In Singapore, companies must have a minimum registered capital of S$1 for private limited companies and S$50,000 for public companies. However, it is important to note that paid-up capital differs from authorised capital.
Authorised capital refers to the maximum share capital a company is authorised to issue. In contrast, paid-up capital refers to the actual amount of share capital that has been paid for by shareholders.
It is also important to note that the minimum paid-up capital requirements may vary based on the type of business and industry. For example, companies that require licences from certain government agencies may be subject to higher paid-up capital requirements.
The paid-up capital is significant to an entrepreneur seeking Singapore company registration since it can be used to cover operational expenses without reserve or borrowing. More paid-up capital gives the company more legitimacy.
WHAT IS ADDITIONAL PAID-UP CAPITAL IN SINGAPORE?
The par value of the share and additional paid-up capital are two possible funding sources that makeup paid-up capital. Commonly, shares are issued at a low base price with a low face value and a premium.
If investors pay a price of SGD 8 to buy shares with a face value of SGD 2, SGD 6 becomes the additional paid-up capital.
Paid-up capital in common stock and additional paid-up capital, must be disclosed on the company’s balance sheet.
WHAT IS THE DIFFERENCE BETWEEN PAID-UP CAPITAL AND SHARE CAPITAL IN SINGAPORE?
Share capital is the total sum of money that a business raises in exchange for either common or preferred shares and may not be repaid. As a result, paid-up capital and unpaid share capital can be used to separate a company’s share capital.
The share capital of small enterprises is occasionally not paid. According to Singaporean company law, all businesses must retain registered capital during the course of their existence.
Investors wanting to establish a business in Singapore should know that all the Singapore Pte Ltd are incorporated with paid-up capital.
TYPES OF SHARES IN SINGAPORE
To become a corporation, every company must issue one Common Share. Ordinary shares typically provide the right to one vote per share at general meetings, the right to dividends, and the right to the company’s remaining assets upon its dissolution.
Preference shares typically grant unique privileges regarding dividend distributions over ordinary shareholders. For instance, a business may decide to pay dividends to preference shareholders ahead of common shareholders. Preference shares may also have priority over common shareholders in the claim of corporate assets. Preference shares are typically non-voting shares.
Non-voting shares, in contrast to ordinary shares, do not grant the shareholder the right to attend or vote at general meetings. Shares with no voting rights are typically given to staff personnel or members of the primary shareholder’s family.
Several classes of shares, such as Class A, Class B, and Class C, each having unique rights and privileges to shareholders, are optional for a corporation to create.
Management shares typically come with additional voting rights and are frequently offered to the company’s founders.
A redeemable share is typically granted subject to the corporation buying it back at a later time.
Before a minimum dividend is paid to all other shareholders, no dividend is paid to deferred shares.
SHAREHOLDER REQUIREMENTS IN SINGAPORE
A private limited company must have a minimum of one shareholder and a maximum of fifty, as per Singaporean corporate legislation. Shareholders may be local or foreign corporations or natural beings. Singapore also permits foreign shareholders to own 100% of a firm.
An individual must first buy firm shares to become a shareholder. A shareholder becomes an owner of the company by purchasing shares.
The shareholder has no ownership interest in the company’s assets and is not responsible for any of the firm’s debts because the company is a separate legal entity. Shareholders have particular rights because they are the company’s owners.
Finally, in addition to these rights, shareholders are also given some responsibilities.
By obtaining an ordinary resolution from the shareholders and submitting a return of allotment, a firm may issue new shares at any moment. Within 14 days of issuing the shares, the firm is required to submit a return of allotment via BizFile to the Accounting and Corporate Regulatory Authority (ACRA). The following details must be included in the return of allocation:
- The number of shares allocated in the transaction
- The amount (if any) paid or presumed to have been paid at the time each share was allocated.
- The balance due on each share, if any,
- The share class that was issued (if applicable)
- The full name, identification, nationality, and address (for shareholders who are individuals)
- The corporation name or UEN and address (for shareholders that are corporations)
- The number and class of shares held by each of its members
The buying and selling of shares by shareholders is referred to as a transfer of shares. Subject to any limitations imposed by the company constitution, shareholders are free to transfer shares with other shareholders. Furthermore, it is typically not within the authority of business directors to oppose the transfer of shares from one shareholder to another.
If a transfer of shares takes place, the business must notify ACRA via BizFile or include information about the transfer in its annual reports.
HOW MUCH PAID-UP CAPITAL DOES YOUR SINGAPORE COMPANY NEED?
With just S$1, one can register your business. Certain immigration passes, however, could demand a specific amount of paid-up money before application. For instance, if the applicant is looking for an EntrePass, he will need to show that the business has S$500,000 in paid-up capital. Also, there are unique requirements for paid-up capital for businesses in particular industries. For example:
- Travel agencies – S$100,000 or S$50,000 if the agency only conducts tours within Singapore and does not arrange for accommodation
- Public accounting firm – S$50,000
- Insurance intermediary firms –S$300,000
One should generally choose a bigger than S$1 paid-up capital if they wish to give the company more legitimacy, draw investors, or comfort their future debtors.
