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Table of Contents
An exempt private company Singapore structure is a private company limited by shares with up to 20 individual shareholders. It is commonly used by startups, small businesses, and foreign founders because it combines limited liability, flexible ownership, potential tax exemption, and lighter filing requirements when the company is solvent.
This article explains what an exempt private company is, the differences between an exempt private company and a private limited company, the benefits it can offer, and the compliance obligations that apply after incorporation.
Key Takeaways
- An exempt private company in Singapore is a private company with a maximum of 20 shareholders and no corporate shareholder interest.
- EPCs are often suitable for startups and closely held businesses that want a simple limited liability structure.
- A solvent EPC may be exempt from filing financial statements with ACRA, but it must still file annual returns and keep proper accounting records.
- Audit exemption is not automatic. The company must qualify as a small company under ACRA’s criteria.
- New qualifying Singapore companies may enjoy start-up tax exemption for their first three consecutive Years of Assessment.
What is an exempt private company?
An exempt private company (EPC) in Singapore, also known as an exempt private company limited by shares, is a type of private limited company owned by a maximum of 20 shareholders under ACRA(1) all of whom must be individuals.
It is commonly used by startups, SMEs, and founder-led businesses because it offers limited liability, a simple ownership structure, and potential benefits such as lighter filing requirements, audit exemption eligibility, and startup tax exemption when the company meets the relevant conditions.
In practical terms, the exempt private company limited by shares meaning is simple: the company is privately owned, shareholder liability is limited by shares, and the ownership structure is restricted enough to qualify for certain exemptions under Singapore company law.
An EPC can be fully owned by foreign individuals. However, like other Singapore companies, it must still meet the local director, company secretary, registered office, and annual compliance requirements.
Benefits of an Exempt private company in Singapore
To build Singapore’s image as the best place for startups and alleviate the compliance burden for small companies, the government announced the ratification of the amendment in 2003 to the Company Act, marking the dawn of EPC.
Here are some of the advantages of EPC that you can make use of to drive more profits:
| Benefit | Description | Key Points |
| Distinct legal entity | An EPC is legally separate from its shareholders, similar to a private company limited by shares. | Shareholders’ liability is generally limited to their share capital, helping protect personal assets from company debts. |
| Fewer compliance requirements | A qualifying EPC may enjoy lighter filing and audit obligations compared with larger companies. | A solvent EPC may be exempt from filing financial statements with ACRA, while audit exemption depends on meeting the small company criteria. |
| Higher tax exemption | A qualifying new EPC may benefit from Singapore’s Start-Up Tax Exemption Scheme. | Eligible companies can enjoy tax exemption on part of their first S$200,000 chargeable income for the first 3 YAs, subject to IRAS conditions. |
| Flexibility in business loans | EPCs may have more flexibility in providing loans or guarantees compared with other private companies. | This can allow more room for internal financing or related-company support, provided the arrangement is properly managed. |
| Foreign-owned policy | An EPC can be fully owned by foreign shareholders if all shareholders are individuals. | Foreign founders may hold 100% ownership, but the company still needs to meet Singapore incorporation requirements. |
| Credibility | Incorporating as an EPC can improve business credibility with clients, banks, and partners. | The company has a formal legal structure, registered status, and continuity through share ownership. |
Distinct legal entity
Like a private company limited by shares, an EPC is considered a legal entity separate from its owners/shareholders. This means that an Exempt private company limited by shares in Singapore is liable for its debts and losses. Its shareholders’ liabilities would not go beyond the share capital they own.
Moreover, your EPC in Singapore can ensure continuity with easy transfer of ownership by transferring shares.
Fewer compliance requirements
An EPC can enjoy an exemption from filing annual accounts as long as it is solvent at the time of registering.
An EPC can also be exempted from conducting an annual audit if it meets at least 2 out of the 3 following criteria for the first or second financial year after incorporation(2)
- Its total annual turnover is equal to or less than $10m
- Total assets are equal to or less than $10m
- Its total employees are equal to or less than 50
All directors and the company secretary have to sign a solvency declaration, the prescribed form of which is available online, and then submit it to the Registrar of Companies in Singapore (ACRA).
