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The Share Capital in Singapore

The Share Capital in Singapore

Updated on Friday 26th August 2016

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The-Share-Capital-in-SingaporeEach company limited by shares is required to have a share capital in Singapore. The share capital represents the amount invested by the founders, called shareholders, in the company in order to carry out its business undertakings. The share capital of Singapore company may be altered or increased and is usually divided into classes. The shares constituting a company’s share capital have no par value. Singapore companies are not required to have an authorized share capital.

If you want to set up a company, you can rely on our Singapore law firm.

Types of share capital in Singapore

The Singapore Commercial Code establishes three types of share capital for investors setting up companies in the city-state. Even if there are no requirements with respect to the minimum amount to be deposited when registering certain types of company, the share capital can be categorized as issued, paid up and unpaid share capital. The issued share capital is represented by the value of shares issued to the shareholders of a company. The paid-up capital represents the amount of share capital deposited by the members of a company. Shareholders of Singapore companies are not required to pay the share capital in cash. A company may also issue shares which will be partially paid, the remaining parts representing the unpaid share capital.

Types of shares in Singapore companies

Singapore companies may issue different types of shares which will confer different rights to their owners. A share represents a movable property within a company. The Commercial Code and the Corporate Governance Code in Singapore offer provisions about the types of share to be issued by a company and their allotments. Companies usually issue ordinary and preference shares. Ordinary shares are the most common types of shares issued by companies in Singapore. Ordinary shares confer voting rights and variable rates of dividends to their holders. Preference shares confer preferential rights when it comes to the distribution of the company’s dividends. The rights and the allotment of shares are stipulated in a company’s Memorandum and Articles of Association.

Share capital regulations in Singapore

According to the Commercial Law, a company in Singapore is required to maintain its share capital during its life span. Also, the share capital may not be redistributed to the shareholders once the company ceases to exist. This is a precaution measure that ensures creditors are paid if the company undergoes bankruptcy.

The Company Act also stipulates that:

  • -       a company cannot buy its own shares;
  • -       a company cannot lend any money if the collateral are its own shares;
  • -       capital reductions are possible only in accordance with Section 78A in the Commercial Code and must be authorized during a general meeting of the shareholders.

For complete information about the share capital requirements for all types of companies, please contact our Singapore lawyers.

 

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