Types of companies (Entities) in Singapore: A complete comparison

Choosing the right type of company is crucial when starting a business in Singapore. It affects your taxes, liabilities, ability to raise funds, and long-term growth.

Our guide is the ultimate resource for both Singaporean entrepreneurs and international businesses looking to grow by incorporating company in Singapore

In this article, you'll learn about the key business structures in Singapore, their pros and cons, and how to choose the best one for your needs.

1. Overview of Singapore company types

1.1. Private Limited Company (Pte. ltd)

Private Limited Liability Company (Private Limited Company or Pte. Ltd. or PLC) is the most common type of business entity in Singapore. It offers flexibility, scalability and many tax advantages.

The main features of this type are limited liability and the ability to raise capital by transferring shares or issuing shares.

1.2. Public company

Public company limited by shares

A public company is a business entity whose shares are purchased by the public through a stock exchange. The company's name usually ends with "Limited" or "Ltd."

For example, DBS Group Holdings Ltd. (DBS), is listed on the Singapore Stock Exchange and offers its shares to the public for trading.

A public limited liability company by shares includes the following main characteristics:

• A company can have more than 50 shareholders.
• A company can raise capital through an Initial Public Offering (IPO).
• The liability of shareholders is limited to the amount they have invested in the company.
• Public companies are subject to strict regulations and disclosures by Singapore regulators such as ACRA and SGX.

A public limited liability company ("LLC") with common stock is the first choice of large corporations, parent companies, looking to expand and raise significant capital by going public.

Public company limited by guarantee

A public company limited by guarantee is a unique company type because it is often used by non-profit organizations such as charities, NGOs, educational institutions or other national interest projects.

The main characteristics of a public company limited by guarantee are:

• The company has no share capital. The company's primary objective is to carry out activities in the public or national interest, rather than to make a profit.
• The liability of members is limited to the amount they have agreed to contribute to the company's assets. This amount is only available in the event of the company's dissolution or significant financial loss.

1.3. Sole Proprietorship

A sole proprietorship is the simplest form of business structure, where the owner and the business are legally treated as one entity in Singapore.

As a business grows, many business owners choose to convert to a Private Limited Company (Pte.Ltd) for better liability protection and investment opportunities.

1.4. Partnership

A partnership is a type of business entity where two or more people (fewer than 20 partners) share ownership of the business. Partners can be individuals, corporations, or other partnerships.

Under the Singapore Companies Act, a Company must form a Pte.Ltd if it has more than 20 partners. This rule does not apply if the Company forms a Professional partnership.

Singapore allows businesses to open 1 of the following 4 types of partnerships:

1. Traditional Partnership (General Partnership): All partners have unlimited liability to the company and other partners.
2. Limited Partnership: Managing partners have unlimited liability for the company and limited partners have limited liability.
3. Limited Liability Partnership: A separate legal entity from its partners, all partners have limited liability.
4. Professional partnership: Popular for specialized fields such as accounting, law, construction.

General Partnership

A traditional partnership consists of two or more partners who agree to manage and share the profits of a business.

The main features of a traditional Partnership include:

• A partnership is not considered a separate legal entity.
• Profits are taxed at the partner's personal income tax rate or corporate tax rate if the partner is a corporation.
• Partners are responsible for all debts and losses of the partnership.

Limited Partnership

A Limited Partnership or LP in Singapore is a business structure consisting of at least two partners: at least one managing partner (General Partner) and at least one limited partner (Limited Partner).

Although an LP is not a separate legal entity, the limited partnership type offers the advantage of limited liability to partners who simply contribute capital to the company.

This is a popular choice for real estate and investment companies, where several partners invest money but are not involved in day-to-day management.

The main features of a limited partnership are:

• Managing partners have unlimited liability. They are personally liable for the debts and obligations of the company. They are also 100% responsible for managing the business.
•  Limited partners' liability is limited to the amount of money they have invested in the company. They do not manage the business.
• Profits are taxed at the partner's personal income tax rate or corporate tax rate if the partner is a corporation.

If all the managing partners in the LP are resident outside Singapore (Singapore non-resident), the LP must appoint a manager resident in Singapore.

If there are no limited partners in the LP, the company registration will be suspended and the managing partners will be reclassified under the Business Registration Act. The status of the LP will only be restored when a new limited partner is appointed.

Limited Liability Partnerships (LLPs)

A Limited Liability Partnership (LLP) in Singapore is a business structure that combines the benefits of both a partnership and a private limited company.

The main features of a limited liability partnership are:

• An LLP is a separate legal entity that can own assets and enter into contracts in its name.
• Partners in an LLP have limited liability. They are not responsible for the mistakes made by other partners and are only responsible for their own personal mistakes.
• LLPs are not required to meet certain statutory obligations such as holding annual general meetings, appointing directors or company secretaries or allocating shares.
• Profits are taxed at the partners' personal income tax rates or corporate tax rates if they are a corporation.

When registering an LLP, there must be at least one resident director in Singapore. GLA will assist you with Singapore nominee director services for fast company formation.

