Singapore is a self-governing city-state with an alluring tax structure, a strong economy, and a top-notch business climate. It has consistently been ranked as one of the top places to conduct business.
Companies in Singapore might be classified as unlimited, limited, private, or public corporations. Exempt private companies, often known as EPCs, and private limited by shares are additional categories for private firms.
The information you want regarding Singapore Exempt Private Company is provided in this article.
How Does an Exempt Private Corporation Limited by Shares Differ from a Non-Exempt Private Business?
A private entity called an EPC can have up to 20 shareholders, none of which can be corporations. In other words, no business may directly or indirectly hold its shares. Another type of EPC is a business that is fully owned by the government and that the Minister has designated as such in a gazette.
A non-EPC, on the other hand, is a private business with less than 50 shareholders or with corporate stockholders and has more than 20 shareholders.
Singapore Exempt Private Limited Corporation Features
Due to its fewer regulatory requirements, an Exempt Private Limited Corporation is the most popular and favoured business entity in Singapore. Due to certain compliance allowances, a large number of small businesses that were Private Limited Entities changed their status to Exempt Private Limited Corporations.
Entitled Private Limited Businesses with yearly revenues of $5 million are excluded from the need for audits. Exempt Private Limited Corporation instead submits a statement of solvency that has been authorised by the directors and company secretary in place of the required statutory yearly accounts. If the statement is not submitted for whatever reason, the ACRA must be given an unaudited account. There is no requirement for the firm to submit an annual report to ACRA up until it is solvent and submits the solvency declaration.
According to the Companies Act and Singapore Financial Reporting Guidelines, Exempt Private Companies must keep accurate accounting records and prepare and submit a financial statement.
A freshly established Exempt Private Company is entitled to complete tax exemption rights. The firm will save a lot of money on taxes for the first three years of its existence. Exempt Private Limited Companies are little businesses with big advantages. Exempt Private Limited Corporation is allowed to save more on auditing expenses thanks to the procedure of statutory auditing requirements.
Private Limited Exempt In terms of loans to directors and intercompany loans/guarantees, companies profit more. If the director of the former business owns 20% or more of the stake, Section 163 of the Companies Act prohibits lending to other companies or providing a guarantee of security for a loan obtained by another company.
Many conditions need to be satisfied in order to effectively set up an EPC. The EPC must include:
- Foreigners are permitted to own all the company’s shares.
- A newly established business is granted a three-year partial corporation tax exemption.
- The amount of capital contributions from shareholders is restricted.
- The minimum number of shareholders is one, who may be a foreign national, with a cap of 20.
- There is no minimum capital needed for incorporation.
- In records, stockholders’ names are not made available.
- Official language- English.
- Name of Singapore Exempt Private Company.
A firm must pay $315 to incorporate, which includes a $15 name application charge as well as a $300 registration fee through the BizFile+ platform.
Incorporation is a straightforward process.
1. Choose a name
To incorporate, you must first pick a name for your EPC. The chosen name must be original and must not contain any phrases or words that may be seen as impolite or unsuitable.
Also, it shouldn’t violate any trademarks. An EPC may use the acronym “EPC” in place of the term “Pte Ltd,” which would typically appear in the name of a private corporation.
2. Submit the company’s constitution
The next step is to submit your company’s constitution and other information using the BizFile+ platform.
Details of the share allocation, such as the class of shares, the number of shares, the amount of paid-up share capital, and the amount of paid-up share capital, as well as the specifics of the directors and company officials, are some of the facts that you would be expected to submit.
3. Shareholder agreement draft
A shareholder agreement must be written as part of the incorporation procedure. The duties of the shareholders and directors as well as the laws and regulations governing business management would be spelt out in the shareholder agreement. It also contains clauses or rules that the Constitution might not have included.
ACRA will send an email to confirm permission after reviewing the supplied papers. The email will include your EPC’s assigned Unique Entity Number (UEN), which acts as your formal Certificate of Incorporation.
Benefits of Singapore Exempt Private Company
1. Shareholder liability
EPC shareholders are solely responsible for the amount they invested in the company’s shares. The shareholders’ assets, other than the money they put in the EPC, will thus be secure from being confiscated to settle the company’s obligations if it were forced into liquidation.
In contrast, owners of other types of businesses, such as partnerships or sole proprietorships, who are shareholders, partners, or have unlimited liability, run the danger of having their assets forfeited if the business is forced into liquidation.
2. Extension of directors’ loans
When it comes to financial borrowing, EPCs have greater freedom and autonomy than non-EPCs. Unlike non-EPCs, who are prohibited from doing so unless certain conditions are met, such as getting previous consent for the loan extension in a general meeting, they are permitted to give loan extensions to their directors.
3. Corporate tax exemption
EPCs that have just been founded are free from corporation tax under the Start-Up Tax Exemption Program. This incentive is offered to encourage local business growth and foster the entrepreneurial spirit.
