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Singapore Exempt Private Company Business Requirement
Choosing the right business entity to start your business is one of the crucial steps in business planning. In Singapore, there are two types of Private Companies Limited by shares: The Private Company and Exempt Private Company (EPC). The Exempt Private Company (EPC) is one of the popular business structures that offer foreigners a separate legal entity with limited liability for its shareholders and a three-year corporate tax exemption. There are some restrictions on shareholder loan to company Singapore, loan from director to private limited company Singapore, and director loan to company Singapore which you can find more information in below guide.
What is Exempt Private Company (EPC)?
In an exempt private company, all shares are not held directly or indirectly by any corporation (i.e. another limited company), and has no more than 20 members. In other words, 20 members or less and no corporation holds a beneficial interest in the company’s shares. Besides, an exempt private company does not need to file its annual accounts with the ACRA for the information of the public as long as the company files a Certificate of an Exempt Private Company.
The Advantages of an EPC
In Singapore, the EPC is currently the most common and favoured type of business structures. This business entity offers you a few benefits:
- The reduced compliance requirements and less red tapes
EPCs need to submit their annual return to the Registrar of Companies within 1 month from their Annual General Meeting. However, the filing of accounts with the Registrar is not required. It is also a mandatory requirement for EPCs to file their annual tax return by 30 November of the following tax year. EPCs, with an annual turnover of less than S$10 million and are solvent, are exempted from annual audit and accounts submission requirements (EPCs only have to submit a solvency declaration signed by the company director(s) and company secretary in the prescribed form). That said, EPCs are required to maintain proper accounting records, prepare and present financial statements in compliance with the Companies Act and the Singapore Financial Reporting Standards (FRS).
- High tax-exemptions granted in the start-up stage.
Tax-exemption is another benefit that attracts many people – a newly set up EPC is granted the tax exemptions under the Start-up Tax Exemption (SUTE) scheme. According to this scheme, tax exemption is given to start-ups on normal chargeable income of up to S$100,000 for each of the first three consecutive years of its operation.
- Foreign-owned policy
In Singapore, foreigners can own all of the shares in an EPC.
- No minimum requirement – one shareholder and no minimum capital
To form an EPC, the minimum requirement is one shareholder, who can also be a foreigner. Besides, there is no minimum capital needed to set up an EPC – only $1 must be the paid-up capital to incorporate a Company.
- Flexibility in business loans
Another great benefit is that EPCs have a greater degree of flexibility in terms of financial loans. In Singapore, companies are required to pass resolution to give loans to another (related) company or to provide guarantees and/or security for loans obtained by another company if the director of the first company has a any interest or shareholdings in the second company. The Companies Act also prohibits a company to extend loans to its directors (loan from director to private limited company Singapore is fine) except for certain purposes. However, an EPC is exempted from the above limitations – thus providing greater freedom for these companies to deal with their capital.
From the high tax-exemptions to flexibility in business loans (shareholder loan to company Singapore, director loan to company Singapore), all these advantages make the Exempt Private Company (EPC) the business entity of choice. If you have less than 20 shareholders and are expanding to Singapore, an EPC fits your business requirement. Do contact us today for professional assistance in setting up an EPC.