A Singapore company is treated as a separate legal entity from its shareholders which in essence it is like a real person: it can acquire or sell a property under its name, file a lawsuit using its name and can be named in a case, and continue its existence regardless of who are the shareholders and board of directors.
There are many reasons why a lot of both foreign and local entrepreneurs wish to form a Singapore company. Apart from it being appealing and offering scalability to grow your business particularly to those who want to tap the Asia Pacific market, the real value really in forming a Singapore corporation is that it offers security for the stockholders and the company itself.
These are the advantages of a Singapore corporation:
- Bankruptcy protection
The shareholders (which are the legal term for corporation owners) enjoy a limited liability which means that their personal assets cannot be used or liquidated to pay off the company's debts, losses, and liabilities to its creditors.
- It exists as a separate legal entity from its shareholders
As a separate legal entity, a corporation can acquire, sell, and own properties without using a principal. In this way, no shareholders or directors can use company properties for their own personal purpose.
- Easy to raise funds
A corporation is categorized into two: private (or non-stock) and public (stock). If it chooses to become public, it can sell some of its shares to the public in order to raise funds for business expansion. This is sometimes more appealing to shareholders who want to avoid bank loans which are usually associated with high interest rates.
- Incentives for key employees
A public company can offer its key employees with shares or ownership which can serve as an incentive. In this way, talented employees will become more loyal to the company and may not consider seeking other employment.
- Tax benefits and exemptions
A corporation which has remained “private" can enjoy zero tax from its first $S100,000 chargeable income within the first three years of its incorporation. Another 50 percent tax deduction is given to a corporation for its $S200,000 income.
Meanwhile, all corporations enjoy a single tier tax system which means that once the taxes have been deducted from the corporate level, shareholders can receive their dividends tax free.
- Efficient operational structure
Shareholders can appoint a board of directors who will make crucial decisions for the company. Meanwhile, the directors will then vote among themselves on who will be the CEO, vice president, secretary, treasurer, etc.
- Continuous existence
As a separate legal entity, a corporation can exist regardless if there is a change in management or several shareholders decide to leave the business.
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Find more information on how to form a Singapore company . Rikvin has successfully helped thousands of foreign entrepreneurs who wish to form a Singapore company by securing their work visas using employment pass route once they have incorporated a Singapore Company.