However, you are still duty-bound to properly update accounting records and prepare financial statements as per the Companies Act and the Singapore Financial Reporting Standards (FRS).
In any other case in which your company falls short of the aforementioned criteria, the obligation to submit audited accounts and to file annual financial statements applies as per usual.
Higher tax exemption
An exempt private company in Singapore is likely to be qualified for the Tax Exemption Scheme for Startups, which can lead to a significant tax cut for your company.
Under the scheme, your newly-formed EPC is entitled to an exemption based on the Singapore corporate tax rate for the first SG$200,000 of its taxable income every year for the first three consecutive years from the Year of Assessment (YA) 2020 onwards(3) . To be more specific:
- 75% of the first SG$100,000 of chargeable income will be exempted from Singapore income tax.
- Additionally, 50% of the next SG$100,000 will also be exempted from being taxed.
In sum, you can get a maximum exempted amount of SG$125,000 for each year of the first 3 years of incorporation.
Side note, this scheme does not apply to every company. Companies that specialize in investing, such as investment holding ones, or in property development as it is with real estate companies are unable to apply for this tax exemption.
Flexibility in business loans
Other types of business entities, in most cases, are subject to tough restrictions upon making business loans to other related entities and their directors.
In particular, a private company is prohibited from lending or providing guarantees or security to loans of other companies, in which its director has interests or ownership of 20% or more. A private company is also not allowed to extend loans to any of its directors.
In contrast, an EPC enjoys much more independence and flexibility in how they act on its capital as it is exempted from this regulation. As EPCs are not curbed by this restriction, you are allowed to grant loans to other companies to leverage your assets into profit.
Foreign-owned policy
As per the Companies Act, a foreigner is allowed to act as the sole shareholder that owns all the shares of an EPC, which suggests that an EPC is eligible for 100% foreign ownership.
Credibility
Following the same pattern as other incorporated entities, EPCs manifest signs of burgeoning capabilities and financial integrity, which helps you shape the perception that investors and the public have of your business.
Requirements to set up an exempt private company in Singapore
To register an exempt private company in Singapore, founders must satisfy both the EPC-specific ownership conditions and the general incorporation requirements for a local company under ACRA.
| Key requirement | Specific requirements | Practical note for founders |
| Company type | An exempt private company is a private company structure suitable for smaller, closely held businesses. ACRA states that an exempt private company may have 20 or fewer shareholders. | This structure is usually suitable for startups, SMEs, and founder-owned businesses that do not plan to bring in corporate shareholders at the early stage. |
| Shareholders | The company must have at least one shareholder, and an EPC is limited to a maximum of 20 shareholders. | Shareholders should be individuals. If the company plans to have a corporate shareholder, a standard private limited company may be more suitable. |
| Local director | Every Singapore company must have at least one director. The director must be ordinarily resident, at least 18 years old, mentally fit, and not disqualified from acting as a director. | Foreign founders can own the company, but they still need at least one Singapore-resident director to meet incorporation requirements. |
| Company secretary | A company secretary must be appointed within 6 months after successful registration. The secretary must be a real person, meet Singapore residency requirements, and cannot be the same person as the sole director. | This role is important for maintaining statutory registers, organising meetings, and reminding directors of annual filing deadlines. |
| Registered office address | The company must have a registered office address in Singapore. | The registered address is used for official correspondence and statutory records. It should be a valid Singapore address, not a P.O. Box. |
| Share capital | If the company type requires share capital, ACRA states that the company needs at least S$1 in share capital(4) to start. | Many founders begin with S$1 paid-up capital, then increase capital later when the business needs funding or banking support. |
| Company name | The company name must be chosen and reserved before registration. | The name should be unique, not misleading, and suitable for approval. Most EPCs use “Pte. Ltd.” as the company suffix. |
| Company constitution | A company constitution is required as part of the incorporation process. | The constitution should define the company’s internal rules, including share rights, governance procedures, and decision-making powers. |
ACRA’s official guidance confirms that local companies are separate legal entities, shareholders have limited liability, and post-registration requirements include appointing a company secretary and auditor unless exempt, maintaining business registers, holding annual general meetings, and filing annual returns.
