Due to a private limited company’s own separate legal identity, having your company registered under this entity brings your business more benefits especially for obtaining an SME loan. In our previous article, we shared the five reasons why a private limited company is the preferable option compared to a sole proprietorship or limited liability partnership (LLP). Now that you are here, keep on reading to know how to effectively convert your sole proprietorship or limited liability partnership (LLP) to a Singapore private limited company or a Pte. Ltd. corporation.
In Singapore, changing your sole proprietorship or limited liability partnership LLP into a private limited company might not be very straightforward, but is rather simple from a legal perspective. Most of the complexity comes from problems related to moving business operations from a sole proprietorship or LLP to a Pte Ltd Company.
In short, you will need to incorporate a new private limited company to transfer all the business matters to the newly incorporated entity and close your sole proprietorship or LLP.
As ACRA doesn’t allow conversion of one company entity to another entity, you would have to incorporate a new Pte Ltd company. The company name must first be approved. In Singapore, it is forbidden to use the same company name. Nevertheless, you must file a No Objection Letter to ACRA outlining your justification if you still want to use the same business name. You might need to provide evidence that the sole proprietorship or LLP and Pte Ltd have the same owner.
This stage is probably the most complex process for many as there are 7 business matters that need to be transferred from the old company to the new one. Refer to the checklist below as a guide to convert your sole proprietorship or LLP to a Pte Ltd company:
The Pte Ltd business may convert the net assets it acquired into paid-up capital. As a result, a resolution and an agreement are required. However, prior to transferring your assets, you must settle any unpaid debts with your creditors.
Bank accounts under the sole proprietorship or LLP entity must be closed and you will need to open a new account under the Pte Ltd company. Additionally, it is important to let clients and other important stakeholders know about this change and request for them to write all checks out to the new Pte Ltd company as the old one has shut down from doing business.
If the business rents an office space or a property, you need to terminate the lease under the sole proprietorship or LLP and sign a new lease agreement under the Pte Ltd company.
Similar to the lease agreements, you will need to terminate any existing business agreements/contracts under the sole proprietorship or LLP and sign a new agreement/contract under the new Pte Ltd entity.
In most cases, permits and licenses cannot be transferred. Hence, the new Pte Ltd business must apply for a new set of all of the required permits and licenses.
On the day the Pte is incorporated, cancel all GST registrations for the previous sole proprietorship or LLP businesses. You get the new business GST in an instance to resume your company operations.
For CPF and MOM, you can transfer employees’ accounts by completing and submitting the necessary paperwork to start the process.
The previous sole proprietorship or LLP must be closed within three months after the new Pte Ltd company is incorporated. To close the old entity, simply send a Notice of Cessation or "NOC” to ACRA to confirm the company closure.
For an LLP, once you have successfully transferred all matters of the LLP business to the Pte Ltd company, you can choose to wind up or strike off the LLP. Do note that striking off is a less complicated procedure compared to winding up. To strike off your LLP:
Deciding to convert your sole proprietorship or limited liability partnership (LLP) to a Singapore private limited company or a Pte. Ltd. corporation, is a smart move. Make an appointment to speak with us and we will be happy to assist you with the right legal referral for a seamless conversion. If you are unsure about what to do, it is generally advisable to get guidance from a professional or an expert.
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Jennifer loves helping SMEs in their business growth journey. She is also an epicurean and has perpetual wanderlust. During the weekend, she weaves poems out of thin air and buries herself in books.
