Setting up a Singapore public company limited by guarantee can be complex. However, the process can be much easier with the proper guidance and support. In this article, we will explore the steps involved in setting up a Singapore public company limited by guarantee and provide practical tips to help make the process as smooth and stress-free as possible.
Singapore Public Company Limited by Guarantee vs. Private Limited Company
Public Company Limited by Guarantee
A Singapore public company limited by guarantee (CLG) usually indicates “Ltd” at the end of its name. It is frequently utilized by non-profit or charitable organizations that engage in activities for public benefits, such as aiding social welfare, advancing education, or supporting community development.
Moreover, a CLG does not have a share capital, meaning members of such a company are not shareholders, as there are no shares. The company is managed by a board of directors or trustees responsible for its management.
The CLG’s members also have limited liability, meaning they are only responsible for contributing a predetermined amount to the company’s assets in the event of winding up. This amount is typically specified in the company’s constitution.
Private Company Limited by Shares
A private limited company, often denoted by “Pte Ltd,” is a for-profit company with a share capital. It can have up to 50 shareholders, and corporations may also be shareholders. Shareholders hold shares in the company that represents their ownership. The shareholders’ liability is limited to the amount of capital invested in the company.
The Main Characteristics Of A Singapore Public Company Limited By Guarantee
A Singapore public company limited by guarantee (CLG) in Singapore possesses several unique characteristics that set it apart from other companies.
Non-profit nature
Shareholders do not fund a CLG. A CLG relies on donations, grants, and contributions from members who support its mission. The company is dedicated to conducting non-profit activities that benefit society, such as promoting charitable, educational, cultural, or other non-profit purposes.
Limited liability
Members of the CLG can minimize financial risks and liabilities by agreeing to contribute a specific amount of money to pay off the company’s debts and liabilities in case the company is wound up while they are a member or within one year after they stop being a member. By limiting the liability of the CLG’s members to their agreed-upon contribution, the company ensures that they are not personally responsible for its debts and liabilities.
Separate legal entity
Under the law, a CLG is recognized as a distinct legal entity from its members, able to own property, enter into contracts, and be sued in its own name, similar to a natural person.
Tax benefits
An incorporated CLG can enjoy limited liability and tax benefits. However, the tax treatment of a Singapore public company limited by guarantee depends on the nature of its income.
Suppose a CLG earns over 50% of its income from tax-deductible membership fees and conducts trade or professional activities. In that case, it will be deemed as conducting a business, and its income from both members and non-members will be subject to taxation. If the tax-deductible membership fees make up less than 50% of the receipts from members, then only the income earned from transactions with non-members will be subject to taxation.
A CLG can seek charity status, which makes it eligible for complete tax exemption on its income. However, the company must meet the Commissioner of Charities (COC) criteria. Although charities are permitted to engage in business activities, the range of these activities is also restricted.
Singapore’s Company Limited By Guarantee Registration Documents and Requirements
If you want to register a Singapore public company limited by guarantee (CLG), there are certain documents and requirements you need to be aware of.
- Registering as a CLG requires a minimum of one member, one director, and a company secretary. One of the directors and the secretary must reside in Singapore, meaning they must be either Singaporean citizens or permanent residents. Foreign individuals who wish to serve as a local director for a CLG must hold either a Dependent Pass or Employment Pass.
- The CLG must prepare a constitution that outlines the organization’s objectives and by-laws.
- The company must also hold Annual General Meetings (AGMs), conduct an annual audit of its accounts, and file annual returns.
- Incorporating a Singapore public company limited by guarantee requires applicants to apply to ACRA through its BizFile+ website. The constitution must be submitted with the application.
- A CLG may have to apply for licenses depending on their activities. It should be done at the time of registration with ACRA. For more information on the relevant licenses, refer to the GoBusiness website.
Application Process for Singapore Public Company Limited By Guarantee
The process of registering a Singapore public company limited by guarantee (CLG) requires a few steps that must be followed to ensure compliance with legal requirements.
Choose a name for your company
The name must be unique, and it must not be identical or too similar to the name of any other company registered with ACRA. You can check the availability of your proposed company name on ACRA’s website.
Decide on FYE
The financial year-end (FYE) marks the conclusion of the accounting period, during which transaction records are maintained and later presented in the form of financial statements.
Appoint directors, members, and a qualified company secretary
A CLG must have at least one director, one member, and a qualified company secretary. It is necessary to include an office address where all official communications and notices intended for the company will be directed and its records and registers will be maintained.
Prepare the Constitution
The Constitution is the governing document of a Singapore public company limited by guarantee that outlines its rules and regulations. It should specify the company name and the guaranteed amount each member must contribute in case of winding up and clearly state the company’s objectives.
Submit the application
Once you have all the required information, you can submit your application via Bizfile+. The fee for the name application is $15, and the fee for registering a company is $300.
How can we help? – Our Incorporation Service
At Premia TNC, we offer comprehensive and customized solutions for incorporating a Singapore public company limited by shares for more than 50 shareholders. Our experienced professionals will guide you through the entire process, from choosing a name to filing annual returns.
We provide services such as drafting a constitution, appointing directors and company secretaries, and offering a registered office address. Our ongoing support ensures your company complies with relevant laws and regulations, including accounting and taxation, corporate secretarial services, and business advisory.
Ready to incorporate your Singapore public company limited by shares? Contact us today to learn more about our services and schedule a consultation with one of our experts.
Singapore Public Company Limited By Guarantee Frequently Asked Questions
1. What’s the difference between a Singapore company limited by guarantee and a company limited by shares?
A Singapore public company limited by guarantee differs from those limited by shares in that it does not have share capital. The liability of CLG members is restricted to the amount contributed to the company's assets in case of liquidation, as outlined in the company constitution. Conversely, companies limited by shares have shareholders whose liability is limited to the portion of share capital they have subscribed to.
2. Is a company limited by guarantee (CLG) classified as public or private?
This is classified under a public company as private company types do not offer a similar structure.
3. Can a for-profit organization be set up as a company limited by guarantee (CLG)?
A Singapore public company limited by guarantee cannot distribute dividends or profits to its members. Therefore, this structure is unsuitable for organizations that aim to generate profits, as their members usually expect to receive returns on their investments through payouts like dividends.
