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Company: A Company is an entity that is registered under the Companies Act (Cap 50). It has its own legal personality that is distinct from its members and the persons who manage the company. Companies can therefore own property and sue or be sued in their own names. They are recognised as taxable entities in their own rights.
Private Companies:
A private company is one whose constitution:
- restricts the right of its members to transfer their shares in the company; and
- limits the number of members that the company can have to not more than 50.
The restriction on the right to transfer shares in a private company usually takes the form of a requirement that the transfer be first approved by the company’s board of directors or a requirement that the shares be first offered to be transferred to existing shareholders.
Exempt Private Companies:
A private company in the shares of which no beneficial interest is held directly or indirectly by any corporation and which has not more than 20 members is regarded as an “exempt private company”. Such companies are exempted from some of the provisions of the Companies Act (Cap 50).
For example, an exempt private company is exempted from prohibitions against loans, quasi-loans and restricted transactions to its directors or to companies related to its directors under sections 162 and 163 of the Act.
If an exempt private company is solvent, it need not attach its financial statements to its annual returns when filing these with ACRA but can simply complete an online declaration of solvency instead.
Public Companies:
Any company that is not a private company is a public company. Public companies may or may not be listed on a stock exchange. Where they are so listed, they are usually referred to as “listed companies” and have to comply with the rules and regulations of the stock exchange on which they are listed.
