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Incorporating local pte ltd and paid-up capital

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catinheels
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Incorporating local pte ltd and paid-up capital

Postby catinheels » Thu, 24 Oct 2013 6:50 pm

Hello,

I just incorporated a private limited company in Singapore and I have stated in the M&AA the amount of capital to be i.e. SGD1,000. this approving process seems automatic and it was approved in few hours! Now what I want to know is the next step. My experience in incorporating a legal entity (in my home country ) tells me that the next step is to make a business bank account and inject the amount of the capital that I stated in the M&AA, correct? My question is how would ACRA know that I have injected the declared amount of capital into the business? What if I only inject SGD500? Do I have to report back to ACRA with the bank statement with SGD1,000 under name of business account within a few days? the reason I say this is in my country there is a process to 'capitalization' or'register the capital' the amount SGD1,000 as the initial capital/paid-in capital/common stock/preferred stock with Legal Bureau. but here in singapore, is there such thing???

thanks for reading and if anyone knows the answer, please let me know!

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Strong Eagle
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Postby Strong Eagle » Thu, 24 Oct 2013 11:02 pm

Do you have a locally resident director?

Your books need to show that shares in the amount of $1000 were purchased from the company and that the company received the funds.

Example:

Debit cash - $1000
Credit paid up capital - $1000

Credit cash - $1000
Debit payroll expense - $1000

In this case, you put $1000 of paid up capital in the bank then spent in on payroll expense. So, there is no requirement to have an initial cash amount in the bank, just the records to prove that a stock sale occurred.

Additionally, once the shares have been purchased, you must then go to the ACRA Bizfile website and update shareholder particulars indicating owners and the number of shares owned.

Most standard articles of incorporation authorize a certain number of Treasury shares. Not all of them need to be purchased. As a matter of fact, I don't know why you chose $1000. You can set up a company for $2 of paid up capital (maybe $1 these days), and still authorize another 100,000 Treasury shares for future investment.

One would only have much larger paid up capital in place if it would be helpful in convincing customers that your company has "girth" when they check your Bizfile records... as we did, with $200,000 of paid up capital.

Note: This is NOT the case with a company formed under the Entrepass. You must show $50,000 starting capital in the bank and you must show that 30 percent or more of the shares are owned by the Entrepass holder. Once demonstrated, of course, you can use the money.

catinheels
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Postby catinheels » Fri, 25 Oct 2013 11:21 am

Yes it has the Singapore resident director.

anyway, thank you, I get the picture.

>Additionally, once the shares have been purchased, you must then go to the ACRA Bizfile website and update shareholder particulars indicating owners and the number of shares owned.

I think this part - I already indicated in the bizfile system sgd1,000 has been paid-up even before making the bank account, I do not know if this is a mistake that needs correction as we are making the bank account now and trying to pay the capital. should i go back to the bizfile website and make the correction until the bank account is really approved and made and capital injected? After seeing your comment, I realised what I should have done is 1 per share, 1,000 shares have been issued, 0 has been paid-up. and then make the bank account and pay the capital SGD1,000 and go back to ACRA and make the cash amount paid has been paid-up and allotted to so and so.

In essence, what I want to know is that this paid-up capital information - where does this info get transferred to? I checked the IRAS and whatever the update I make, thru the Bizfile, will be reflected over on their database bi-weekly. Where else does it get reflected, for example, MOM?

1,000 is just an example and the actual amount is different.


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