Pros and Cons of Public Company Limited By Guarantee in Singapore?

What are the Pros and Cons of Singapore Public Company Limited By Guarantee?

What are the advantages and disadvantages of a Public Company Limited By Guarantee in Singapore?

What are the plus and minus of a Public Company Limited By Guarantee in Singapore?

What are the Pros and Cons of Singapore Public Company Limited By Guarantee?

What are the advantages and disadvantages of a Singapore Public Company Limited By Guarantee?

What are the plus and minus of a Singapore Public Company Limited By Guarantee?

Singapore Public Company Limited By Guarantee

Introduction

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.

Features

• 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.

Requirements:

• 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.