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Epica Learn Series

What is a limited company?

What is a limited company?

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What is the meaning of the word Limited in the Singapore Company Name? Example Epica Pte Limited?

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?

What is a company?

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.

What is a limited company?

Limited company - About limited company

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.

Various types of limited companies

There are three different types of limited companies in Singapore:

Limited company - Types of limited company

Private Limited Company

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


Limited company - Types by shares

Public company limited by shares

In this business structure, there can be more than 50 shareholders. Such companies use "Ltd" at the end of their names. Shares of a public company limited by shares are usually available to the general public for purchase. Existing shareholders can sell their shareholding to anybody, subject to provisions in the constitution.


Limited company - Types by gaurantee

Public company limited by guarantee

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.

Conclusion

A limited company is a unique legal entity. These companies are also called limited liability companies as the liability of an owner is limited in them.

There are multiple benefits of incorporating a limited liability company in Singapore, such as limited liability, lower corporate tax rates, and tax exemption schemes. You can also connect with Epica to learn more about incorporating a limited liability company in Singapore.

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