, you will be able to provide them with the information you have gathered in the previous two steps.
Here are the steps that will be taken by your RFA at this stage:
- Applying for the Company Name and getting it approved
- Submitting the details of all company directors and shareholders to ACRA through the Bizfile website
- Filing the Company Constitution (formerly known as. Memorandum and Articles of Association) – it can be a standard version provided by ACRA or prepared separately to fit the special needs of your company
Essentially, once these steps are completed by your registration agent, the process of incorporation is done. It usually takes just about 20 minutes to file the incorporation for one small company.
After the incorporation, you will receive a Certificate of Incorporation, which is the main official document confirming the registration of your company. You can also order a Business Profile and other documents from ACRA as needed.
Get Expert Help from Intracorp Today
The process to register an Exempt Private Company or any other business entity in Singapore can be very complex to understand and execute. Intracorp has over 10 years of experience in the incorporation of hundreds of companies that are successful to this day. Our packages are affordable and tailored to each of our customers’ needs so that they can receive the guidance and help they deserve when forming a company. Contact us today with any inquiries about Exempt Private Companies or to begin the incorporation process with the assistance of our experts.
