Opening a Company Limited by Guarantee / Non-profit Organization in Singapore.
This page covers information on opening a company Limited by Guarantee (CLG) and Non-Profit Organization (NPO) in Singapore, including the basics of the registration process, fees, annual filing requirements, and tax requirements. Contact us at Hub for additional information on Corporate services in Singapore.
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What is a Company Limited by Guarantee (CLG)?
A Company Limited by Guarantee (CLG) is a type of Non-Profit Organization that uses to carry out non-profit making activities such as charity work, education, research, or sports. It is a legal form of organization that is suitable for non-profit activities in Singapore. It does not issue shares and its members do not own any stake in the company. Instead, the members agree to pay a certain amount to the company’s creditors if the company is dissolved. A CLG is suitable for Non-Profit Organizations that have large-scale or complex operations and require a separate legal identity.
Key Features.
- A Company Limited by Guarantee (CLG) is a type of company that does not have share capital or shareholders, but instead has members who act as guarantors and agree to contribute a nominal amount (usually S$1) in the event of winding up.
- The CLG can own property, enter into contracts, sue or be sued in its own name, and apply for charity or Institution of a Public Character (IPC) status if it meets the criteria.
- It does not have share capital and its members are not shareholders.
- They must register with the Accounting and Corporate Regulatory Authority (ACRA), which is the national regulator of business entities and public accountants in Singapore.
- CLGs do not permit providing profits or dividends to their members.
- CLGs do not require share capital. Instead, the liability of the company’s members is limited to the number of assets they commit.
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Tax Exemptions.
A CLG / NPO is liable to pay corporate tax at the prevailing rate of 17% on its income unless it qualifies for tax exemption. The organization can apply for a tax exemption if it meets certain criteria and obtains charity status from the authorities. To qualify for the tax exemption, the entity must meet the following conditions:
- It must register as a charity with the Commissioner of Charities (COC) or as an IPC with the relevant Sector Administrator (SA).
- It must have exclusively charitable objects that are beneficial to the community in Singapore as a whole, and not confined to sectional interests or groups.
- It must use its income and assets solely for its charitable purposes and not distribute any part of them to its members.
- It must comply with all the regulatory requirements imposed by the COC, SA, ACRA, and IRAS.
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Compliance Requirements .
- There should be at least three members on the governing board, two of whom should be Singaporean residents.
- The CLG must define its goals and purposes, including what the members want to accomplish with the organization.
- It must maintain a registered office address in Singapore where all official communications and notices can be sent.
- The Accounting and Corporate Regulatory Authority (ACRA) regulates a CLG, which must comply with the Companies Act and other relevant laws.
- A CLG is subject to corporate tax at 17%, unless it is granted charity or IPC status, which entitles it to tax exemptions and deductions.
- Within three months of incorporation, the organization must appoint a company auditor.
- Within six months of incorporation, the CLG must appoint a company secretary.
- Every year on December 15th, the entity should file the organizations tax returns.
- The corporate secretary must file annual returns with ACRA within 30 days of holding its annual general meeting (AGM).
