Setting up a limited by guarantee (LBG) company in Singapore can be a straightforward process. This type of company is typically used by non-profit organisations, clubs, and associations, and it offers certain advantages, such as limited liability for members. In this blog, we will guide you through the steps to set up an LBG company in Singapore.
Step 1: Choose a Suitable Name for Your LBG Company
Select a unique and meaningful name for your LBG company. Ensure that the name complies with the Accounting and Corporate Regulatory Authority (ACRA) guidelines. It should not be identical to any existing company name in Singapore, and it should not infringe on any trademarks.
The company name must include the term “Limited” as a suffix and be unique.
You can reserve the name with the Accounting and Regulatory Authority (ACRA) through the BizFile+ website.
Step 2: Prepare the Memorandum and Articles of Association
The Memorandum and Articles of Association are the company’s governing documents. These documents should include:
- The name of the company, the number of members, and the amount each member has guaranteed to pay in the event of winding up
- Clear objectives stating that the company is exclusively charitable or of benefit to the community
- A statement that the liability of the members is limited
- The duties and terms of office for the minimum of three trustees, two of whom must be Singapore citizens or permanent residents
You can draft these documents or seek legal assistance to ensure they comply with Singapore’s regulations.
Step 3: Apply for Relevant Licenses
CLGs may be required to apply for licenses based on the type of activities they perform. Visit the License One website to apply for the necessary licenses during the registration process
Step 4: Appoint Directors and Company Secretary
An LBG company in Singapore should have at least one director who is a Singapore resident and a company secretary. The company secretary must be appointed within six months of company incorporation. Ensure that your chosen directors and company secretary meet the eligibility criteria and fulfill their statutory duties.
Step 5: Register with ACRA
To incorporate your LBG company, you need to submit the necessary documents to ACRA. This includes the Memorandum and Articles of Association, details of directors and company secretary, and the registered address of the company. You can do this online through the BizFile+ portal, or you can engage a professional service provider like FreeIncorp to help you with the registration process.
Step 6: Prepare a Registered Office
Your LBG company must maintain a registered office address in Singapore, where official correspondence can be sent. This address must be open to the public during normal business hours. You can use your own office address, or hire a registered filing agent to provide this service.
Step 7: Apply for Tax Exemption
Most LBG companies in Singapore qualify for tax exemption. To avail of this benefit, you must apply for charity status with the Singapore government. This process is known as “Institution of a Public Character” (IPC) registration. Once approved, your LBG company can enjoy tax-exempt status on its income.
Step 8: Compliance with Annual Filing Requirements
Like all companies in Singapore, LBG companies have annual compliance requirements. You need to file annual returns, financial statements, and hold an Annual General Meeting (AGM). Ensure you keep proper records of the company’s financial transactions and follow the accounting standards set by ACRA.
Step 9: Reporting to Members
Since an LBG company is formed by members, it’s essential to keep them informed about the company’s activities. Regular reports should be provided to members to ensure transparency and accountability.
Step 10: Renewal and Continual Compliance
Remember to renew your company’s registration with ACRA annually. Continue to meet the compliance requirements, such as holding AGMs, submitting annual returns, and keeping financial records.
Step 11: Fulfilling Your Mission
Finally, as a limited by guarantee company, you’re likely operating for a specific charitable, social, or non-profit purpose. Ensure that you continually work toward fulfilling your organisation’s mission and serving your intended beneficiaries.
Setting up an LBG company in Singapore involves several steps, but with the right guidance and a clear understanding of the process, it can be a relatively smooth journey. Seek legal or professional advice to navigate the legal requirements and to ensure that your company operates in accordance with Singapore’s regulations.