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You are here: Home / Blog / Determining Your Singapore Business’ Shareholder Structure

Determining Your Singapore Business’ Shareholder Structure

December 29, 2021 IN Blog

Determining your Singapore Business’ Shareholder Structure

First of all, thank you for choosing Singapore as the country to start your business. Given Singapore’s robust economy and government initiatives, you are greeted with many options when it comes to your business’ shareholder structure. That makes it tricky to find the most suitable choice for your company. Check out these important steps that will help you to find the right structure!

Table of Contents: 

  1. Back to Basics
  2. Splitting the Pie with Your Shareholders
  3. Finding your Paid-up Capital

Back to Basics

Gathering the basic information about shares and their holders would set you on the right track. There are ordinary and preference shares, and they both offer different rights and responsibilities. Each company has total freedom in choosing the desired Singapore business shareholder structure, as long as it suits the your business’ profile.  

Splitting the Pie with Your Shareholders

The first obstacle to conquer is how to divide the shares between the company founders. Naturally, the CEO should get a bigger percentage. That will give them a larger portion of shares but this would also require them to manage the company on a daily basis. 

An alternative approach is to decide based on the capital invested. The person who invested the most would receive the most shares. It’s also possible to discuss with the major investors. For example, if they do not want to participate in daily management, preference shares are a smart choice. They secure the desired profit distribution priority but not the same voting rights.

Suggested Read: A Step by Step Guide for Company Registration in Singapore

Finding Your Paid-Up Capital

This capital is the initial investment for your company’s development. You can invest as little as $1, but realistically you will need much more to give your business credibility and a solid foundation. A good amount to start your investment would be at S$5,000. 

Once you have the paid-up capital amount, you can decide on the price per share. Although you can change the price based on share types, you can also use the same price for all classes. For example, the cost per share can be $1.

In this example, you might issue 5,000 shares for $1 each. You can divide them among the stakeholders according to the money they want to invest. Remember to keep track and monitor the amount of allocated shares to each investor. This ensures transparency in the company and increases trust among the business’ shareholders. 

Suggested Read: 8 Things to do after Incorporating your Singapore Company

Start Your Singapore Business with SCI

At Singapore Company Incorporation, we have helped thousands of companies to launch their businesses in Singapore. Our team offers anything from incorporation assistance to accounting and corporate compliance services. You can expect a team of experts to guide and ensure you do everything by the book. If that sounds good, don’t hesitate to contact SCI today!

FAQs in Singapore Business Shareholder Structure

Who can be a Shareholder?

Any party that owns at least one or more of the company’s shares. They might have voting, profit-sharing, and other rights. Shareholders can also participate in meetings and communicate with the company’s board.

What are the different classes of shares?

There are many different types of shares* a company can offer:

  • Ordinary: These shares allow equity ownership, participate equally in dividends and basic voting rights.
  • Preference: These shares have preferential rights over ordinary shares, with respect to dividends. Holders of these shares get priority on return of capital as well.
  • Redeemable: These shares may be bought back by the company at a later or agreed upon date.
  • Management: these carry extra voting rights, usually given to management or the company’s original owners to maintain control.
  • Pseudo shares: Companies issue these to become active in the future, but only if particular events occur.

*Not limited to the ones listed

What’s more important – the number or percentage of shares?

It’s the total share percentage that can grant a shareholder advantage during profit distribution and privileged voting rights. You will also be able to ascertain how much power you have based on the percentage alone, but not always the number of shares.

How can a company issue shares?

Companies need to pass an ordinary resolution of the shareholders and filing a return of allotment. This must be filed with ACRA within 14 days of issuing the shares.

Contact SCI to Help with Your Company Incorporation

SCI offers a wide range of services that make us your perfect partner when starting a company in Singapore.

Learn More

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