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1 ) Choose The Right Business Entities For Registration

The following are business entities that are available for registration in Singapore



 Sole Proprietorship
  • Governed by the Business Registration Act.
  • Any individual above the age of 18 years who is not a bankrupt may register a sole proprietorship to start his own business.
  • The sole proprietor is entitled to all profit of the business and is personally liable, without limit, for all its debts and obligations.


 Partnership
  • Governed by the Business Registration Act.
  • Any persons up to a maximum of 20 may enter into a partnership.
  • All the partners are personally liable, without limit, for the debts and obligations of the partnership.


  Limited Partnership
  • Governed by the Limited Partnership Act.
  • Essentially a partnership but must have at least 1 general partner and 1 limited partner.
  • General partners and limited partners can be individuals or corporations.
  • Does not have a legal personality separate from the partners.
  • General partner has unlimited liability, fully responsible for the debts and obligations of the partnership.
  • Limited partner’s liability capped at the amount of his agreed investment.
  • Must appoint at least one local manager, if all the general partners are “ordinarily resident” outside of Singapore.
Advantages
  • Simplest form of vehicle, least legal and administrative procedures and costs of implementation.
  • Full control of the business.
  • Entitle to the entire profits of the business.
  • Proprietor or partners can sell or discontinue business.
  • Cheap to discontinue the business.
Disadvantages
  • Unlimited personal liability for debts and negligence committed.
  • Success and continuance of business depends on the ability and health of the proprietor or partners.
  • Confined management.
  • Potential disputes and breakdown in the mutual trust of the partnership.
  • Difficult to expand and raise additional capital.


  Limited Liability Partnership (LLP)
  • Governed by the Limited Liability Partnerships Act.
  • 2 or more persons form a body incorporated.
  • Separate legal personality and have perpetual succession.
  • Liable for the act of each partner, wrongful partner has no limited liability.
Advantages
  • Separate legal personality.
  • Have perpetual succession.
  • Change in partners shall not affect the existence, rights or liabilities of the LLP.
  • Partner is not personally liable for an obligation of the LLP.
  • A partner shall not be personally liable for the wrongful act or omission of any other partner of the LLP.
Disadvantages
  • Every partner is the agent of the LLP.
  • A former partner will be regarded as still being a partner unless notice has been filed with the Registrar and business associates are being notified.
  • Mutual rights and duties of each partner of the LLP, and the mutual rights and duties of a LLP and its partners shall be governed by the LLP agreement or by the provisions set out in the First Schedule of the Limited Liability Partnership Act.
  • A bankrupt could be a partner.
  • A partner may assign the whole or any part of his interest in the LLP.


  Incorporated Company
  • Governed by the Companies Act.
  • One or more persons associated for a lawful purpose may form an incorporated company by subscribing his or their names to a Memorandum of Association and comply with the requirements for registration.
  • Company is treated as an entity separate from the members and is a “person” in law.
Advantages
  • Company has potential succession and the death or withdrawal of members does not affect continuance.
  • Members generally have limited liability and are not liable for the debts of the company.
  • Corporate structure affords considerable flexibility in the organization, management and financing of company, because:
  - May have a large number of members while partnership normally restricted to 20 partners.
  - Shareholders may have varying entitlements to dividend and control.
  - Companies may be private or public and large companies may be listed on stock exchanges.
  - Can seek funding from the public.
  - Easier to finance larger business projects through corporate structure.
  • Ownership and management can be separated and control can be vested in directors and in some group of shareholders.
  • Shares can be bought and sold without interfering with the corporate structure.
  • Considerable scope for tax planning.
Disadvantages
  • More expensive and complex to form and to maintain.
  • More detailed and rigorous legal and financial reporting requirements.
  • Less privacy on financial affairs
  • Minority shareholders may not have effective involvement or control over decision-making or management.


  Unlimited Company
  • Liability of the members to contribute to the assets of the company is unlimited.
  • A previous member is liable only if he ceased to be a member less than a year before winding up.
  • Formed by professional organizations.
  • Seen as an advantage over partnership.


  Company Limited by Guarantee
  • Liability of the members to contribute to the assets of the company in the event of it being wound up is limited to such amount as they respectively undertake to contribute.
  • Members not required to contribute any capital while the company is a going concern.
  • Is a public company.


  Company Limited by Shares
  • Liability of the members is limited to the amount unpaid (if any) on the shares held by them.
  • Member with shares fully paid up has no further liability to the company, need not contribute to the payment of the company’s debts should the company become insolvent.


  Public Company Limited by Shares
  • A company other than a private company.
  • Can only commence business when the Registrar issues it with a notification to commence business.
  • No limit on the number of shareholders/members.
  • May offer shares, debentures and other securities to the public subject to the issue of prospectus or statement in lieu of prospectus to invite public to invest.
  • Does not have the word “Private”, “Sendirian” or their abbreviations as part of its name.


Private Company Limited by Shares
  a company having a share capital which
 
  • Restricts the right to transfer its shares.
  • Limits its members to not more than 50 (employees of the company or of its subsidiaries excluded and joint holders of shares are constructed as one).
  • Company’s name must include the word “Private” or “Sendirian” which may be abbreviated to “Pte.” or “Sdn.”.
   
   
Exempt Private Company (EPC)
  a private company in the shares of which
 
  • No beneficial interest is held directly or indirectly by any corporation.
  • Has not more than 20 members.
Advantages:
  • Solvent EPC exempted from submitting financial statements with its annual return.
  • Exempt from audit requirements in respect of a financial year if its revenue in that year does not exceed the amount prescribed by the Minister, currently S$5 million.
  • Able to provide loans to its directors and persons connected to the directors.

   Download the Comparison Table - Business Structures



2) How to choose, the decision will depend on several things, among others:

  Is it going to be a one-man business or a partnership?

  Does the owner has the necessary skills and can he finance the business entity on his own or does he need partners?

  How many partners will there be?

  How large is the business entity going to be?

  Does the owner want to “protect” his personal assets from claims by business creditors?

  Is there a law requiring that a company be incorporated to operate the business?



3 ) Seek Professional Service in Registration of Business Entity

Seek professional services in registration of business entity, in particularly registration of a company which involve the drafting of an appropriate constitutional document – Memorandum and Articles of Association.

Should you require our assistance, please complete the form and return to us with copies of the supporting documents and we will provide you with our quotation for your consideration before proceed with the registration of entity.

   Download the Form on Pre-Registration Information