A private company is a locally incorporated company where the number of shareholders is limited to 50. The shareholders of a private limited company can either be individuals or corporate entities or both.
A private limited company is the most flexible and scalable type of business form in Singapore. It’s also the most preferred type of Singapore business entity as opposed to sole proprietorship or limited liability partnership.
Usually, a foreign business that wishes to establish their presence in Singapore will opt for a Singapore subsidiary company Such a structure offers protection against liabilities.
Singapore Branch office can be opened by any company. A branch must have an authorized representative appointed by the parent company to undertake business proceedings for the branch. A branch office is considered as an extension of the parent company and hence are not eligible for tax benefits or incentives.
Limited liability partnership (LLP) can be incorporated by 2 or more persons (or entities); either resident or non resident of Singapore. LLP has lower compliance requirements compared to a private limited company and is governed by the Limited Liability Partnership Act.
An LLP is primarily meant for carrying out a business where two or more professionals would like to build a joint practice in a common field. It is not recommended for trading businesses. A partnership agreement must be prepared with detailed information about how the profits and management responsibilities are divided between the partners of the LLP.
A foreign company that is interested in exploring potential opportunities in Singapore can setup a representative office before commencing operations on a large scale. Unlike a subsidiary or a branch office, a Singapore representative office is viewed only as a liaison office and has no legal status.
It cannot conduct any business activities of profit yielding nature. For most sectors, representative office approval process is a fairly straightforward process assuming the foreign company is an established entity and the scope of planned activities falls within the scope of a representative office. Since it lacks a legal status, a representative office is prohibited from concluding contracts, negotiating or opening Letter of Credit, getting involved in trading, leasing a warehouse, etc. It can only engage in activities such as conducting market research and feasibility studies.
A sole proprietorship is the simplest and the riskiest type of business form in Singapore. From a legal perspective, sole proprietorship is not a separate entity and therefore the owner and the business are one and the same. The owner personally owns all assets and liabilities of the business. There is no protection of personal assets from business risks and liabilities. In an event of the business being sued, the owner is personally responsible for the business’s liabilities.