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According to ACRA, Singapore is home to more than 400,000 registered businesses. The majority of registered businesses are limited liabilities or private limited companies. However people sometimes get confused as to what a limited company is? What is the meaning of word Limited?
A company in Singapore is basically a business structure that is a separate legal entity from its owner. It means it can rent or own properties, sue or be sued, sign contracts in its own name instead of its owners.
This separates its owners' liabilities from itself as the company itself is responsible for all its debts and liabilities. Because the company is a separate legal person, and there is a separation of debts and liabilities, it is often a preferred entity type. Because of this structure, a limited company can span over many generations of owner and liabilities of company remain separate from that of owners.
In a limited company, owners have limited liabilities. Owners hold a particular number of shares in a limited company that defines the company's ownership.
Owners only own the company based on their respective shareholdings. Other than that, an owner's liability is limited to the amount one has invested in buying the company's shares. In case the company becomes insolvent, the assets of its owners remain unaffected.
There are three different types of limited companies in Singapore:
It is the most preferred business structure in Singapore. There is a minimum of 1 and a maximum of 50 shareholders in a private limited company. Generally, a private limited company uses "Pte Ltd" at the end of its name. The shares of a private limited company are not available to the general public for purchase. If they wish to invest in private limited company, they must seek approval from board of directors and existing shareholders of the company
Non-profit organizations mostly use this business structure. There is no share capital in this business structure. Owners' liabilities are limited to the amount undertaken by them to contribute if the company gets wound up.
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