Exempt Private Company

An Exempt Private Company (EPC) is a private limited company that has a maximum of 20 members, with shares not beneficial to other corporate entities.

Incorporating an Exempt Private Company in Singapore is a relatively easy process.

First, you choose a name for your company. The name you choose should be unique compared to other registered legal entities. A normal private company features the abbreviations “Pte Ltd”. However, an exempt Private Company has the right to use the abbreviations “EPC”.

Next, you will need to file articles of association and memorandum with the Registrar of Companies. The Registrar will analyze your documents and confirm their approval via an email. The Registrar also allocates an identity number known as the Unique Entity Number for your company.

Upon success of your registration, the registrar will once again provide proof of your company’s incorporation by issuing a Certificate of Incorporation.

The company, through the secretary, then gives out share certificates to its shareholders. The share certificates indicate the number of shares an individual owns. The Secretary, on behalf of the company, will also give out the resolution to the board of directors for the first time, as well as a Resolution for Account Opening to respective bank(s).

1. The business entity must have a minimum of one shareholder, one resident director and a company secretary. The company secretary will ensure that the company does not cross the regulatory and legal boundaries set by the Company Act. Upon registration of your company, you must appoint the secretary within six months.

2. One of the business directors must be a resident. This director should have the authority to oversee vital matters and make important decisions. For you to qualify as a resident under the Singapore law, you must either be a Singapore citizen, a holder of an Employment Pass, a holder of a Dependent Pass or a permanent resident of Singapore. Other directors can be foreigners.

3. One person can serve as the resident director and the single shareholder required. However, you will find that most financial institutions such as banks will need your company to have a minimum of two signatories.

4. The Singapore law requires your business to hold a physical address in Singapore.

5. Lastly, you need to pay share capital. You must pay a minimum of S$1 as share capital.

Exempt Private Company (EPC) is the most popular business structure in Singapore and hence the most common.

It’s many benefits include:

The Registrar of Companies in Singapore expects companies to file annual returns. Your company must submit these returns within a month to the company’s Annual General Meeting. The Singapore law has also set 30th November of an upcoming tax year as the deadline for filing annual tax returns.

The turnover of EPCs determines their compulsion to accounts submission and annual audits. If your EPC’s turnover is under S$10 million, The Singapore law exempts you from subjection to accounts submissions and annual audits.

However, the company’s director and secretary must compose a solvency declaration and sign on it, which must later be presented to the Registrar of Companies in Singapore and ACRA. EPC’s whose operations have gone dormant must also present this signed solvency declaration. Upon approval, ACRA and the Registrar will recognize in receiving the unaudited accounts. Shareholders with a stake of a minimum of 5% can request for preparation of returns and audited accounts.

If the EPC has an annual turnover of at least S$10 million, audited accounts on an annual basis is expected. You do not have to attach the accounts when filing the returns but you must complete the declaration of solvency. The solvency declaration is available online for completion.

The Singapore Financial Reporting standards and the Companies act require all companies to prepare, maintain and present annual accounting reports. These bodies have implemented accounting standards that all companies must adhere to.

Tax exemption is a factor you should give a lot of consideration when choosing the structure of your business entity. Singapore has a scheme called the Start-up Tax Exemption (SUTE). This scheme has set out high tax exemptions for EPCs that have been newly founded. If you have a start-up EPC, up to S$300,000 of chargeable income is viable for exemption.

This exemption is levied consecutively for the first three years of the company’s existence in bits of S$100,000. For the first year, the first S$100,000 is exempted at a rate of 100%. The remaining S$200,000 is exempted at a rate of 50% for the next two years. Thus the total amount that is exempted from tax is S$200,000 out of the S$300,000.

However, these exemptions do not apply to all Start up Exempt Private Companies. Companies that deal in real estate sale or investment and holding companies dealing in investments are not exempted from tax under the Singapore law.

Moreover, tax exemptions are nullified for companies with a turnover of more than S$5 million. These companies must pay a corporate tax rate of 17%. This tax applies to all income including the one earned internationally.

Singapore does not limit foreign shareholders to the quantity of shares they should own. Thus, a foreigner in Singapore is free to own an EPC fully.

You only need one shareholder to set up an Exempt private company. Moreover, shareholders do not have any legal restrictions. Your EPC can thus feature shareholders from all over the world. If you are a foreigner, you are free to partially or fully own the shares of an Exempt Private Company.

The share capital you use to set up your EPC is not limited. The minimal You need to pay is S$1.

The Companies Act prohibits companies from granting loans to other companies. Companies are also not allowed to give loan security or sign on loan guarantees for other companies if a director of the first company has affiliations with the second company.

The Company Act terms these affiliations as 20% ownership of the company’s shares or interest in the company. Moreover, the Act prohibits companies from extending loans to any of their directors.

This Act allows Singapore companies to give loan security, sign guarantees and grant loans to other companies, on condition that they pass a resolution.

The Act has provided Exempt Private Companies with flexibility on the regulations that govern financial loans of business entities. The companies are fully exempted from these regulations, offering them more financial freedom on their capital.

As a shareholder, your liability is directly proportional to your contribution to the share capital.

The Company act provides full discretion for all shareholders. The public records do not store the shareholders’ names. Only the Articles of Association and the Memorandum are made public.

Looking to start a business in Singapore? An Exempt Private Company is a favorable and flexible business structure.

Timcole can assist you with the formation of an Exempt Private Company, as well as providing book-keeping and secretarial support to your business.

Timcole is one of the leading company incorporation and accounting firm based in Singapore. Our wide range of professional services serve as a one-stop solution for your business, offering you the most affordable price for services conducted with the highest level of excellency.

Contact us to find out more on how we can help you with your company today.