Is an EPC the right structure for your business?
An EPC is usually suitable for founders who want a simple, privately held Singapore company without corporate shareholders. It is less suitable for businesses planning institutional fundraising, corporate shareholding, or a more complex group structure.
| Scenario | EPC may be suitable | Consider another structure |
| Small founder-led business | Yes, especially where all shareholders are individuals | Not necessary if you expect corporate shareholders soon |
| Foreign founder setting up in Singapore | Yes, if local director and compliance requirements are met | Consider advisory support for residency, banking, and tax setup |
| Startup seeking venture capital | Possible at early stage | A standard private company structure may be more flexible for corporate investors |
| Holding or investment company | Possible legally, but tax exemption may be limited | Tax advice is important because investment holding companies do not qualify for the startup tax exemption |
| Business with more than 20 shareholders | No | Consider a private company limited by shares |
How to register an exempt private company in Singapore
Registering an exempt private company in Singapore involves more than submitting an incorporation form.
Founders must first secure an approved company name, prepare the required company and shareholder details, file the application through ACRA’s BizFile system, and complete key post-incorporation steps after approval.
Each step helps ensure the company is properly registered, assigned its Unique Entity Number (UEN), and ready for banking, tax, and ongoing compliance obligations.
Step 1. Choose and reserve a company name
The company name should be unique, available, and suitable for approval. Most EPCs use “Pte. Ltd.” as the company suffix because the EPC is still a private company limited by shares.
Step 2. Prepare incorporation details
Before filing, prepare the company’s registered office address, financial year end, business activities, shareholder details, director details, company secretary details if available, and share capital structure.
Step 3. Submit the incorporation application
The application is filed through ACRA’s BizFile system. ACRA’s company registration process includes entering company details, adding position holders and shareholders, adding controller information, adding share capital details, allotting shares, submitting the constitution, and completing final review and payment.
Step 4. Receive the UEN and incorporation confirmation
Once approved, the company receives a Unique Entity Number (UEN), which serves as its official identification number for government, banking, tax, and business dealings.
Step 5. Complete post-incorporation setup
After incorporation, the company should issue shares, maintain statutory registers, appoint a company secretary if not already appointed, set up accounting records, and open a business bank account.
Things to do after incorporating a Singapore exempt private company
Once an exempt private company in Singapore has been successfully incorporated in Singapore, business owners must comply with several statutory obligations to ensure proper governance and regulatory compliance.
These requirements are set out under the Companies Act and are designed to promote transparency, accountability, and efficient business conduct. Below are the key post-incorporation obligations that every EPC should be aware of.
Apply to the annual general meeting (AGM)
An Annual General Meeting (AGM) is a statutory requirement under the Companies Act unless an exemption applies. For most Exempt Private Companies (EPCs), the first AGM must be held within 6 months after the end of the financial year end (FYE).
The purpose of the AGM is to provide transparency to shareholders by presenting the company’s financial statements, which typically include:
- The Profit and Loss account;
- Balance Sheet;
- Statement of changes in equity;
- Cash flow statement;
- Notes to the financial statements.
In practice, companies are not required to gather shareholders for this meeting physically. The AGM can be conducted through written resolutions or electronic document circulation, provided that all shareholders have the opportunity to review and consent.
During an AGM in Singapore, shareholders may also approve audited or unaudited financial statements, declare dividends, re-appoint directors and officers, and authorise directors’ remuneration.
Filing annual returns
Once incorporated, companies in Singapore are subject to ongoing compliance obligations, one of the most important being the filing of annual returns.
This process ensures that the Accounting and Corporate Regulatory Authority (ACRA) maintains an accurate and transparent record of the company’s particulars, including details of directors and shareholders, registered address, and financial statements.
Under Section 197 of the Companies Act(5) , companies must file their annual returns electronically through ACRA’s BizFile+ portal within the prescribed deadlines:
- Non-listed companies: within 7 months after the Financial Year End (FYE).
- Listed companies: within 5 months after the FYE.
