Running a Singapore company often involves adjusting your shareholding structure. Whether it’s to attract new investors, part with a co-founder, or support expansion, share capital changes are a common requirement.

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

Here’s the breakdown.

Defining Share Capital

Share capital is the total value of shares issued to a company’s shareholders. In Singapore, ordinary shares are typical, though preference shares are also used.

All private limited companies must issue at least one share at incorporation. Afterward, you can issue more shares or reallocate existing ones, with all changes recorded with ACRA (Accounting and Corporate Regulatory Authority).

Why Change Share Capital?

Businesses adjust share capital for various reasons:

• Raising capital from investors
• Adding new shareholders or partners
• Enabling a shareholder’s exit
• Realigning shares for tax or compliance purposes
• Offering equity as employee rewards

The approach—issuance or transfer—hinges on your goal.

Issuing New Shares

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

Steps:

1. Review your constitution: Does it allow new share issuance? Any restrictions? Most Singapore companies follow the Model Constitution, permitting issuance with shareholder approval.
2. Obtain approvals:
   • Pass a board resolution to propose the issuance.
   • If required, hold an extraordinary general meeting (EGM) for shareholder consent.
3. Issue shares:
   • Set the number of shares and issue price.
   • Collect payment, if applicable.
4. Update records:
   • Update 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, but you must report the amount paid for new shares.
• Unauthorized issuance risks legal disputes or reversal.

Transferring Shares

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

Steps:

1. Check restrictions:
   • Pre-emption rights may give existing shareholders priority.
   • Review your constitution or shareholders’ agreement.
2. Prepare documents:
   • Complete a share transfer form.
   • Setouis the transfer price, if applicable.
   • Stamp the form, if needed.
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 endorse the transfer.
5. Update records:
   • Revise the register of members.
   • Issue a new share certificate.
   • Cancel the old one.
6. File with ACRA via BizFile+.

The Company Secretary’s Role

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

• Compliance with the Companies Act.
• Preparing resolutions and EGM notices.
• Filing with ACRA and IRAS.
• Updating the share register and issuing certificates.

Without an in-house secretary, corporate secretarial services are essential to avoid penalties, delays, or disputes.

Issuing vs. Transferring: Quick Comparison

Additional Considerations

1. Timing: ACRA’s filing deadlines are strict. Late filings may result in fines or director liability.
2. Valuation: Justify share values for transfers or investor deals to satisfy IRAS.
3. Tax: IRAS may scrutinize transfers for undervaluation or gains tax. Consult a tax advisor.
4. Records: Maintain clear documentation for audits or regulatory reviews.

Closing Word

Adjusting your share structure in Singapore is straightforward with diligence. Ensure:

• Compliance with your constitution.
• Proper approvals.
• Accurate, timely filings.
• Stamp duty payment, if required.
• Updated records.

Your company secretary or corporate secretarial services provider ensures compliance and protects against risks. In shareholding, precise documentation is as critical as the deal.