1. A Pte Ltd company in Singapore is required to have a certain share capital amount at the time of its incorporation. Share capital refers to the amount of capital or funds that the company requires to start its business activities. It can raise this funds by issuing shares to investors. The minimum issued share capital in Singapore is $1.
2. By paying for the shares, an investor is buying into ownership and become the shareholder of a company. A shareholder can be an individual, a company or a limited liability partnership. In exchange for their financial contribution towards the company’s share capital, shares will be issued by the company to its shareholders.
3. Share capital can be issued with or without full payment from shareholders, i.e. a share may be fully or partially paid up. Fully paid up capital refers to the amount shareholders have paid to the company for their shares, whereas partially paid up means there are still amount outstanding to be received from the shareholders.
4. For example, Company X issues 100,000 shares at $1 each to its shareholders. This brings the issued share capital to $100,000. However, the shareholders have only paid up 50% of their shareholding, which means that the paid up capital is $50,000 and the unpaid share capital is $50,000. If the shareholders pay the remainder 50% of their shareholding, then the company’s paid up capital will become $100,000 and the unpaid share capital will be $0.
5. There are different type of shares that a company can issue to its shareholders. Ordinary shares are the most common type of shares. Ordinary shares carry voting rights and shareholders will receive dividends if the company is profitable and available retained earnings.
6. Aside from the share capital being used to fund its business activities, it also demonstrate some other functions too. For example, banks and creditors use the share capital to assess the creditworthiness of a company. Generally, a larger share capital can have the effect of making a company appear more financially secure.
7. The share capital can be increase when required. This is a common way for companies to raise capital for new investments, acquisitions, or to rebalance their financial structure. To increase share capital in a company, it is usually necessary to issue new shares. This process is known as an ordinary allotment of shares.
8. Share capital is an essential part of a company’s equity. It provides financial stability where the company can be sure it has sufficient funds to run its operations. A sufficient amount of share capital also enhance business credibility. Just imagine which one is more credible in the eyes of the public – Company A that has a share capital of $2 and Company B with share capital of $10,000.
9. If you need help to know how much share capital that you should set up for for your business, please come and talk to us. We at PL Biz Consulting Pte Ltd have the expertise and dedicated experts to guide and assist you.