It is important to note that even EPCs that qualify for audit exemptions remain obligated to submit their annual returns. Failure to do so may result in late lodgment penalties and, in more serious cases, enforcement action against directors. Ensuring timely and accurate filing is therefore a key responsibility in maintaining compliance.
Audit exemptions
Singapore’s corporate framework provides certain audit exemptions to reduce the regulatory burden on smaller companies, including Exempt Private Companies (EPCs). These exemptions allow qualifying companies to avoid the cost and administrative effort of statutory audits while still maintaining proper financial reporting practices.
Under the Companies Act, an EPC may be exempted from audit requirements if it qualifies as a “small company.” To meet this definition, the company must satisfy at least two of the following three criteria for the immediate past two consecutive financial years:
- Total annual revenue of not more than SG$10 million;
- Total assets of not more than SG$10 million;
- No more than 50 employees.
Despite being exempted from audits, EPCs are still required to prepare accurate financial statements in compliance with the Singapore Financial Reporting Standards (SFRS).
These records may be requested by the Accounting and Corporate Regulatory Authority (ACRA) or the Inland Revenue Authority of Singapore (IRAS) when necessary. Non-compliance with record-keeping obligations can result in penalties and undermine corporate transparency.
Disclosure of EPC’s UEN
Every company incorporated in Singapore is issued a Unique Entity Number (UEN) by the Accounting and Corporate Regulatory Authority (ACRA), and an exempt private company is no exception.
The UEN serves as the official identification number of the company in its dealings with government agencies, banks, and business partners, helping to streamline regulatory and administrative processes.
Under Singapore law, the UEN must be clearly displayed on all official company documents and communications, including invoices, contracts, correspondence, websites, and letterheads. Proper disclosure ensures transparency, allows stakeholders to verify the company’s legal standing, and reduces the risk of fraud.
Failure to comply with these requirements may result in penalties and negatively affect the company’s compliance status. EPCs should therefore ensure that their UEN is consistently presented on all official documents and digital platforms from the time of incorporation.
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What is the difference between Exempt private company vs. Private limited company?
An exempt private company (EPC) is not a separate structure from a private limited company in Singapore, but a specific type of private limited company with stricter ownership limits. An EPC can have up to 20 shareholders, all of whom must be individuals, while a standard private limited company can have up to 50 shareholders and may include corporate shareholders.
The main differences lie in shareholder eligibility, ownership flexibility, financial statement filing, and audit exemption treatment. For small founder-led businesses, an EPC may offer a simpler structure. For companies planning corporate investment, group ownership, or a larger shareholder base, a standard private limited company is usually more flexible.
The comparison below summarises the main distinctions between EPC and Ptd. Lte.:
| Criteria | Exempt private company (EPC) | Private Limited Company (Ptd. Lte.) |
| Shareholders | Maximum of 20 shareholders, all must be individuals. | Maximum of 50 shareholders, may include corporate entities. |
| Ownership structure | Restricted to natural persons only. | Allows both individuals and corporate shareholders. |
| Audit requirement | Eligible for audit exemption if qualifying as a small company. | Generally subject to audit, unless qualifying as a small company. |
| Annual filing | Must file annual returns with ACRA, may follow simplified rules. | Must file annual returns with ACRA, often with stricter requirements. |
| Transfer of shares | Transferable but may be limited by the company’s constitution. | Transferable, subject to provisions in the company’s constitution. |
| Regulatory burden | Typically lighter due to exemptions available. | Typically heavier due to broader obligations. |
Set up your Singapore company quickly with BBCIncorp
Setting up an exempt private company in Singapore can be efficient when the ownership structure, local director requirement, company secretary appointment, and post-incorporation compliance are handled correctly from the beginning.
