When starting a business in Singapore, one of the first key decisions is selecting the right business structure. Below is an overview of the available options. Prism can assist with setting up your company in any form you choose, and our consultants are happy to advise you on the structure best suited to your goals.
Private limited company
A private limited company (Pte Ltd) is a limited liability entity where shares are owned by up to 50 shareholders and are not publicly traded. In Singapore, most privately incorporated businesses are registered as private limited companies. Shareholders of a private limited company can include individuals, corporate entities, or both.
An exempt private company (EPC) is a specific type of private limited company that can have a maximum of 20 shareholders, all of whom must be individuals rather than corporate entities.
Public limited company
A public limited company (PLC) is tailored for large businesses and can offer shares to the public. There is no limit on the number of shareholders for PLCs, and they are subject to more stringent regulations due to their ability to raise funds from the public. PLCs are usually listed on a stock exchange.
A public limited company by guarantee is designed for non-profit purposes. Instead of having shareholders, it has members who act as guarantors and agree to contribute a specified amount if the company is liquidated.
Sole Proprietorship
A sole proprietorship is the most straightforward business structure in Singapore. Legally, it is not a distinct entity from its owner; the business and the owner are considered one and the same. The owner personally owns all business assets and is responsible for all liabilities, with no protection for personal assets against business risks.
As a sole proprietor, you have unlimited liability. This means that if your business cannot cover its debts, creditors can pursue repayment from your personal assets.
Partnership
A partnership structure seeks to overcome the growth limitations of a sole proprietorship by enabling two or more individuals to jointly establish and own a business. Unlike a sole proprietorship, a partnership does not have a legal existence separate from its partners and will dissolve upon the death, insolvency, incapacity, or retirement of a partner. Additionally, any partner can request the dissolution of the partnership at any time.
Partnerships can be particularly suitable in specific scenarios, such as for professional groups like engineers, lawyers, or architects, who may choose to operate without forming a company. In Singapore, partnerships can take three forms: general partnerships, limited partnerships, and limited liability partnerships.
Subsidiary company
A subsidiary company is a privately incorporated limited company in Singapore where the majority of shares are owned by another local or foreign company.
In Singapore, it’s possible for a company to be entirely foreign-owned, allowing international companies to set up a subsidiary and hold 100% of its shares. According to Singaporean law, a subsidiary is regarded as a distinct entity from its foreign parent company and is considered a local Singaporean company. As a result, the foreign parent company and its assets are not liable for the subsidiary’s debts and liabilities.
Branch Office
A subsidiary company is a privately incorporated limited company in Singapore where the majority of shares are owned by another local or foreign company.
In Singapore, it’s possible for a company to be entirely foreign-owned, allowing international companies to set up a subsidiary and hold 100% of its shares. According to Singaporean law, a subsidiary is regarded as a distinct entity from its foreign parent company and is considered a local Singaporean company. As a result, the foreign parent company and its assets are not liable for the subsidiary’s debts and liabilities.
Representative Office
A representative office (RO) is a temporary arrangement that allows foreign companies to assess the market or handle company matters in Singapore without engaging in profitable business operations. ROs are restricted to performing market research or feasibility studies and are not allowed to engage in activities that generate profit.
