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Every company must incorporate with ACRA first before fully operating in Singapore. There are a wide range of business entities a company owner may choose to incorporate, and requirements differ depending on the chosen entity. For those who wish to incorporate a subsidiary or private limited company, paid-up capital will be required.
Featured in this article are two of the most commonly raised concerns about paid-up capital—how does it differ from issued capital and how to update or increase it.
There are two amounts of capital for every company: issued capital and paid-up capital.
Issued capital is the capital issued by the company to the shareholders. During the board meeting, a company may decide on the issued capital for company incorporation. Subsequently, a company may also increase its capital and issue it to the shareholders. Shareholders do not need to pay the full amount of their capital contribution into the bank account of a company.
Suppose that your company’s issued capital is $100,000, but you have only collected $10,000 from the shareholders. In that case, your issued capital becomes $100,000, while your paid-up capital becomes $10,000 only. As such, paid-up capital is a part of issued capital. It represents the amount paid into the company bank account. Evidently, paid-up capital will always be less than or equal to issued capital.
To increase a company’s paid-up capital, it needs to issue new shares after being incorporated. This can be achieved by accepting new shareholders or encouraging current shareholders to buy more shares.
The procedure of increasing paid-up capital post-incorporation is as follows:
Most CSPs follow this certain practice, in which the capital amount is less than the certain threshold, Lets say S$10,000. When the capital amount is less than this, it would be also updated as paid-up capital. This instance only applies to smaller sums of capital. The idea here is that you update both these amounts as issued and paid-up at the same time because they are small amounts anyway.
When the capital amount is large (e.g., S$300,000), your CSP will require you to submit the proof of deposit into the company bank account. After obtaining the proof, your CSP will update your company’s paid-up capital amount. With higher paid-up capital, external business partners may feel comfortable and secured with your company, view your company as reputable, and make decisions favorable for your company. Thus, it is every CSP’s responsibility to ensure that the amount reflected is deposited into the company bank account.
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