Choosing the right company structure in Singapore

When starting a business in Singapore, it is essential to choose the right company structure. Each structure has unique advantages, legal requirements, and tax implications. Below is a breakdown of the main types of structures:

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1. Private Limited Company (Pte. Ltd.)

A Private Limited Company is the most common business structure in Singapore. As a separate legal entity, it can own assets and take legal action or face lawsuits in its own name. The shareholders’ liability is limited to their share capital, making it a safer option for entrepreneurs. This structure is suitable for small to medium-sized businesses aiming for growth.

2. Public Company Limited

Public companies can have over 50 shareholders and raise capital by offering shares to the public, making them suitable for larger businesses or companies planning to list on the stock exchange. However, they are subjected to stricter regulations.

3. Sole Proprietorship

This is the simplest business structure, where the business and owner are considered one entity. While it is easy to set up, the owner is personally liable for all debts and obligations.

4. Partnership

This structure involves two or more individuals sharing the ownership of the business. There are two types of partnership:

General Partnership: All partners share unlimited liability.
Limited Partnership (LP): At least one partner has unlimited liability, while others have liability limited to their investment.

5. Branch Office

A branch office is an extension of a foreign company and is not legally separated from its parent company. This means the parent company is liable for the branch’s liabilities and debts. This setup is deemed suitable for foreign businesses wanting full control over operations in Singapore.

6. Representative Office (RO)

This is a temporary setup for foreign companies to explore business opportunities without engaging in commercial activities. It is typically used for market research and partnership building and is limited to three years. After which, a representative office has to be converted to a branch office or a subsidiary.

7. Variable Capital Company (VCC)

A new corporate structure specially designed for investment funds, offering flexibility in capital management and the ability to segregate assets and liabilities between sub-funds. It is an attractive option for fund managers and those in the financial sector.
Choosing the correct company structure is the key to your business's long-term success. It is essential to choose a structure aligned with your business size, goals and liability tolerance.

If you need advice or have any questions about your corporate needs, contact Finova Group for expert guidance and support.