LLC in Singapore: A Smart Choice for Global Businesses
What is a Limited Liability Company in Singapore?
A Limited Liability Company (LLC) in Singapore is a business entity owned by at least one shareholder (except for public limited companies). It has the following key features:
Legal Entity
An LLC in Singapore is considered a separate legal entity, meaning it operates independently of its owners. This allows the company to:
Sue and be sued under the company name.
Buy, sell, and hold assets in the company's name.
Limited Liability
There is a clear distinction between ownership and management. While the business is owned by shareholders, it is managed and operated by a board of directors. Shareholders can also be directors of the company.
As a separate legal entity, the LLC is responsible for its debts and liabilities, protecting the owners (shareholders) from personal financial responsibility. Shareholders’ liabilities are limited to the value of their shares in the company.
Types of LLCs in Singapore
Here are the main types of LLCs in Singapore:
Private Limited Company (Pte Ltd) This is the most common type of LLC in Singapore, owned by a limited number of shareholders (up to 50). It cannot offer shares or debt instruments to the public. The shareholders can be individuals or corporate entities.
Exempt Private Company (EPC) This is a private limited company with no more than 20 shareholders, none of whom are corporate entities. This structure is chosen to minimize regulatory compliance requirements.
Public Limited Company by Shares This type of company can be owned by 50 or more shareholders and may be listed on a stock exchange. It can issue shares or debt instruments to the public to raise capital.
Public Company Limited by Guarantee A non-profit entity for purposes such as charitable organizations or professional associations. It has no shareholders, only members who guarantee the company's debts up to a certain amount.
Advantages and Disadvantages of LLCs in Singapore
Advantages:
Separate Legal Entity: An LLC can own assets and sign contracts in its name.
Limited Liability: Shareholders are only liable up to the value of their shares.
Perpetual Existence: Changes in shareholders or members do not affect the existence or obligations of the company.
Transferability of Ownership: Shares can be transferred, making it easy to bring in new investors or sell the business.
Tax Benefits: LLCs can benefit from various tax incentives and have several legal methods to reduce corporate income tax, such as startup tax exemptions.
Disadvantages:
Regulatory Compliance: Establishing an LLC in Singapore involves meeting numerous legal and regulatory requirements, including annual filings, maintaining accounting records, and holding annual general meetings.
Legal Requirements: An LLC must file taxes with the IRAS, submit annual reports to ACRA, and maintain various records (financials, registers).
The process is relatively straightforward and can be broken down into several key steps:
Choose the Type of LLC Decide which type of LLC you want to establish (Private Limited, Exempt Private, Public, etc.).
Prepare Legal Requirements You must fulfill several legal criteria before registration, such as having a local address and appointing a company secretary and auditor.
Legal Requirements for LLCs in Singapore
Once your LLC is formed, the following positions must be appointed:
Company Secretary: You must appoint a company secretary within 6 months of incorporation, and the position must not remain vacant for more than 6 months at any time.
Auditor: Every company must appoint an auditor within 3 months of formation unless exempted by the government.
Other legal obligations include:
Financial Year End: Choose a fiscal year-end date for your company.
Register Keeping: Maintain up-to-date registers of shareholders, directors, and other important information.
Annual General Meeting (AGM): Public companies must hold an AGM, and private limited companies are required to file annual returns with ACRA.
Annual Tax Filing: Submit corporate tax returns to IRAS (Inland Revenue Authority of Singapore).
Why Choose Singapore for Your LLC?
With favorable tax policies, a robust legal framework, and a highly competitive business environment, Singapore is an ideal destination for international businesses. Its well-established regulatory systems and ease of business setup make it an attractive choice for entrepreneurs and companies looking to expand globally.
Ready to Start Your Company in Singapore?
With attractive tax incentives, a business-friendly environment, and a quick registration process, Singapore is a perfect location to launch your global business. Contact us for free consultation and detailed guidance on the process of setting up your LLC in Singapore, helping you start and grow your business successfully.
