Liquidation Advisor Guide - Types of Business Entities in Singapore
The closing, liquidation and winding up process for businesses and companies differ a lot depending too on the type of setup of the business entity. The information in this Liquidation Advisor Guide will help you understand the types of liquidation and winding up services that are applicable in Singapore for different types of businesses and companies, ensuring compliance with the relevant legal frameworks.
Here’s an overview of the primary business entities in Singapore:
- Description: A business owned and run by a single individual. It is the simplest form of business entity.
- Characteristics:
- No legal distinction between the owner and the business.
- Unlimited liability for the owner.
- Simple to set up and maintain.
- Liquidation Considerations:
- The owner is personally responsible for all debts and obligations.
- Liquidation process is straightforward, involving the cessation of business operations and settling of debts. All liabilities are typically subsumed by the owner of the sole proprietorship, whether a corporate or individual.
- Description: A simple business owned by two or more individuals.
- Characteristics:
- Very similar and simple in structure as a sole proprietorship
- Shared responsibilities and profits among partners.
- Unlimited liability for partners.
- Requires a partnership agreement.
- Liquidation Considerations:
- Partners are jointly and severally liable for debts.
- Liquidation involves distributing assets and settling liabilities as per the partnership agreement. All liabilities are typically subsumed by the partners, whether a corporate or individual.
- The general partner potentially subsumes all the liabilities of the liquidating entity.
- Description: Combines the features of a partnership and a private limited company.
- Characteristics:
- Separate legal entity from its partners.
- Limited liability for partners.
- Partners can manage the business directly.
- Liquidation Considerations:
- LLP can be wound up voluntarily or by a court order.
- Liquidation involves paying off debts and distributing remaining assets to partners.
- Description: A separate legal entity from its shareholders.
- Characteristics:
- Limited liability for shareholders.
- Can have up to 50 shareholders.
- Subject to stricter regulatory requirements.
- Liquidation Considerations:
- Can be voluntarily or compulsorily wound up.
- Singapore licensed insolvency practitioners are usually required for the liquidation process.
- Involves appointing a liquidator to manage asset distribution and debt settlement.
- Description: A company that can offer shares to the public.
- Characteristics:
- Separate legal entity.
- Limited liability for shareholders.
- Subject to rigorous regulatory and reporting requirements.
- Liquidation Considerations:
- More complex liquidation process involving creditors and shareholders.
- Requires the appointment of a licensed liquidator.
- Can be voluntarily or compulsorily wound up.
6. Variable Capital Company (VCC)
- Description: Introduced in Singapore in 2020, the Variable Capital Company (VCC) is a corporate structure specifically designed for investment funds.
- Characteristics:
- Allows for the segregation of assets and liabilities between sub-funds, offering flexibility and risk management for investors.
- Can be set up as either a standalone entity or an umbrella entity with multiple sub-funds.
- Limited liability structure, similar to a private limited company.
- Liquidation Considerations:
- Allows for the segregation of assets and liabilities between sub-funds, offering flexibility and risk management for investors.
- Can be set up as either a standalone entity or an umbrella entity with multiple sub-funds.
- VCCs can be wound up voluntarily or by court order.
- Liquidation involves the distribution of assets and settlement of liabilities, which may vary depending on the structure and assets held within each sub-fund.
- The process typically involves appointing a liquidator to oversee the winding up and distribution of assets to investors.
When seeking liquidation services in Singapore, it’s essential to choose a Singapore licensed insolvency practitioner. They have the expertise to navigate the complexities of different business entities and ensure a smooth and compliant liquidation process.
Understanding these entities will aid in providing efficient and effective liquidation services, ensuring compliance with Singapore’s legal requirements.
Guardian Advisory - Singapore Insolvency Practitioner
Your trusted partner in restructuring and liquidation services in Singapore. We provide restructuring advisory services and are approved liquidators in Singapore.