Guide to Singapore Company Limited by Guarantee: What You Need to Know

A Company Limited by Guarantee (CLG) is a unique type of business structure in Singapore, commonly used for non-profit organizations, charities, and professional associations. This structure allows organizations to operate with limited liability while focusing on advancing specific objectives rather than generating profits. If you are considering forming a CLG, this guide will provide you with all the essential information you need, including the benefits, registration process, and compliance requirements.

What is a Company Limited by Guarantee (CLG)?

A Company Limited by Guarantee (CLG) is a business entity that does not have share capital or shareholders. Instead, it is owned by members who guarantee to contribute a fixed amount (typically nominal) to the company's assets in the event of winding up. CLGs are often established for non-profit purposes, such as:

1. Charities and Foundations: Supporting social, cultural, or community causes.
2. Professional Associations: Representing industries or professions.
3. Clubs and Societies: Operating for non-commercial activities.

Key Features of a CLG

1. Limited Liability

• Members' liability is limited to the amount they have guaranteed, typically a nominal sum.

2. Non-Profit Nature

• Profits, if any, are reinvested into the company's objectives and not distributed to members.

3. No Shareholders

• Ownership lies with members, not shareholders, as there is no share capital.

4. Public Accountability

• CLGs must comply with stricter reporting standards, especially if they are registered as charities.

Benefits of a CLG

1. Ideal for Non-Profit Activities

• CLGs are designed to support non-commercial objectives, making them the ideal structure for charities and associations.

2. Tax Exemptions

• CLGs registered as charities may qualify for tax exemptions under Singapore's Charities Act.

3. Perpetual Succession

• The company continues to exist regardless of changes in membership.

4. Credibility and Trust

• Operating as a registered CLG enhances credibility, especially when soliciting donations or grants.

How to Register a CLG in Singapore

Step 1: Define Your Objectives

• Ensure your organization's goals align with the purposes allowed for a CLG, such as charitable, educational, or community development objectives.

Step 2: Prepare Incorporation Documents

• Constitution: Clearly outline the company's objectives, membership structure, and governance.
• Details of Members and Directors: Include personal details of at least one member and one director who is a Singapore resident.

Step 3: Choose a Name

• The company name must end with “Limited” or “Ltd” to indicate limited liability.
• Check name availability and reserve the name via ACRA's BizFile+ portal.

Step 4: File Incorporation Application

• Submit the incorporation application via BizFile+, including:
  • Approved company name.
  • Constitution document.
  • Particulars of members, directors, and the company secretary.

Step 5: Obtain Approval

• Once approved, you will receive a Certificate of Incorporation from ACRA.

Compliance Requirements for a CLG

1. Annual General Meeting (AGM)

• CLGs must hold an AGM to present financial statements and other reports to members.

2. Filing Annual Returns

• File annual returns with ACRA within 7 months after the financial year-end.

3. Financial Reporting

• Prepare and file financial statements in compliance with Singapore Financial Reporting Standards (SFRS).

4. Maintaining Registers

• Maintain a register of members, directors, and any significant controllers.

5. Compliance with Charities Act

• If registered as a charity, comply with additional regulations under the Charities Act.

Common Mistakes to Avoid

1. Unclear Objectives:
   • Ensure your objectives align with the purposes allowed for a CLG.
2. Non-Compliance with Reporting Requirements:
   • Missing deadlines for filing returns or holding AGMs can result in penalties.
3. Inadequate Governance:
   • Ensure proper governance and management to maintain credibility and trust.

How Apexia Corporate Advisory Can Help

Establishing and managing a CLG requires careful planning and strict compliance with regulatory standards. At Apexia Corporate Advisory, we offer:

1. Incorporation Services

• End-to-end support for registering your CLG with ACRA.

2. Constitution Drafting

• Prepare a tailored constitution that aligns with your objectives.

3. Compliance Management

• Assist with filing annual returns, preparing financial statements, and meeting AGM requirements.

4. Charity Registration

• Support your application to register as a charity under the Charities Act.

5. Governance Advisory

• Provide guidance on governance best practices to enhance trust and operational efficiency.

Conclusion

A Company Limited by Guarantee is an excellent structure for organizations focusing on non-profit objectives in Singapore. By ensuring compliance and proper governance, your CLG can effectively achieve its goals while maintaining credibility. Need help setting up or managing a CLG? Contact us today for expert advice and tailored solutions!