This tutorial will teach you everything you need to know about company shares and shareholders in Singapore's private enterprises.
A company limited by shares, whether public or private, is founded when one or more people sign the company constitution and follow the requirements of the Companies Act.
At all times, one shareholder is required, and the personal identifying data, contact information, and residential address of each shareholder must be provided when registering for Singapore company registration online.
You must also declare the amount of paid-up capital, i.e. the total amount that the shareholder(s) has paid for his/her shares, at the time of registration and have the capital registered.
Minimum share capital requirements
A Singaporean business must have at least S$1 in issued capital. However, no minimum paid-up capital is necessary.
Paid-up capital refers to the amount paid by shareholders on shares issued by the corporation and distributed to shareholders.
The entire amount of firm shares issued and divided among shareholders is referred to as issued (or allotted) share capital. These shares, unlike paid-up capital, may or may not have been completely paid-up.
Share Classifications
The Firms Act of Singapore allows companies to issue many classes of shares, each with its own set of rights and privileges. The following are the most prevalent types of corporation shares:
Ordinary shares: In order to be registered in Singapore, all firms must issue at least one ordinary share. Ordinary shares are often granted on a one-share-one-vote basis, and they provide the right to dividends as well as the right to distribute the residual assets when the business is wound up.
Preference shares: As the name implies, holders of preference shares have unique privileges. Typically, these special rights are utilized to give stockholders preference over ordinary shareholders, such as when it comes to dividend payments or asset distribution after a liquidation. Preference shares are non-voting shares that can be redeemed in most situations.
Non-voting shares: Non-voting shares, unlike regular shares, do not provide the shareholder the power to vote. Non-voting shares are typically designated for firm personnel.
Management shares: These are typically awarded to the company's founders and provide additional voting rights.
Redeemable shares: A redeemable share is typically given with the provision that the corporation will buy the share back at a later date.
Deferred shares: No dividend is paid to deferred shares until all other shareholders have received a minimum dividend.
Shareholder necessities
Private limited businesses in Singapore must have at least one shareholder at all times and can have up to 50 shareholders. Firm shareholders can be either locals or foreigners, and Singapore is one of the few Asian countries that allows 100% foreign company ownership.
A shareholder can be a person or a company, and in order to become a shareholder, the firm's shares must be purchased. By purchasing shares, a shareholder gains ownership of a portion of the corporation.
Issuance of shares
A corporation can issue new stock at any moment. In Singapore, new company shares are issued through an ordinary resolution of the shareholders. When a corporation issues new shares, it must file a return of allotment with the Accounting and Corporate Regulatory Authority (ACRA). The allocation return must include the following:
- The total amount of shares issued
- The cost of each freshly issued share
- The amount that is still to be paid on each share
- The type of stock
- The full name, ID number, nationality, and address (for shareholders who are individuals)
- The name of the corporation and its registered address (for shareholders that are corporations)
- Each shareholder's share count and share class
- Transfer of stock
Shares can be freely purchased and sold, subject to any restrictions imposed by the company constitution. Such transactions are known as share transfers.
If a firm's shares are transferred, the company must notify ACRA via BizFile or declare the transfer in the annual filings.
Rights of shareholders
The rights of all shareholders are often outlined in the business constitution. The constitution of the firm will also specify any additional rights that preference shareholders may have as a result of the class of shares they own.
In addition to the constitution, shareholder rights are governed by the legislation.
The company constitution is a contract between the shareholders as well as between the shareholders and the company. Because it is a contract, each shareholder has the right to demand that the provisions of the constitution be followed by all other shareholders and the firm. This means that a shareholder can ask a court to stop an anticipated constitutional violation or to set aside an act that has already been undertaken in violation of the constitution.
Shareholder rights include, but are not limited to:
Voting rights: An ordinary share typically grants the shareholder one vote. Ordinary resolutions are used by shareholders to exercise their voting rights. Ordinary resolutions are passed when, for example, the company is:
- Choosing a new director
- Changing the company's charter
- Changing the company's share capital
- Appointing and dismissing auditors
- Changing the company's name
Meeting attendance and call: Shareholders have the right to attend annual general meetings (AGMs). Extraordinary General Meetings can be called by shareholders who own at least 10% of the company's stock (EGM).
Access to the company's documentation, audited financial statements, and balance sheet.
Dividend rights: Typically, dividends are paid only if the company made a profit during the fiscal year. A company's directors have the authority to suggest the payment of a fixed-amount dividend. To distribute a dividend, however, the corporation must adopt an ordinary resolution through a shareholder vote.
Right to assets in the event of liquidation: Shareholders have the right to distribute firm assets in the event of liquidation. Ordinary shareholders typically have the final claim on any of the company's residual assets, trailing creditors and preference shareholders.
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