EPCs receive a tax exemption of 75% on their first SGD 100,000 in normally taxable income and an additional 55% on each subsequent SGD 100,000 in normally taxable revenue starting in YA 2020 and after.
Nevertheless, not all EPCs are eligible for the benefit of tax exemption. A real estate development company (EPC) that is a holding company for investments and is heavily involved in the development of real estate for investment, sale, or both would not be exempt from tax.
4. Annual returns filing
To lessen the burden on solvent EPCs, ACRA has made it simpler to file yearly filings. EPCs must initially, however, abide by the following conditions:
- Failure of FYE on or after August 31, 2018,
- The business is not prepared and is not required to file audited financial statements.
- The previously submitted information to ACRA has not changed.
5. Audit exemption
EPCs that meet the requirements for small businesses are eligible for a potential audit exemption.
An EPC must meet the following requirements in order to be classified as a small business:
- A private corporation in the relevant fiscal year
- For the two prior consecutive fiscal years, satisfy two or all three of the following requirements:
- Has a maximum annual profit of SGD 10 million
- Has a maximum total asset value of SGD 10 million
- Not more than 50 employees
The filing and compliance requirements that apply after incorporation must also be taken into consideration. These criteria include, among others:
As was already indicated, EPCs are expected to convene an Annual General Meeting (AGM) within six months following their company’s FYE. Unless they have been excused from doing so or have decided to stop having AGMs, that is.
If all of the members approve a resolution to stop having AGMs, the latter is possible. If there won’t be an AGM, the EPC may pass written resolutions on items that would have been brought up at the meeting.
2. Annual returns filing
Annual returns must be submitted by every EPC. For both solvent and insolvent EPCs, different filing procedures apply.
If an EPC satisfies the prerequisites outlined above, it may choose to file streamlined annual returns rather than being required to submit its financial statements along with its annual filings.
On the other hand, an insolvent EPC is not excused from reporting financial statements or qualified to file yearly reports using a streamlined process. As an alternative, when filing its annual reports, it must provide a complete set of financial statements in XBRL format or financial statement highlights in XBRL format together with a PDF copy of the financial statements.
3. UEN disclosure
The UEN of an EPC acts as the business’s identification number and is necessary when the firm conducts operations like filing corporate tax returns, requesting licences, or submitting CPF contributions from workers.
Also, the UEN must be disclosed or shown on all critical business documents, including correspondence, formal notices, account statements, and invoices.
4. Appointing auditors
Generally speaking, companies must select an auditor within three months of their establishment. Your EPC is free from audits and does not need to employ auditors, however, provided it satisfies the requirements for a “small business” as described above.
Look For Assistance From Expert Business Incorporation Services in Singapore
Using a competent Singapore company incorporation agency may speed up the process of setting up a firm and guarantee that it conforms with local regulations. Other beneficial business solutions, such as accounting, audit and assurance, and business advisory services, are sometimes provided by company registration services.
1. What distinguishes a private corporation in Singapore from an exempt private limited company?
A corporation is referred to as a private company if it has more than 20 shareholders but fewer than 50. An Exempt Private Limited Corporation, or EPC, is referred to in Singapore if there are 20 or fewer shareholders and no corporations or other beneficial interests in the company’s shares.
2. In Singapore, what exactly is an Exempt Private Limited Company?
Exempt Private Limited Companies in Singapore, generally known as EPCs, give foreign investors access to a distinct legal entity with limited shareholder responsibility and a three-year partial corporation tax exemption. An Exempt Private Limited Corporation in Singapore is also more restricted by shares, business models with less red tape, and governmental rules than the majority of other Singaporean corporations.
3. Can a residential address be used as the company address for an Exempt Private Limited Company in Singapore?
Indeed, there are a few instances where the residential address might serve as the business address.
4. Who is eligible to become a shareholder in a Singapore Exempt Private Limited Company?
In Singapore, an Exempt Private Limited Corporation is open to shareholders who are at least 18 years old. In Singapore, HUF, a Pvt Ltd., an Ltd firm, an LLP, and a Sole Proprietorship are additional entities that can become shareholders in an Exempt Private Limited Company.
5. How many directors must an Exempt Private Limited Company have in order to register in Singapore?
An Exempt Private Limited Corporation must have at least one director to register in Singapore. The maximum number of directors is unrestricted, despite the fact that the constitution of the company often specifies the number of directors. A corporate entity is not permitted to serve as a director of a corporation since a director must be a natural person. Moreover, at least one director must be a Singaporean citizen.
6. Who can open an Exempt Private Limited Company in Singapore?
Anybody can establish an Exempt Private Limited Corporation in Singapore, regardless of nationality. As was already indicated, the applicant must be older than 18 and not be declared bankrupt.
7. How much time does it take to reserve a name in Singapore for an Exempt Private Limited Company?
If the ACRA has no objections to the name the applicant has chosen, the name reservation process for a new Exempt Private Limited Corporation in Singapore simply takes a few minutes.