How to Set Up a Public Company Limited by Guarantee in Singapore
Setting up a Public Company Limited by Guarantee (PCLG) in Singapore is an efficient and cost-effective process. Establishing a PCLG is one of the most preferred forms of non-profit organizations for overseas nationals or entities in the city.
It should be noted that the structure of PCLGs is not suitable for members who seek a return on their investments through payouts such as dividends because it is prohibited from paying dividends or distributing the surplus to its members. Instead, such surplus is to be used to advance the ‘non-profit’ objectives of the entity.On the other hand, incorporating a PCLG serves several benefits to an organization including limited liabilities as mentioned as well as tax benefits. Thus, the first step to setting up this form of company is to register a new company name and then incorporate a PCLG. It is advisable to use professional assistance to register with the Accounting and Corporate Regulatory Authority (ACRA) under the Singapore Companies Act.
The approval of the company name may take up to 14 days or more depending on the circumstances whereas the incorporation may take at least 15 minutes after the payment of all fees. The fee to reserve the company name is S$15 (US$10) and registration fees for PCLGs are S$300 (US 217).
The following steps are needed to establish a PCLG in Singapore:
1. Lodge a Memorandum and Articles of Association (M&A) in order to register the company. The M&A must include the following details:
- Name of the company, the number of members, and the amount each member has guaranteed to pay in the event of winding up. The company name must include term ‘Limited’ as a suffix in its name;
- Clear objectives where it must be stated that it is exclusively charitable or be of benefit to the community;
- A statement that the liability of the members is limited; and
- Minimum of three persons to act as trustees and two of them must be Singapore citizens or permanent residents; their duties and terms of office must be clearly defined.
2. Apply for relevant licenses for regulatory compliance at the time of registration with ACRA. Visit the License One website to apply.
3. Audit requirements
- An auditor must be appointed within three months of incorporation.
4. Statutory Compliance
- A company secretary must be appointed within six months of incorporation;
- Annual general meeting and audits must be held without fail.;
- Annual returns with ACRA must be filed seven months after the financial year-end;
- Tax returns to be filed on 15th December each year; and
- Public disclosure obligations and statutory control imposed by the Singapore authorities must be followed.
5. GST Registration Requirements
- It is mandatory to register for GST if annual taxable supplies exceed S$1 million, even if the company is substantially involved in non-business activities.
Aside from ensuring that amendments to the M&A are approved by the Commissioner of Charities or the respective Sector Administrator, the company must also guarantee that the M&A underlines the circumstance within which the company can be dissolved.
More importantly, any of the PCLG’s remaining funds and/or assets after dissolution cannot be distributed to its members. The remaining and assets after the settlement of debts and legal responsibilities should be given to other funds charitable groups or charities with similar objectives. The company may then be eligible to apply as a charity status after three months of incorporation.
A version of this article appeared in the ASEAN Briefing magazine How to Set Up a Non-Profit Organization in Singapore.