Professional Partnership

According to ACRA, a professional partnership is only for partners who have a professional license as prescribed by the Singapore government. This type of partnership allows the company to have more than 20 partners.

Professional limited companies are usually established by individuals licensed to practice under specific Singapore laws. These include:

1. Engineer registered under the Professional Engineers Act.
2. Solicitors registered under the Legal Profession Act.
3. Architect registered under the Architects Act.

Professional partnerships also have the option of registering the company as a limited liability partnership (LLP) under the Limited Liability Partnerships Act.

2. Options for foreign companies 

Foreign companies wishing to establish a presence in Singapore have three main options for registration: Subsidiary, Branch Office and Representative Office.

Foreign companies will need a verified registered agent like Global Links Asia to help them register their company in Singapore.

2.1. Subsidiary

A subsidiary is a separate legal entity incorporated under the laws of Singapore. Although owned by the foreign parent company, the subsidiary operates independently and is treated as a local company.

A subsidiary can be a private limited liability company or a public company. 

Additionally, foreign investors can establish independent companies from the parent company with foreign individuals as shareholders if they do not wish to establish a subsidiary.

The main characteristics of a subsidiary are:

• This is a separate legal entity.
• Shareholders have limited liability.
• The company can enjoy various tax incentives and exemptions available in Singapore as it is considered a tax resident in Singapore.

2.2. Branch office

A branch office is an extension of a foreign company operating in Singapore. The main features of a branch office include:

• A branch is not a separate legal entity, but is considered an extension of the parent company.
• The parent company is fully responsible for any debts or legal actions against the branch office.
• The branch is taxed as a non-resident entity in Singapore.
• Branch offices may only engage in activities similar to those of the parent company.

2.3. Representative office

Representative Office (RO) is a temporary base used by foreign companies to explore business opportunities in Singapore. The main features of a representative office include:

• A representative office is not a separate legal entity.
• The Office may not enter into contracts, transactions or engage in profit-making activities.
• The office helps businesses research the market and develop business relationships before the Company decides to officially enter the Singapore market.
• ROs are usually registered for a limited period (usually up to 3 years) after which they must be transferred to a subsidiary or branch office.

3. How can you choose the right type of companies to incorporate in Singapore?

To help you choose the right type of company, below is a summary of GLA's recommendations for each type.

3.1. For startups, small and medium or micro businesses, solo entrepreneurs

• Sole Proprietorship: Businesses that do solo work (tutoring, plumbers, designers), take advantage of personal income tax or want to test business ideas.
• General Partnership: You have less than 20 partners, the partners work in the same professional field such as lawyers, doctors, architects, accountants or real estate consultants.
• Limited Partnership (LP): You want a clear management structure with a general partner controlling operations and raising capital through limited partners.
• Limited Liability Partnership (LLP): You want a clear management structure, limited liability.
• Private Limited Liability Company (Ptd.Ltd): You want a clear business structure, limited liability, better branding and the ability to raise capital and enjoy tax incentives. This is an easy choice for both domestic and foreign entrepreneurs.

3.2. For large companies, large international corporations, parent companies

• Public company: The company wants to raise capital through a public offering.
• Public company limited by guarantee: The company wants to participate in sustainable activities for the public good such as charity.
• Subsidiary: The company wants to open a local company as a private limited company in Singapore with the parent company as the ultimate beneficial owner.
• Branch office: The company wants to have a physical presence in Singapore providing the same services as the parent company without having a separate legal entity.
• Representative office: The company wants to explore the Singapore market, collect market information, build relationships without having to generate sales and revenue.

Besides the above suggestions, answering the following questions can help you make better decisions.

1. How much is the investment capital? Does the company plan to borrow from the bank or invest capital?
2. How many owners does the business have?
3. What is the expected profit of the company? (If your profit is below SGD 160.000, personal income tax rate may be most suitable)
4. Does the company want fewer filing obligations or more filing obligations to qualify for government assistance?
5. Is it easy to dissolve a company?

4. How can we help you incorporate your company in Singapore?

At Global Links Asia, we have over XNUMX years of experience helping SMEs and entrepreneurs expand into international markets. We understand what you need and provide comprehensive support for a smooth, hassle-free share transfer process.

• Fast, efficient, and legal company registration in Singapore.
• Support with nominee director , secretary, and registered address services at a much reasonable price.
• Accounting, financial reporting, and tax optimization as per Singapore accounting standards
• Assistance in opening company bank accounts with licensed physical and digital banks in Singapore 
• Business operation support, including consular legalization, trademark registration, payment gateway setup, and more.

5. Frequently asked questions about types of companies in Singapore

Highlights

• There are 7 common types of companies in Singapore that businesses should know. The choice will depend on the business strategy of the Enterprise.
• Pte.Ltd Company is the most popular type of company in Singapore for foreign businesses.
• Foreign businesses need a reputable unit like GLA to help support opening a company under Singapore law.
• To learn more about the process of opening a Singapore company with the selected type, businesses should refer to the following article.