An Entrepreneur’s Guide to Setting Up An Exempt Private Company in Singapore

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Singapore is a sovereign city-state with an attractive tax system, a robust economy and an excellent business environment. It has been ranked as one of the easiest places to do business consistently over the years.

Businesses in the country can be categorised into unlimited or limited companies, as well as private or public companies. Private companies can further be categorised into private limited by shares and exempt private companies or EPCs. This article guides you through what you need to know about Singapore Exempt Private Company.

What Is An Exempt Private Company?

Unlike a non-EPC private company, an exempt private company has a maximum of twenty shareholders. Also, its shareholders cannot be corporations. Therefore, EPC’s shares cannot be directly or indirectly held by any corporation.

An exempt private company is exempt from statutory audit requirements. The primary objective behind this exemption is to protect the shareholders’ interest and curtail them from bearing losses. 

The government can also own an EPC completely. Examples of these companies are the Temasek Capital Pte Ltd and Singapore Technologies Holdings.

What Are The Benefits Of Establishing An Exempt Private Company?

An EPC offers many advantages over other types of business structure. Here are some of its benefits.

    1. Liability Of Shareholders

      Shareholders of an EPC will only be liable up to their investment in the company’s shares. Thus, if the company were to be driven to liquidation, the shareholders’ assets, aside from the amount they have invested in the EPC, will be safe from being seized to pay off the company’s debts.

      In contrast, shareholders, partners or owners of other business structures, such as a partnership or a sole proprietorship, have unlimited liability and hence, will be at risk of losing their assets should the company be driven to liquidation.

    2. Loans Extension To Directors

      Compared to non-EPCs, EPCs have more autonomy and liberty when it comes to financial loans. They can offer loan extensions to their directors, as opposed to the non-EPCs that are not allowed to extend loans to the directors unless some requirements are satisfied, such as obtaining prior approval for the loan extension in a general meeting.

    3. Exemption To Corporate Tax

      Under the Start-Up Tax Exemption Scheme, newly-established EPCs are exempt from corporate tax. This benefit is provided to boost the entrepreneurship spirit and stimulate local companies’ growth.

      From YA 2020 and beyond, EPCs will get a seventy-five per cent tax exemption on the first SGD 100,000 of normal chargeable income and another fifty per cent exemption on the next SGD 100,000 of normal chargeable income.

      Nevertheless, not every EPC can get the privilege of tax exemption. An EPC that is an investment holding firm and is substantially involved in the development of real properties for sale, investment or both would not be exempt from tax.

    4. Filing Of Simplified Annual Returns

      ACRA has simplified the process of annual returns filing for solvent EPCs to help ease their burden. However, EPCs have to meet the following requirements first:

      • FYE falls on or after 31st August 2018
      • The company is not preparing audited financial statements and is not obligated to file them
      • No changes in the past information filed with ACRA
    5. Potential Audit Exemption

      EPCs that are qualified as small companies are eligible for possible audit exemption.

      An EPC must satisfy the following criteria to be deemed as a small company:

      • A private company in the fiscal year in question
      • Meet two of the three requirements below for the two preceding consecutive fiscal years:
        • Has an annual profit of not more than SGD 10 million
        • Has a total asset of not more than SGD 10 million
        • Has not more than fifty personnel

How To Establish An Exempt Private Company In Singapore

Entrepreneurs intending to establish an EPC successfully should satisfy the following requirements:

  • Has at least one shareholder
  • Has at least one director who lives in the country and is at least 18-year-old
  • Has at least one corporate secretary whole is a licensed person living in the country
  • Provide an initial paid-up capital of at least SGD 1
  • Has a physical office address in the country

Seeking Help From Professional Company Incorporation Services In Singapore

Hiring a professional company incorporations services in Singapore helps streamline the process of business setup and ensure it complies with the country’s regulation. Some company registration services offer other helpful business solutions, including accounting, audit and assurance, payroll and business advisory services.

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