Singapore Public Company Limited By Guarantee
A public company limited by guarantee is most often formed by non-profit organisations such as sports clubs, workers’ co-operatives and membership organisations, whose owners wish to have the benefit of limited financial liability.
A public company limited by guarantee does not have any shares or shareholders (like the more common limited by shares structure) but is owned by guarantors who agree to pay a pre-defined amount of money towards company debts.
Generally, the guarantors will have no profits distribution as they will instead be re-invested to help promote the non-profit objectives of the public company limited by guarantee. If any profits are distributed to the owners, then the company will forfeit its right to apply for a charitable status.
- A public company limited by guarantee is a distinct legal entity from its owners, and is responsible for its own debts.
- A public company limited by guarantee enjoys the same rights that a private limited company may have in accordance with the Companies Act, Cap 50.
- It does not have a share capital.
- It has members who will undertake to contribute a minimum amount of S$1.00 to the liabilities of the Company in the event the Company is wound up.
- The personal finances of the company’s guarantors are protected. They will only be responsible for paying company debts up to the amount of their guarantees.
- The status of ‘Limited’ will help to build the trust and confidence amongst clients and investors. This type of professional credibility is valuable and can help a company achieve its objectives more effectively.
- At least 1 director who is ordinarily resident in Singapore
- At least 1 member
- Qualified Company Secretary
- Constitution (formerly known as Memorandum & Articles of Association) setting out the objects and by-laws.
- Submission of audited financial statements annually is mandatory unless it is dormant.
- To hold Annual General Meetings (AGM).
- To file Annual Returns with the Accounting and Corporate Regulatory Authority of Singapore (ACRA).
Advantages / Pros:
- Exempt from corporate income tax if surplus funds are from members’ contributions.
- Can apply to be registered as a charitable organisation or institute of public character in Singapore.
Disadvantages / Cons:
- Subject to more annual disclosure obligations.
- Requirements of reporting in accordance with law.
- Professional assistance is required for setting up / incorporation.
- Professional service provider’s assistance is required for regular or ongoing statutory compliance.