Some companies in Singapore are required to have shareholders according to the specifications of Singapore’s business laws. Shareholders play extremely important roles in such companies. Through the ownership of the company’s shares, shareholders are the collective owners of the company. As the collective owners of a Singapore-based company, shareholders are granted certain rights which must not be violated by the company.
Incorporation of a Company Without Shareholders
Some who are starting a business in Singapore for the first time might be unaware of the laws surrounding shareholders and thus attempt to incorporate a company without any shareholders. According to Singapore company laws, a private limited company must have a minimum of one shareholder. It also may not have any more than 50 shareholders. These shareholders may either be individuals or corporations. Shareholders of a company based in Singapore may either be local or foreign. There is no restriction on the percentage of a company’s shares which may be owned by a foreigner. This means that all of the shares of a company based in Singapore could be owned by foreign shareholders.
After taking into consideration the requirements in the preceding paragraph, it is evident that anyone who plans to incorporate a private limited company in Singapore without having any shareholders will be in direct violation of the country’s company laws. Due to this fact, the person who is starting the company will find that the registration of the company will be rendered invalid. This will remain the case until the prospective company owner selects one or more people who will serve as the shareholders of the company.
Anyone who intends to operate a business in Singapore which does not have any shareholders could also opt to start one of the business entities which does not require any shareholders. Such a person has the options of starting either a sole proprietorship or a partnership. None of the requirements related to the establishment of a sole proprietorship are related to shareholders because a sole proprietorship does not have any shares. Similarly, partnerships including general partnerships and limited partnerships do not have any shares. They are owned by partners; however, a general partnership may not have any more than 20 partners. If such is the case, the general partnership will be rendered invalid and a private limited company, which does require shareholders, will have to be incorporated. Thus, those who start and own partnerships are not required to select any shareholders.
While on the topic of starting a Singapore-based company, we would like to mention that we at Paul Hype Page & Co provide various services related to the setup of any business entity of your choice in Singapore. We will work with you to help you understand the most suitable business entity for the business activities which are to be performed. Regardless of whether it is a sole proprietorship, partnership, or private limited company, our services and solutions will enable you to have the best possible experience as a company owner in Singapore.
Rights of Shareholders in a Singapore Company
One of the most important rights possessed by a Singapore company’s shareholders is that of the right to receive a portion of the company’s profits. They receive this portion of the profits in the form of dividends. The details about how shareholders are to receive dividends are usually detailed in a shareholders’ agreement. However, companies which do not have a shareholders’ agreement may nevertheless provide their shareholders with dividends according to the proportion of the company’s shares which they hold. Shareholders also have the right to approve auditors for the company. Should the shareholders deem such a move necessary, they may even choose to remove one or more of the company’s current directors. Another right of shareholders of a Singapore company is that of attending the company’s general meetings as well as voting during these meetings. Such meetings include annual general meetings (AGMs) and extraordinary general meetings (EGMs). These meetings play important roles in charting the future business path of the company; therefore, shareholders have much of a say in the future of the company’s business prospects.