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FOR CONVERSION OF SOLE-PROPRIETOR
OR PARTNERSHIP FIRM TO
A PRIVATE LIMITED COMPANY
We are pleased to provide you the
information on conversion of sole-proprietor or partnership
firm to a private limited company.
The formation of a private limited company
will require certain compliances with the legal requirements
in accordance with the Singapore Companies Act. A private
limited company as distinguished from a partnership or a
sole trader, is an incorporated company which enjoys certain
advantages such as separate legal entity ie. the company
is itself a separate person from its shareholders; limited
in the sense that it has limited liability in that the liability
of the company does not extend to its shareholders and perpetual
succession in that the death of a member will not affect
the continuance of the company. It is on the other hand
not allowed to make any public offer of its shares and has
restricted rights of transferring of it shares by the shareholders.
In order to convert to a private limited company,
the following requirements must be adhered to:-
- A name search is required. Each name chosen
is $15.00 and it takes 5 working days for the name to
be approved by the Registrar of Companies.
- A letter of no objection for the use of
the company's name from the sole-proprietor or partnership
firm.
- For a company who still wishes to retain
their existing business name and incorporate a Pte Ltd
company using the same name must produce a letter explaining
why they want to retain the business name and also to
state whether its owned by the same person.
- The minimum number of member is ONE with
a maximum of FIFTY for a private company.
- The minimum issued share capital is ONE
(usually $1 each).
- The company so formed must have at least
ONE Director, whom must be an ordinary resident
in Singapore.
- There must be at least ONE Company Secretary
qualified under Section 171(1B) of the Companies Act.
The company must appoint an auditor within 3 months from
the date of incorporation.
- Once the company is incorporated, the sole-proprietor/partnership
firm must be terminated within 6 months from the date
of incorporation. The company will take over-over all
its assets and liabilities as stated in the company's
Memorandum and Articles of Association. In addition, it
must close all banks accounts maintain by the sole-proprietor/partnership
firm, to inform customers about the change and also advise
them to issue all cheques in favour of the Pte Ltd company
as the firm is no longer in operation.
- The net assets taken over
by the Pte Ltd company can be converted as paid up capital.
As such an agreement and resolutions are required.
- In the event that there
is any claim from creditors and such amount is due to
them before converting the company to a Pte Ltd company,
the sole-proprietor/partners are liable for it.
- The company will be subject
to Income Tax at a flat rate of 20% (W.e.f. YA 2005)
on its taxable income. Please be informed that accounting
income and taxable income are different due to some inadmissible
items which are not tax deductible.
Our cost and disbursement for the formation
of a new company will be $900/- including disbursements
and 1 year contract of web-based secretarial services at
$380/-.
With regards to foreigners taking up or continuation
of employment, persons whom are neither citizens nor permanent
residents will require an employment pass or a professional
visit pass; and non-citizens who are not permanent residents
earning not more that $2,000.00 per month will require a
work permit under the Regulation of Employment Act.
For Further enquiries, click
here
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