Share Capital/Paid-up Capital
In Singapore, the minimum share capital required in a company is S$1. In this article, we explore what share capital means and how it can affect how your company is run.
What is Share Capital?
Share Capital refers to the amount of money that has been invested into the company by the shareholders. The amount of money invested can be used as the company sees fit in its daily operation.
In Singapore, the minimum share capital required is S$1, but there is no maximum limit. However, do note that companies that have a share capital of more than S$500,000 will have join the Singapore Business Federation (SBF). Membership is mandatory and will incur an annual membership fee. Click here for more information on the SPF membership.
After the amount of share capital has been decided, the invested amount will need to be deposited into the company bank account for use by the company.
What is the difference between share capital and shares?
Share capital refers to the total amount of money that has been invested into the company by the shareholders. In Singapore, the minimum amount is S$1.
Shares refer to the percentage of ownership between the shareholders of the company. The percentage of shares need not be equivalent to the amount of share capital invested into the company by the shareholders.
For example, 2 shareholders can invest different amounts of share capital into the company, but based on their agreement, own the same amount of shares.
Another example: Shareholder A and Shareholder B can each invest S$20,000 in their company. However, it can be agreed by them that Shareholder A will hold 80% of the shares, while Shareholder B will hold 20% of the shares.
Can I just set my company’s share capital to S$1?
Yes, it is possible to set the share capital of the company to s$1, which is legal minimum set by ACRA for companies incorporated in Singapore.
However, do note that share capital is public information can be viewed by other individuals, companies, corporates or businesses. Thus, share capital may affect the impression of your company.
Can I change my share capital after Incorporation?
Yes, it is possible to increase or decrease the share capital of the company after it has been incorporated. However, there will be complicated procedures involved in order to prepare the necessary documents for filing to ACRA for the increase in share capital.
Thus, it is always advised for the company to decide on the share capital before the incorporation of the company.
Does this mean that I need to change share capital if I invest more money into my company in future?
No. Funds that are invested into the company can also be recorded as a loan to the company.
Loans to the company mean that this amount will have to returned eventually and will have to be recorded as a liability instead of an asset in the company’s accounts.
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