Where is the capital paid?
Following incorporation, the paid-up capital will be transferred in cash to the company’s bank account. Once paid, this capital does not necessarily have to stay in the bank account; it can be utilised to cover general operating costs or personnel salaries. Nonetheless, the withdrawal should be seen as a loan that the shareholder must repay to the company if the money was utilised for expenses.
What if the capital is not fully paid?
If a shareholder has not paid the whole purchase price for the shares they possess, the remaining balance is still owed to the corporation. A shareholder’s ability to vote may be restricted by terms in the company’s charter until all of their shares have been paid for.
The shareholder will also be personally liable for his or her portion of any unpaid capital if any portion of the shares is not paid. The shareholders are not individually accountable to the company’s creditors if the shares are completely paid up.
What if the paid-up capital is not enough?
Paid-up capital neither reflects a company’s net worth nor provides assurance of its liquidity. Retained earnings are recorded in the company’s accounts as any profits attributable to the company’s operations that exceed the initial paid-up capital. They might be utilised to cover continuing costs and liabilities for the firm.
In the case that there are insufficient funds to pay off its creditors, the corporation may issue new shares, take out loans, or issue debt instruments to raise money (i.e. corporate bonds).
Singapore Business Federation membership with S$500,000 paid-up capital
The Singapore Business Federation automatically accepts as members any company with a Singaporean registered office and paid-up capital of S$500,000 or more (SBF). Members of the SBF have access to a variety of networking events as well as other activities, including workshops and policy briefings.
How to increase the capital of the company?
By issuing new shares, one can raise your company’s capital. These additional shares are either made available to current shareholders or sold to new investors in the business. There are certain legal guidelines that must be followed in order to raise a company’s capital. They include but are not limited to, notifying current shareholders, getting shareholder approval, and directors’ responsibilities.
How to change the company capital in the business profile?
There are a number of legal criteria one must follow in order to expand the company’s capital. Among them is the holding of an extraordinary general meeting to ask the company’s shareholders for their consent. They must update the details on the company profile on ACRA’s BizFile+ portal once the capital has been deposited into the corporate bank account.
One must submit the following paperwork to do that:
- Proof of capital injection (payment slip from the corporate bank account)
- Ordinary resolution authority
- Directors’ resolution
- Letter to the company secretary
- Application of shares
WHAT HAPPENS TO PAID-UP CAPITAL IF A SINGAPORE COMPANY CLOSES DOWN?
A liquidator will be appointed to wind up the company’s affairs if it goes out of business.
The procedure involves the liquidator realising all of the company’s assets (including the paid-up capital) for distribution to creditors and, as previously noted, to the shareholders if there is any money left over.
When a company is originally incorporated, the initial paid-up capital amount is established.
WHAT ARE THE BENEFITS OF HIGHER PAID-UP CAPITAL IN SINGAPORE?
A corporation is more credible to its investors and stakeholders when it has a bigger paid-up capital, which has the following benefits.
Since larger paid-up capital translates into better liquidity and cash flows, it directly benefits newly formed businesses that haven’t yet earned significant revenues for paying suppliers, employees, and service providers.
If a company chooses debt financing, it may better bargain with financial institutions for cheaper interest rates because it has a higher paid-up capital. These businesses can even obtain loans with little or no collateral.
Membership in the Singapore Business Federation (SBF) is automatically granted to all Singapore firms with paid-up capital above SGD 500,000. Members have increased access to networking opportunities, business courses, and a variety of events on business-related themes.
The SBF membership can give these businesses a competitive edge and support the improvement of product and service branding.
What is registered capital?
The registered capital is the amount of money or assets a company has committed to raising and using for its business operations. It represents the company’s financial strength and stability, and can also affect its ability to secure financing and attract investors.
What is the minimum registered capital required for a private limited company in Singapore?
The minimum registered capital required for a private limited company in Singapore is SGD 1.
However, it is common practice for companies to have a higher registered capital amount, depending on their business needs.
Are there any exceptions to the minimum registered capital requirement for private limited companies?
Yes, certain exceptions exist to the minimum registered capital requirement for private limited companies. For example, if the company is a subsidiary of a publicly listed company or if it is a venture capital company, it may be exempt from the minimum requirement.
What is the minimum registered capital required for a public company in Singapore?
The minimum registered capital required for a public company in Singapore is SGD 500,000.
How do I register my company’s capital with ACRA?
To register your company’s capital with ACRA, you must submit the relevant information and documentation through the BizFile+ online portal. This will include details such as the amount of registered capital; the currency used, and the number of shares issued.
How is registered capital used by a company?
Registered capital is used by a company to fund its operations, investments, and growth initiatives. It can be used to purchase assets, pay for expenses, hire employees, or invest in research and development.
What are the consequences of failing to comply with registered capital requirements?
If a company fails to comply with registered capital requirements, it may face penalties and fines from ACRA. It may also be unable to access financing or attract investors, as it may be seen as financially unstable or risky. Additionally, directors or officers of the company may be held liable for any financial losses incurred due to non-compliance.