Singapore Business Structures

1. What is a sole proprietorship?

A sole proprietorship: 
  • Is not a separate legal entity 
  • Cannot sue or be sued in its own name 
  • Cannot own property

As the owner, you have unlimited liability and are personally liable for the debts and losses of the business.

2. What is a partnership?
 
a. Partnership
A partnership is an association of two or more persons carrying on a business with a common view to profit. This type of business:
  • Has between two and 20 owners
  • Is not a separate legal entity
  • Cannot sue or be sued in its own name 
  • Cannot own property
The partners have unlimited liability and are personally liable for the debts and losses of the business.
 
b. Limited Liability Partnership (LLP)
In a limited liability partnership, the individual partners’ own liability is generally limited. This type of business:
  • Has at least two partners, no maximum limit 
  • Is a separate legal entity 
  • Can sue or be sued in its own name 
  • Can own property
The owners, who can be either individuals, a company or another limited liability partnership, have limited liability. The partners are not personally liable for the debts and losses of the LLP incurred by other partners.
 
c. Limited Partnership
 
A limited partnership consists of two or more persons, with at least one general partner and one limited partner. There is no maximum limit to the number of owners.
This type of business:
  • Is not a separate legal entity 
  • Cannot sue or be sued in its own name and 
  • Cannot own property
The general partner is personally liable for the debts and losses of the business, while the limited partner is not personally liable for them.
 
3. What is a company?
 
A company is a legal business entity which is separate and distinct from its shareholders and directors and is registered under the Companies Act, Chapter 50. Shareholders are not personally liable for debts and losses of company.
 
The main types of companies in Singapore include – Exempt Private Company, Private Company, Public Company, Foreign company or Singapore Branch.
 
4. What is an Exempt Private Company (EPC)? Can a small company be exempted from audits?
 
Under Section 4(1) of the Companies Act, an exempt private company (EPC) is a company with no more than 20 individual shareholders and whose shares are not held by another company. An EPC can also be one that the Minister has gazetted as such. When the annual revenue of the EPC is not more than $5 million, it is exempted from audit requirement. However, the company is still required to submit unaudited accounts (including the notes to the accounts) which must be accompanied by the Directors’ report and the Statement by Directors and be prepared in compliance with the Companies Act.
 
5. What is a Private Company?
 
A Private Company has 50 shareholders or less. Shareholders are not personally liable for debts and losses of company, with their liability limited to the amount of shares they have not paid for those shares allotted to them.
 
Private Limited Companies
Companies limited by shares pursuant to, and governed by the Singapore Companies Act. The share holders cannot be held personally liable for the debts of Limited Companies, with their liability limited to the amount of shares that have been issued to them which they have not fully paid for. The number of shareholders is limited to fifty or less.
 
Exempt/Deemed Exempt Private Limited Companies
This type of company has less than 20 members, none of them being corporate entities. The status is not specially conferred, it is simply a status by operation of law.
Gazetted Exempt Private Companies – Government-owned companies which have been declared Exempt Private Company by the Minister Gazette. 
 
Public Companies –
the number of shareholders can be more than fifty members and the company may raise capital by offering shares and debentures to the public. A public company must register a prospectus with ACRA before making any public offer of shares and debentures.
 
Foreign Companies –
companies incorporated outside Singapore who wish to set up a branch in Singapore, registered as foreign company under the Companies Act
 
6. What is a Public Company?
A Public Company can have more than 50 shareholders. A public company limited by shares may raise capital by offering shares and debentures to the public.  It must register a prospectus with ACRA before making any public offer of shares and debentures.  A public company limited by guarantee does not have a share capital.  Instead, the member of the company provides a guarantee to pay a sum of money if the company is wound up.  It is often formed for non-profit making activities that have some public interest.
 
7. What is a Foreign Company or Singapore branch?
A company incorporated outside Singapore who wish to set up a branch in Singapore, can be registered as a foreign company under the Companies Act.
 
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