Running a company in Singapore often involves adjusting your shareholding structure. Whether it’s to attract new investors, part ways with a co-founder, or fund expansion, share capital changes are a key part of business growth.

The two main approaches are issuing new shares or transferring existing ones. Both require strict legal compliance, precise ACRA filings, and the expertise of your company secretary or corporate secretarial services provider.

Here’s a clear guide.

What Is Share Capital?

Share capital is the total value of shares issued by a company to its shareholders. In Singapore, ordinary shares are the most common, though preference shares are also an option.

Every private limited company must issue at least one share at incorporation. After that, you can issue additional shares or reallocate existing ones, with all changes reported to ACRA (Accounting and Corporate Regulatory Authority).

Why Revise Share Capital?

Businesses adjust their share structure for several reasons:

  • Raising funds from investors
  • Adding new shareholders or partners
  • Facilitating a shareholder’s exit
  • Reorganizing shares for tax or compliance purposes
  • Offering equity to reward employees

The method—issuance or transfer—depends on your goal.

Issuing New Shares

Issuing new shares involves creating additional shares to allocate, often for investment or services.

Steps:

  1. Check your constitution: Does it allow new share issuance? Any conditions? Most Singapore companies use the Model Constitution, permitting issuance with shareholder approval.
  2. Secure approvals:
    • Pass a board resolution to propose the issuance.
    • If required, hold an extraordinary general meeting (EGM) to obtain shareholder consent.
  3. Allocate shares:
    • Set the number of shares and issue price.
    • Collect payment, if applicable.
  4. Update records:
    • Revise the register of members.
    • Issue share certificates.
    • File a Return of Allotment of Shares (Form 11) with ACRA within 14 days.
  5. BizFile+ update (optional): Changes automatically reflect in your ACRA profile.

Notes:

  • Singapore has no minimum paid-up capital requirement, but you must declare the amount paid for new shares.
  • Unauthorized share issuance may lead to legal disputes or reversal.

Transferring Shares

Transferring shares means reassigning existing shares between shareholders, often during exits or restructurings.

Steps:

  1. Verify restrictions:
    • Pre-emption rights may give existing shareholders priority.
    • Review your constitution or shareholders’ agreement.
  2. Prepare documents:
    • Complete a share transfer form.
    • Determine the transfer price, if applicable.
    • Stamp the form, if required.
  3. Pay stamp duty:
    • Transfers incur a 0.2% duty on the higher of purchase price or market value.
    • File with IRAS within 14 days.
  4. Board approval:
    • Pass a resolution to approve the transfer.
  5. Update records:
    • Amend the register of members.
    • Issue a new share certificate to the transferee.
    • Cancel the old certificate.
  6. File with ACRA via BizFile+.

Role of the Company Secretary

Singapore law mandates appointing a company secretary within six months of incorporation. The company secretary or corporate secretarial services provider is essential for share capital changes, handling:

  • Compliance with the Companies Act.
  • Drafting resolutions and EGM notices.
  • Filing forms with ACRA and IRAS.
  • Maintaining the share register and issuing certificates.

Without an in-house secretary, corporate secretarial services are critical to avoid penalties, disputes, or compliance issues.

Issuing vs. Transferring: A Comparison

Action Issuing New Shares Transferring Shares
Creates new shares? Yes No
Involves payment? Usually Sometimes
Affects share capital? Yes No
Requires stamp duty? No Yes (IRAS)
Needs ACRA filing? Yes (Form 11) Yes (Transfer form)
Needs board approval? Yes Yes

Additional Considerations

  1. Timing: ACRA enforces strict filing deadlines. Missing them risks fines or director liability.
  2. Valuation: Share values must be justifiable for transfers or investor deals to satisfy IRAS.
  3. Tax: IRAS may review transfers for undervaluation or gains tax. Consult a tax advisor.
  4. Documentation: Maintain thorough records for audits or regulatory scrutiny.

Final Word

Revising your share structure in Singapore is manageable with careful execution. Ensure:

  • Your constitution permits the change.
  • Approvals are secured.
  • Filings are accurate and timely.
  • Stamp duty is paid, if applicable.
  • Records are updated.

Your company secretary or corporate secretarial services provider ensures compliance and protects your business. In shareholding, meticulous documentation is as critical as the transaction itself.