On paper, a company is a legal entity comprised of a voluntary association of people, whether it happens to be natural or legal. This can also be a mixture of both. The members and associates within a said company share a common purpose and focus their resources to achieve specific goals.
When your organization goes through company registration, it can take on different forms depending on the goals of the members that comprise it, such as a voluntary association (e.g. non-profit organizations), a specific business entity, or a financial entity (e.g. banks).
How to register a company or setup a new business entity in Singapore will depend based on the type of company registration you need, as well as the different requirements in different countries. If you have plans to do business in the country, Singapore also has its own regulations of the different types of company structures that you need to keep in mind when you choose to register company with ACRA.
Limited Liability Company
This legal entity called a limited liability company, or LLC, is limited by its amount of share capital. Under the Singapore Companies Act, an LLC is a recognized business entity that is separate from the members that comprise it.
This in turn limits the members’ liability to the assets within the company. For instance, if a lawsuit is filed against a member of the company, any seizure in assets will be limited to those of the member’s assets within the company, and the personal assets of the members are protected.
Opting to register company as an LLC can fall under two sub-categories:
• Private Limited – This is the type of LLC that most entrepreneurs prefer to establish, where the maximum number of shareholders is less than fifty and share auctioning is mostly closed off to the general public.
These shareholders can either be comprised of individuals, or by corporate entities.
• Public Limited – This is the type of LLC that may offer sell its shares with the intent of having the general public as an investor, and would need at least fifty shareholders. Because of this, public limited companies have (and are subject to) more stringent regulations and policies.
Two or more companies can even form a limited liability company and in the process turn into a corporation through a process known as company incorporation.
Through company incorporation, the resulting combination of companies is granted the same legal status as a person and is in turn separate from the companies or the companies’ owners.
When setting up a firm as a sole owner, your company is listed as a sole proprietorship, which is the easiest to set up. For offshore entrepreneurs looking to register company for foreigner enterprises, all you need is to appoint a local manager residing in the country for you to start establishing an enterprise. You might also need assistance from firms which offer company registration services in Singapore such as http://www.sgbusiness.sg/.
However, this very nature of a sole proprietorship company also makes it highly risky, since all assets and liabilities of the company are treated as the owner’s own. This a serious drawback if you happen to be unable to pay the bills, or even shoulder the cost of registering a company.
This type of business structure attempts to address the constraints of a sole proprietorship, and allows two or more people to establish it as co-owners. Partnerships can come in different categories, such as the following:
• General – When you want to register company, general partnerships are also considered risky as they have the same drawbacks as a sole proprietorship: the business’s assets and liabilities are treated as those of the owners’.
• Limited – Another legal structure that attempts to address these constraints introduces the concept of the limited partner along with the general partner. However, limited partners’ liabilities only extend to their investments in the company and can’t participate in the business’s management.
• Limited Liability – Of the three types of partnership entities, the limited liability partnership, or LLP, combines the features of both partnership and company. However, opting to register company for this type of legal structure is meant specifically for professions, not for businesses that carry a particular trade.
Partnerships are easy to set up, but have only have a maximum number of twenty partners. Once there are more than twenty partners, you will need to register as a company, undergo the necessary paperwork, and pay the incorporation fees.
Registration Options for Foreign Companies
Though it is possible as an offshore entrepreneur or business owner to register company in Singapore for foreigner enterprises, available options are often limited to the following:
• Subsidiary – A subsidiary company is treated as its own separate entity, with the parent company acting as a primary shareholder. This is the most preferred choice for starting a small business.
• Branch/Representative Office – Branch offices and representative offices are a way for the parent company to extend into the country, but work in different ways. While branch offices are treated as an extension of the parent company, representative offices are geared more towards marketing research.
The Open Model
The open company has developed as a more recent legal entity that revolves around concepts such as free, open-source content and software, as well as more open standards and tools. This approach to business places its value on record and financial transparency, accountability, and the inclusion of stakeholders and investors.
While a traditional closed company may be more rigid in terms of focusing on earning a profit or achieving a specific goal, an open company is more likely to focus more on personal engagement and positive outcome, and has an easier application process.