Registering Non-profits, Trusts & Societies in Singapore

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Non-Profit Organisations (NPOs), also referred to as Voluntary Welfare Organisations (VWOs), are divided into 3 categories in Singapore: A Company Limited by Guarantee (CLG) under the Accounting and Corporate Regulatory Authority of Company (ACRA); or A Society under the Registry of Society (ROS); or A Charitable Trust under the Office of Commissioner of Charities (COC). Non-profits, trusts and societies are different types of legal entities that can be set up in Singapore for various purposes, such as charitable, social, religious, educational, cultural, or environmental causes. They are not driven by profit motives and they aim to benefit the public or a specific group of people. In this article, we will compare and contrast these three types of entities and provide a guide for someone who wants to open one in Singapore.

Non-profits

A non-profit organization (NPO) encompasses entities that reinvest their surplus income into fulfilling their objectives, rather than distributing it to members or shareholders. NPOs can choose to register as a public company limited by guarantee (CLG), a society, or a charitable trust, each offering unique benefits, characteristics, requirements, and drawbacks.

A public CLG operates without share capital or shareholders; instead, its members act as guarantors, agreeing to contribute a nominal amount (typically S$1) in the event of winding up. This structure is suitable for NPOs with large or complex operations that require a distinct legal identity. A CLG has the capacity to own property, enter into contracts, and apply for charity or Institution of a Public Character (IPC) status. It is regulated by the Accounting and Corporate Regulatory Authority (ACRA) and must comply with the Companies Act. Additionally, it must file annual returns, financial statements, and tax returns. Unless granted charity or IPC status, a CLG is subject to a 17% corporate tax rate; however, obtaining charity or IPC status entitles it to tax exemptions and deductions.

On the other hand, a society consists of at least 10 individuals who unite to pursue a common purpose that is lawful, ethical, and aligned with public policy. This organizational form is suitable for NPOs with straightforward or small-scale operations that do not necessitate a separate legal identity. Unlike a CLG, a society does not possess legal status and therefore cannot own property or initiate legal proceedings in its name. Instead, these actions are undertaken by individual members or office-bearers of the society. A society can apply for charity or IPC status, and it is regulated by the Registry of Societies (ROS). Compliance entails adherence to the Societies Act, filing of annual returns and financial statements with ROS, and submission of tax returns to the Inland Revenue Authority of Singapore (IRAS). Income tax is imposed at the prevailing individual rates unless charity or IPC status is granted, which affords the society tax exemptions and deductions.

To register a non-profit organisation in Singapore, you will need to follow these steps:

Choose a suitable type of entity

Select the most appropriate entity type (Company Limited by Guarantee, Society, or Charitable Trust) based on your goals, activities, size, organizational structure, governance, funding sources, and tax considerations.

Choose a unique and appropriate name

Select a distinctive and fitting name for your organization that aligns with its mission and avoids infringement on trademarks or existing names.

Draft a constitution

Prepare a constitution or governing document outlining the rules and regulations of your organization, including its objectives, membership criteria, composition of the management committee, powers and duties of office-bearers, meeting procedures, financial policies, dissolution clauses, and other relevant details.

Apply for registration

Submit the necessary documents and fees online or in person to register your organization with the relevant authority (ACRA for Company Limited by Guarantee, ROS for Society, COC for Charitable Trust).

Apply for charity

If your organization meets the criteria and you desire to benefit from tax advantages and public recognition, apply for charity or IPC status with COC.

Apply for other relevant licenses

If your organization conducts activities that require licenses or permits from other government agencies, such as fundraising, education, healthcare, or social services, apply for the relevant licenses or permits.

Maintain proper records and accounts

Ensure that your organization maintains accurate records and accounts, and submits annual returns, financial statements, and tax returns to the relevant authorities in a timely manner.

Comply with the laws and regulations

Adhere to the laws and regulations governing your organization and follow best practices in governance and accountability.