BBCIncorp provides end-to-end Singapore company formation services, helping foreign founders and SMEs register their company while staying aligned with ACRA requirements and ongoing compliance duties. With BBCIncorp, you can streamline the setup process through:
- Company incorporation support, from name reservation and document preparation to registration submission with ACRA
- Local director and company secretary solutions to help meet Singapore’s statutory requirements from day one
- Registered office address and statutory compliance support for maintaining proper company records after incorporation
- Corporate bank account opening assistance, including KYC preparation and onboarding guidance
- Accounting, tax, and annual filing support to help your EPC remain compliant after registration
Beyond incorporation, BBCIncorp also supports founders with cross-border advisory, corporate restructuring, and long-term compliance planning. This makes it easier for foreign entrepreneurs to focus on business growth while ensuring their Singapore company is set up on a proper legal and operational foundation.
Conclusion
An exempt private company Singapore structure is a practical option for startups, SMEs, and foreign founders who want a closely held private company with limited liability and simpler ownership. Its main advantages include individual shareholder control, potential tax exemption, and lighter filing treatment for solvent EPCs.
Before choosing this structure, founders should review shareholder plans, tax eligibility, audit exemption status, financial statement filing obligations, and long-term fundraising needs. A well-planned setup can reduce compliance risk while keeping the company ready for growth.
References:
- ACRA – Choosing a company type: https://www.acra.gov.sg/register/business/registering-different-business-structures/local-company/choosing-a-company-type/
- ACRA – Audit exemptions: Small company concept: https://www.acra.gov.sg/manage/companies/legal-requirements-common-offences/preparing-financial-statements/audit-exemptions/
- IRAS – Corporate income tax rate, rebates and tax exemption schemes : https://www.iras.gov.sg/taxes/corporate-income-tax/basics-of-corporate-income-tax/corporate-income-tax-rate-rebates-and-tax-exemption-schemes
- ACRA – Deciding on share capital & share type: https://www.acra.gov.sg/register/business/registering-different-business-structures/local-company/deciding-on-share-capital-share-types/
- Section 197 of the Companies Act: https://sso.agc.gov.sg/Act/CoA1967?ProvIds=pr197-,pr201-
Frequently Asked Questions
What are the common challenges of Exempt Private Companies?
Like many business structures, Exempt private companies (EPCs) in Singapore face specific challenges that influence their performance and long-term development:
- Limited access to funding: Difficulty in securing financing can restrict opportunities for expansion.
- Maintaining accurate financial records: Limited resources make it challenging to keep accounts up to date, but utilising accounting software can streamline bookkeeping processes, improve accuracy, and reduce administrative workload.
- High operational costs: Rising overheads often place a financial burden on smaller companies.
- Strong market competition: Competing in saturated industries can make it challenging to sustain profitability.
Are Exempt Private Companies required to be audited?
The obligation to undergo an audit does not apply automatically to every EPC in Singapore. Instead, it depends on whether the company qualifies as a “small company” under the Companies Act. To be regarded as a small company, it must meet at least two of the following three criteria for the two most recent consecutive financial years:
- Annual revenue does not exceed SG$10 million;
- Total assets do not exceed SG$10 million;
- The company has no more than 50 employees.
Companies that satisfy these thresholds may be exempted from statutory audit requirements. Those that do not qualify, however, must appoint auditors and ensure that their financial statements are properly reviewed and filed.
Are Exempt Private Companies permitted to offer loans to their directors or connected companies?
Under Singapore company law, Exempt Private Companies are permitted, in certain circumstances, to extend loans to their directors or to entities connected with them. Any loan arrangement must be properly disclosed to shareholders or the board, structured on fair and reasonable terms, and must not expose the company to undue financial risk.
In many cases, prior approval at a general meeting is also required before the loan can proceed.
Does an EPC need to file annual returns?
Yes. All live Singapore companies must file annual returns with ACRA each year. This applies even if the company is inactive, dormant, or exempt from filing financial statements.
Can foreigners own an exempt private company in Singapore?
Yes. Foreign individuals may own an EPC in Singapore. However, the company must still appoint at least one director who satisfies Singapore’s local residency requirements and must comply with ACRA and IRAS obligations.
What is the difference between a solvent and insolvent exempt private company in Singapore?
A solvent exempt private company can meet its debts when they fall due, so it generally does not need to file financial statements with ACRA, but it must make an online solvency declaration when filing its annual return. An insolvent exempt private company cannot meet its debts when due and must file financial statements with ACRA in the required format.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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