Capital Requirements To Start A Business In Singapore 

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Written By Loanbuddy Singapore
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Capital Requirements To Start A Business In Singapore 

Singapore is one of the most buzzing countries in the world when it comes to business. It allows foreign investors as well as budding entrepreneurs to grow and maximize their returns.

Over the years, many entrepreneurs have established their businesses in Singapore and you could be the next!

Singapore is the ideal location for those starting a new venture as it gives a competitive edge and ease to do business.

But what are the requirements to start a business in Singapore? What is the capital investment you need to make to incorporate your new company? This article will give you an understanding of how much capital is required to open a company and other related questions.

What Is Capital And Why Is It Important?

Capital is one of the biggest factors when starting a business. For kick-starting any business from scratch, or for marketing to purchasing goods or for research and development; capital becomes essential. Additionally, it is used to purchase new equipment, rent and salary payments.

As the initial funding source, capital is very crucial in the early stages of any business. It also indicates how financially strong a company is.

There are two types of Capital

Issued Capital is the total amount of shares that a company has issued to its shareholders. This can be in the form of paid or partly paid equity shares.

Paid-up Capital is the amount that has been paid by the shareholders out of issued capital. It can be raised via an initial public offer (IPO) in the stock market to various investors in a large number.

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How Much Capital Is Required to Start A Business In Singapore?

As a new startup founder, you will be amazed to know that you only need $1.00 as paid-up capital to start your business. This amount of money applies to Singapore Citizens, Permanent Residents, and foreigners who want to register a company in Singapore.

This amount can be increased after the operations have commenced. It is noteworthy that different types of businesses need different amounts of capital for operations. Some of the businesses are:

Applying for EntrePass: If you are a foreigner trying to set up a business in Singapore, you need to have at least $500,000 in hand as paid-up capital.

Travel Companies: $50,000 if the company does not offer accommodation services and conducts travel within Singapore. However, companies offering overseas travel need a minimum capital of $100,000.

Insurance intermediary agencies: A minimum of $50,000.

Public Accounting Firms: A minimum of $300,000.

If you want to build credibility in your business, you will probably increase your capital from just $1.

How to set up your business in Singapore

How Can You Increase Your Company’s Capital In Singapore?

You can issue new shares to the existing shareholders or sell to new investors to increase the amount of paid-up capital. To increase the company’s capital, there are certain legal formalities that need to be fulfilled. Some of the major requirements include-

  • Notice to existing shareholders for calling an extraordinary general meeting
  • Approval from shareholders in shareholders’ meeting
  • Directors’ responsibilities including directors’ resolution

Once you have performed all the legal duties, the capital is required to be updated on your company’s business profile on ACRA BizFile+. You need to submit the following documents to make changes to the company’s capital.

  • Proof of capital credited in a corporate bank account. (generally payment slip)
  • Authority of ordinary resolution
  • Resolution by directors
  • Letter to the corporate secretary
  • Shares application

Where Does The Paid-Up Capital Appear?

The paid-up capital is immediately credited to the company’s bank account after incorporation. But it does not necessarily need to stay in the company’s bank account after all formalities are done. It can be used to incur essential expenses. However, the money withdrawn to meet the expenditure should be regarded as a loan which needs to be paid back in form of revenue or income.

What Happens In The Case Of Partly Paid-Up Shares?

If any shareholder has partly paid the amount on shares subscribed, the unpaid amount remains due from him/her. The constitution of a company can restrict a shareholder from voting until he or she pays the amount due on shares in full.

Additionally, the shareholder becomes personally liable to pay the unpaid portion of shares issued to him/her. However, the shareholder will not be held personally liable to the company’s directors if shares issued to him/her are fully paid up.

What Are The Other Options To Raise Capital For Business in Singapore?

Apart from issuing new shares and giving ownership of your company to someone else, you can raise funds for your business through different channels such as:

  • Crowdfunding Campaign

It is the most popular and effective way to raise funds for new startups. For small business owners, Crowdfunding is an easier and cheaper way as compared to loans as they no longer have to pay hefty interest charges. In addition, crowdfunding acts as a marketing tool to attract potential customers and educate them about your products.

Crowdfunding also helps entrepreneurs to connect and make collaborations in future. The prospective collaboration may also give you a synergic benefit in terms of sales and brand visibility.

  • Funding from Incubators and Accelerators

Though it is a very time and effort consuming method, an entrepreneur can raise a significant amount of seed funding from incubators and accelerators. Funds from such investors typically go up to thousands which is a huge amount of capital.

Different incubators invest in industry-specific startups that can range from medical tech, fintech, life sciences etc. Before getting on to this road, you need to make sure that your chosen incubator aligns with the business nature of your company.

  • Applying for a Bank Loan or Credit Line

At last, you always have this ancient yet effective option to infuse funds into the business. You need to make sure that you have a good credit repayment history and a high credit score to get your application accepted.

Unlike other methods, the application for a business loan does not result in equity dilution. You need to pay scheduled installments on time.

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