Premia TNC Singapore Team
Author
Introduction
An exempt private company (EPC) in Singapore is a specific type of private limited company designed for businesses seeking a streamlined and discreet corporate structure. It is limited by shares and allows up to 20 shareholders, all of whom must be individuals, as corporate shareholders are not permitted. This structure is especially suitable for small businesses and startups due to its simplified compliance requirements and enhanced privacy. EPCs benefit from limited liability protection, which ensures that shareholders are only liable up to the amount they invested in the company.
Singapore classifies private companies limited by shares into two categories: non-exempt private companies with up to 50 shareholders and exempt private companies with a maximum of 20 individual shareholders. To maintain legal distinction, the name of an EPC must not be identical to any existing entity and must include the appropriate suffix, either “Private Limited” or the abbreviation “Pte. Ltd.”, or other approved variations. These companies enjoy regulatory advantages such as reduced filing obligations and may qualify for various tax incentives, making them a practical choice for entrepreneurs looking to establish a private and efficiently managed business in Singapore.
Focusing on the Differences: Exempt Private Company Limited by Shares in Singapore
1. Shareholding Structure and Compliance Obligations
An exempt private company limited by shares in Singapore is a private company that has no more than 20 shareholders, and none of them can be corporate entities. Smaller, closely held companies can more easily comply with regulations thanks to this simplified structure. In contrast, a non-exempt private company can have up to 50 shareholders, including both individuals and corporate entities. Due to its broader ownership structure, a non-exempt private company is subject to stricter regulatory oversight, including the requirement to file its financial statements in XBRL format as part of its annual return. On the other hand, an exempt private company is only required to submit its financial statements in XBRL format if it is declared insolvent.
2.Audit and Financial Reporting Requirements
Both EPCs and non-EPCs can be exempt from audit requirements if they qualify as “small companies.” Small companies are not required to have their financial statements audited. Additionally, if an EPC is solvent, it can submit a declaration of solvency instead of detailed financials.
3 Core Features: Exempt Private Company Limited by Shares in Singapore
1. Defined Shareholder Structure
An exempt private company (EPC) can have up to 20 individual shareholders, with corporate shareholders strictly prohibited. This restriction helps maintain a controlled ownership structure and simplifies internal decision-making, making it ideal for closely held businesses.
2. Simplified Financial Reporting
EPCs enjoy reduced financial reporting obligations, easing compliance requirements. This flexibility allows companies to allocate resources toward business development rather than navigating complex reporting standards.
3. Enhanced Privacy Protection Enhanced Privacy Protection
EPCs offer a higher degree of privacy, as shareholder details and certain company information are not publicly disclosed. This structure safeguards sensitive business data and helps preserve strategic confidentiality in competitive markets.
4 Perks of Exempt Private Company Limited by Shares in Singapore
1. Attractive Tax Exemptions
EPCs benefit from the Start-Up Tax Exemption Scheme, which significantly reduces the tax burden during the initial years of operation. Under this scheme, qualifying companies can enjoy a 75% exemption on the first S$100,000 of normal chargeable income and a 50% exemption on the next S$100,000 for the first three consecutive years of assessment. This allows new businesses to retain more profits for reinvestment and growth.
2. Limited Liability Protection
One of the key advantages of an EPC is limited liability. Shareholders are only liable up to the amount of their share capital, ensuring that personal assets remain protected from any company debts or obligations. This structure provides peace of mind and encourages entrepreneurship by reducing financial exposure.
3. Financial Loan Flexibility
EPCs enjoy more flexibility in providing financial assistance to related entities and directors. Because EPCs are exempt from certain restrictions under the Companies Act, they are permitted to issue loans, guarantees, or securities in a broader range of circumstances than other private companies. This flexibility supports better financial management within corporate groups.
4. Simplified Compliance Requirements
EPCs that meet the criteria of a “small company” are exempt from statutory audit requirements, resulting in lower compliance costs and administrative workload. To qualify, the company must be a private entity and meet at least two of the following criteria for the past two financial years. Either an annual revenue of S$10 million or less or total assets of S$10 million or less, along with no more than 50 employees. This enables companies to focus more on growth.
5 Steps Getting Registered: Exempt Private Company Limited by Shares in Singapore
1. Selecting a Company Name
Selecting a suitable and distinctive company name is the crucial first step in the process of registering an EPC. The proposed name must not be identical to existing business names and should avoid offensive or vulgar language. The name must also comply with ACRA’s naming guidelines, and any use of restricted words (e.g., “bank,” “finance,” etc.) may require additional approval from relevant authorities.
2. Filing the Incorporation Documents
Once the company name is approved, the next step is filing the necessary incorporation documents. The key documents include the Memorandum of Association (MOA) and the Articles of Association (AOA), also known as the Constitution, which outline the company’s structure, governance policies, and business objectives. Additional documents such as consent to act as director and identification proof of shareholders and directors must also be submitted.
3. Approval by the Registrar of Companies
The application will be approved once the registrar confirms that all documents and details are complete and accurate. In some cases, further verification may be required, depending on the nature of the business or background of the stakeholders.
4. Issuance of Unique Entity Number (UEN)
The Unique Entity Number (UEN) serves as the official identification of a company in Singapore and is required for all future transactions, tax filings, and statutory communications with government agencies. It is issued upon approval of the company registration.
5. Certificate of Incorporation and Initial Resolutions
The formal Certificate of Incorporation and Business Profile will be issued digitally as proof of the company’s legal existence. Following incorporation, the company secretary will issue share certificates to shareholders, indicating the number of shares allotted to each. The first board meeting is then conducted, during which resolutions are passed for administrative matters such as appointing key officers and opening a corporate bank account.
The Compliance Side: Exempt Private Company Limited by Shares in Singapore
1.Annual General Meeting (AGM)
EPCs must convene their AGM no later than six months after the end of their financial year. Alternatively, resolutions can be passed in writing, offering flexibility in meeting statutory requirements. This supports efficient corporate governance while maintaining compliance under the Companies Act.
2. Annual Return Filing
Annual returns must be filed by EPCs within 7 months from the end of their financial year. The process is streamlined, with fewer reporting burdens compared to other company types.
3. Unaudited Financial Statements
Audited financial statements are not required for companies who meet at least two of the following criteria for the past two financial years. Either an annual revenue of S$10 million or less or total assets of S$10 million or less, along with no more than 50 employees. If an EPC is insolvent, it must submit its unaudited accounts, along with the XBRL report, to the registrar, prepared in accordance with Singapore Financial Reporting Standards (SFRS).
Premia TNC Singapore Team
Author
Premia TNC Singapore is a dynamic team of experts dedicated to supporting businesses and entrepreneurs as they establish, manage, and grow their presence in Singapore and across the region. Premia TNC Singapore specializes in providing tailored corporate services, from company incorporation and compliance to tax planning and accounting. With our extensive experience and deep understanding of the local regulatory environment, we are here to make business operations smoother and more efficient.
