This article was co-created by the Carta team and Sunil Rai, senior partner and lawyer at global law firm Dentons Rodyk & Davidson LLP.
Singapore has established itself as a leading global business hub, offering a robust legal framework, an attractive tax regime, and a seamless regulatory process. Whether you’re setting up a new company or expanding internationally, Singapore’s dynamic environment provides a strong foundation for growth and operational success.
This guide outlines the process of incorporating a private limited company in Singapore and how Carta can support your business at every stage.
Taxes
Singapore offers a competitive tax environment, with corporate profits taxed at a flat rate of 17% (as of 2024). Various tax relief schemes and incentives are also available during the initial stages of business operations. For instance, newly incorporated companies may qualify for a 75% tax exemption on the first S$100,000 of normal chargeable income, and a further 50% exemption on the next S$100,000.
Legal benefits of incorporation
Incorporating a company in Singapore offers numerous legal benefits, which provide stability and protection. For instance:
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A company is recognized as a separate legal entity with limited liability. By isolating members’ and directors’ financial exposure to their shareholdings in the company, this legal structure safeguards personal assets from the company’s potential debts and losses.
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Perpetual succession allows companies to remain in existence until formally wound up or struck off.
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Companies have the ability to own property in their corporate name and the legal capacity to sue or be sued under their company name.
Key requirements for incorporation
To establish a legally compliant entity in Singapore, you’ll need to meet these foundational requirements:
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Shareholders: At least one shareholder holding a minimum of one share.
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Directors: A minimum of one director who is a resident of Singapore and at least 18 years old.
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Company Secretary: Must be appointed within six months of incorporation to ensure regulatory compliance.
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Auditors: Required within three months of incorporation unless the company is exempt under the Companies Act 1967 (and Subsidiary Legislation).
Beyond incorporation
Choosing the right business structure in Singapore
Singapore offers three main types of corporate entity to suit diverse needs:
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Exempt Private Company: Limited to 20 members, suitable for small businesses.
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Private Company: Accommodates up to 50 members, suitable for businesses that are scaling and require additional shareholders.
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Public Company: No member limit, ideal for businesses planning to raise capital through public markets.
Singapore operates under a “no-par value” regime, simplifying the issuance and valuation of shares by removing the concept of nominal or par value.
Ongoing compliance obligations
Once incorporated, businesses must meet ongoing compliance requirements. These include:
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Filing annual returns with the Accounting and Corporate Regulatory Authority (ACRA) and tax returns with the Inland Revenue Authority of Singapore (IRAS).
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Conducting regular general meetings to align directors and shareholders on important decisions and observe corporate formalities, such as the appointment of directors.
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Ensuring that share allotments are accurately documented and updated in a timely manner to meet compliance standards.
Closing the business
If a business needs to shut down operations, there are two primary options available in Singapore: winding up and striking off. This decision depends on the company’s circumstances and obligations.
Winding up, also known as liquidation, is the process of selling a company to pay off its debts. While a voluntary winding up can be initiated by members of the company, a compulsory winding up requires the appointment of a provisional liquidator and a meeting of creditors.
Alternatively, businesses may opt for the simpler process of striking off, which means being removed from the Register of Companies maintained by the Accounting and Corporate Regulatory Authority (ACRA). This option typically applies to dormant or inactive companies.
How Carta can support your business
After incorporation, setting up proper corporate governance is essential for long-term success. Carta’s software-first approach simplifies this process, offering three key advantages:
Efficient cap table management
Carta keeps your cap table accurate and updated in real time, eliminating the hassle of manual spreadsheets. You can track share issuances, ownership changes, and transfers seamlessly, providing shareholders with instant visibility.
Simplified corporate governance and transparency
Carta centralizes all governance needs, from tracking board consents and resolutions to storing company documents securely in a virtual data room. You can quickly retrieve essential records and generate reports for shareholder updates or regulatory requirements, ensuring streamlined communication.
Seamless equity and ESOP management
Carta makes it easier to issue equity to investors and employees. Our ESOP tools allow you to design, administer, and track employee stock ownership plans effortlessly.
