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Company Limited by Guarantee in Singapore – How to Set One Up
Your Guide on How to Set Up a Company Limited by Guarantee
If you’re thinking of setting up a Company Limited by Guarantee in Singapore, then this guide is for you. Here is everything you need to know to help you get started.
Please note that due to the preference of most of our clients on others type of business entities in Singapore, we are no longer providing the services of setting up Company Limited by Guarantee to our clients. The followings are mainly for information purposes only.
Understanding What a Company Limited by Guarantee (CLG) Is
This form of business entity is ideal for non-profit organisations like charities who want to conduct business in the country. Like other business entities, a CLG is also registered under the Accounting and Corporate Regulatory Authority (ACRA). Since it is under ACRA, it has to comply with the Companies Act too. Usually, charitable and non-profit organisations who need more of a corporate status for the business.
CLG companies are different compared to a Company Limited by Shares. Some differentiating factors include:
- CLGs don’t need share capital. The liability of the company’s members is limited to how much they undertake in terms of assets.
- CLGs are considered as public companies.
- CLGs are not allowed to pay its members profits and dividends.
The Benefits of a CLG
There are certain benefits associated with incorporating this type of structure. Here are some reasons why you should consider incorporating a Company Limited by Guarantee in Singapore:
- Incorporation means your company will be considered a separate legal entity.
- Incorporation means you and the company’s members will be protected from any liabilities which may be incurred.
- Incorporation entitles you to tax benefits. CLGs that come with a charity status will be exempted from paying taxes.
- You can conduct your activities through certain structures like charitable trusts or societies. A society is a structure that comprises of 10 or more people. It is best suited for volunteer groups and groups based on membership. With a society, you’re spared from the hassle of having to file your annual tax returns. A trust structure, on the other hand, is established by those who intend to leave some of their income behind for charitable reasons. The costs involved in setting up a trust a much higher though.
The Benefit of Setting Up a Society and Trust
One benefit of setting up a trust and society is that you cannot be sued. At the same time, you can’t sue either. Members can either sue or be sued only within their personal capacity.
How to Set Up a Company Limited by Guarantee in Singapore?
You will need to lodge an application with ACRA to get the process started. Applications must be lodged through BizFile+, which is ACRA’s website. The documents, procedure and required fees are as follows:
- A fee of $15 to reserve your company name.
- A fee of $300 to register your CLG. Companies will be registered 15-minutes in general after all fees have been paid.
- You may be required to apply for the relevant licenses with ACRA. This would depend on the nature of your business activities.
- Applying for a charity status will allow you to be entitled to full tax exemptions on your income.
How to Dissolve a Company Limited by Guarantee?
In the event you need to dissolve a CLG, there are two options to choose from:
- Winding Up – If your company is unable to repay its debts. Wind-ups can happen either voluntarily or involuntarily.
- Strike Off – The company director will need to apply for a company strike off with ACRA.