Trusts

A trust is a fiduciary arrangement that authorises a trustee to hold assets on behalf of a beneficiary or beneficiaries. The beneficiary has an equitable interest in the trust assets and the trustee has the responsibility to manage the trust assets for the beneficiary’s benefit. A trust can be created for various purposes, such as financial management, estate preservation and management, retirement planning, benefits of the employee, protection of asset, investment, corporate usage, charities, and tax savings.

The main benefits of a trust are wealth control and preservation of assets. For wealth control, a settlor can specify the terms and conditions of the trust, deciding when and to whom the trust assets will be distributed. This is especially important for a settlor who wants to provide for his or her family members or beneficiaries in a certain way. For asset preservation, a trust provides better protection of one’s assets from creditors or lawsuits. As mentioned above, trust assets are not claimable by the creditors in the event where the settlor is bankrupt.

The main disadvantages of a trust are cost and complexity. Setting up and maintaining a trust can be expensive and time-consuming, as it involves legal fees, professional fees, administrative fees, and taxes. A trust also requires a high level of compliance and reporting, as it is subject to various laws and regulations depending on the type and purpose of the trust. A trust also involves a loss of control and ownership over one’s assets, as they are transferred to the trustee who has the legal title and authority over them.

To set up a trust in Singapore, you will need to follow these steps:

Choose a suitable type of trust

Select an appropriate trust type (such as revocable or irrevocable, fixed or discretionary, express or implied) based on your objectives, requirements, preferences, and tax considerations.

Choose a reliable and competent trustee

Select a trustworthy and capable trustee who will act in the best interests of the beneficiary or beneficiaries. You can appoint an individual, a corporate trustee (such as a trust company), or both.

Choose one or more beneficiaries

Select one or more beneficiaries who will receive benefits from the trust assets. You can designate specific individuals or groups (such as family members or charities) or leave the decision to the trustee’s discretion.

Choose a reliable and competent trustee

Select one or more beneficiaries to receive benefits from the trust assets. You can specify individuals or groups (such as family members or charities) or allow the trustee to use their discretion.

Draft a trust deed

Prepare a trust deed outlining the terms and conditions of the trust, including its objectives, duration, trustee’s powers and duties, beneficiary or beneficiaries’ rights and obligations, distribution provisions, revocation terms, and other relevant details.

Transfer the assets

Transfer the assets you wish to place in the trust to the trustee. This can include cash, property, shares, bonds, insurance policies, and other assets.

Register the trust

If the trust is a tax resident in Singapore or earns income from Singapore sources, register it with IRAS.

Maintain proper records and accounts

Keep accurate records and accounts for the trust and, if necessary, submit annual tax returns to IRAS.

Societies

A society is a type of organisation that consists of at least 10 persons who agree to pursue a common purpose that is not illegal, immoral, or contrary to public policy. A society can be registered under the law as a non-profit organisation if it meets the criteria for charity or IPC status. A society can also be registered under other laws if it falls under certain categories, such as trade unions, co-operative societies, mutual benefit organisations, etc.

The main benefits of a society are low cost and simplicity of registration and operation. A society does not require any share capital or guarantors and has minimal compliance requirements compared to other types of entities. A society also has full control and autonomy over its activities and decisions.

The main disadvantages of a society are unlimited liability for members and lack of legal status. A society does not have any legal personality and cannot own property, enter into contracts, sue or be sued in its own name. Instead, these actions are done by the individual members or office-bearers who are personally liable for all the debts and obligations of the society. A society also has difficulty in raising funds and expanding its activities due to its limited credibility and reputation.

To set up a Society in Singapore, you will need to follow these steps:

Choose a unique and appropriate name

Select a distinctive and fitting name for your organization that mirrors its mission and avoids trademark or existing name conflicts.

Draft a constitution

Create a constitution outlining the rules and regulations of your society, including its goals, membership requirements, committee structure, responsibilities of office-bearers, meeting protocols, financial procedures, dissolution provisions, and other relevant aspects.

Includes all government fees & charges
Name application & reservation
12 months Company Secretary
Founders Board of Directors Resolution
Model Constitution & Bizfile
Self-inking Company Stamp