LLC is a legal business entity separate and distinct from its shareholders and directors.

 

There are three types of LLC namely Exempt Private Company, Private Company and Public Company. An Exempt Private Company has 20 members or less and no corporation holds beneficial interest in the company’s shares, a Private Company has 50 members or less and a Public Company can have more than 50 members

 

Legal Status of a LLC

• LLC is a separate legal entity from its members and directors

• Members have limited liability

• LLC can sue or be sued in company’s name

• LLC can own property in company’s name

• Members not personally liable for debts and losses of company

 

Yearly Statutory Obligations

• Must appoint a company secretary within 6 months of incorporation

• Must appoint an auditor within 3 months after incorporation, unless the company is exempt from audit requirements

• Annual returns must be filed. Statutory requirements for general meetings, directors, company secretary, share allotments must be complied with

 

Registration requirements for a LLC

• At least one shareholder

• At least one director residing in Singapore and at least 18 years old

• If a foreigner wishes to act as a local director of the company, he can apply for an EntrePass from the Ministry of Manpower

• Undischarged bankrupts cannot be a director and cannot manage a company without approval from the Court or the Official Assignee

 

Taxation of a LLC

Profits are taxed at prevailing corporate tax rates.

 

For new start-up companies, they enjoy the following corporate tax exemption and tax rebates:

 

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Continuity of business

The LLC has perpetual succession until wound up or struck off.

 

Closing the Business

• The LLC may decide to wind up if its affairs voluntarily if the directors are of the opinion that the LLC will be able to pay its debts in full within 12 months after the commencement of the winding up. It must appoint a liquidator or provisional liquidator to wind up its affairs and file the necessary notifications required under the Companies Act. If the directors are of the opinion that the LLC cannot by reason of its liabilities continue its business, an LLC may decide to opt for creditors’ voluntary winding up.

• The LLC may be wound up under an order of the Court under certain circumstances e.g. the company is unable to pay its debts. The Court may appoint a liquidator to wind up the affairs of the company. Where the Court does not appoint a liquidator, the Official Receiver shall be the liquidator of the company. The liquidator will file the necessary notifications required under the Companies Act. 

• The LLC may apply to ACRA to strike off its name from the Register. ACRA may approve the application if there is reasonable cause to believe that the company is not carrying on business, and the company is able to satisfy the criteria for striking off. If the company is GST registered and is no longer carrying on a business, it has to apply for cancellation of GST registration with IRAS. 

 

Our Opinion

The most common form of business entity in Singapore would be the Private Limited Company (“Pte Ltd”). Compared to other business structure, it is a separate legal entity from its member and directors.