Singapore Exempt Private Limited Company – A quick overview

Singapore Exempt Private Limited Company – In this guide, we set out key things you need to know about setting up a Singapore exempt private limited company in Singapore.

Prior to setting out some key points about EPCs, we would like to share with you a quote from Singapore’s founding prime minister Lee Kuan Yew at his Speech at the fourth Delegates’ Conference of the NTUC, 1967,

“Change is the very essence of life. The moment we cease to change, to be able to adapt, to adjust, to respond effectively to new situations, then we have begun to die.”

What is a Singapore Exempt Private Limited Company (EPC)?

The Companies Act (Cap. 50) defines an EPC as a Singapore company which has not more than 20 members and in which no corporation holds any beneficial interest in its shares.  

What are the benefits if your Singapore company qualifies as a Singapore Exempt Private Limited Company?

Benefit #1 – Freedom to give loans

Section 163 of the Companies Act (Cap. 50), states, inter alia, that a company cannot give loans to a company where a director has an interest of 20% or more.  This restriction does not apply to a Singapore Exempt Private Limited Company.

Benefit #2 – Ability to file simplified annual returns

ACRA has simplified the annual return filings process for solvent EPCs.

EPCs need to fulfil the following requirements before being eligible to file a simplified annual return:

• Financial Year End (FYE) falls on or after 31 August 2018 
• The EPC is not preparing audited financial statements 
• The EPC is not required to file financial statements 
• There should not be any change in the previous information filed with ACRA

Possible audit exemption for EPC that qualify as small companies.

EPCs were previously exempted from having their accounts subject to audit if they had an annual revenue of S$5 million or lower.  However, with effect from 1 July 2015, only “small companies” are exempt from audit requirements.

A company is deemed a “small company” if it:

• Is a private company; and
• Satisfies any two of the three criteria listed below for each of the two preceding consecutive Financial Years (FYs):
  1. Annual revenue does not exceed $10 million
  2. Value of total assets does not exceed $10 million as at the end of the FY
  3. The company has a maximum of 50 employees at the end of the FY

An EPC that satisfies the above criteria is likely to be exempted from audit, and consequently be able to reduce its operational and compliance costs.

How to set up an EPC

In order to set up an EPC successfully, a few requirements must be met. The EPC must have: 

• At least 1 shareholder (only individuals)
• At least 1 locally resident director who is at least 18 years old
• At least 1 company secretary who must be a licensed individual resident in Singapore
• An initial paid-up share capital of at least $1
• A physical Singapore office address

Once you have ensured that your company has met the requirements stated above, you can make an application to ACRA to register your EPC.

Tax Breaks for EPC

Starting a new EPC in Singapore comes with it certain tax breaks.  Depending on when your company is incorporated, different rates apply. 

Do check with us if you are unsure which tax rates apply for your EPC.

Finally, we take heart from a quote from Nelson Mandela

“It always seems impossible until it’s done.“

About Raffles CPA

Raffles CPA is a leading global professional services firm headquartered in Singapore that serves global clients. 

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