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Three of the requirements in Singapore company incorporation are a minimum of one share, $1 paid-up capital, and one shareholder. The shares of a company define its ownership. It also defines the rights, privileges, and responsibilities of the shareholders.
Company owners are now eager to know the par value of Singapore shares, as well as the limit to the par value of shares issued to Singapore companies. These topics are exactly what we are going to focus on in this article.
Par value is the face value of shares. As seen in most countries and also in Singapore a long time ago, each company is typically issuing shares at $1 face value. Therefore, the shares used to come with the face value.
In Singapore, there is no minimum par value or nominal for each share. The idea of par value does not prevail anymore in the country. A company can issue its shares at any value it deems fit. This mandate provides companies with significant flexibility in planning shareholding structures.
You can issue 5% shares at S$5 to one person in your company. At the same time, you can issue 5% shares at S$5,000 to another person.
Clearly, the concept of share premium is also not that relevant anymore in Singapore Companies Act. So what happens when you issue shares, is you specify the number of shares issued and mention the total capital amount. There is no need to mention the value per share. This amount is backward calculated.
When incorporating or making a new issue of shares, always watch out for two things: the total number of shares and the total amount for which they are issued. Par value is not mentioned, as well as the issue price. Apparently, the issue price can be calculated.
At the time of incorporation, the company was registered with 10,000 shares and the capital was S$10,000. Hence, the issue price was technically $1. After three years, the company grew to a sizable level and an investor was buying 2500 shares for a total value of $2,000,000. When we issue such, we will only mention the 2500 (shares) and $2,000,000. Then, the total value of shares will be $2,010,000 and the shares will be 12,500. Thus, we can calculate the issue price by dividing $2,000,000 by 2,500, which is equal to S$800/share. Noticeably, par value was not mentioned here.
Moving on to the same concept, the numbers show percentage ownership and the amount shows the total capital of the given company. Suppose that the same company grew even bigger after two years and issued 5,000 shares, with the total value of $5,000,000. Now, the total capital of the company is $7,010,000 and the number of shares is 17,500.
The following number of shares shows the percentage ownership of the company with the group of people who incorporated the company, the first-round investors and the second-round investors:
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