Paid-Up Capital in Singapore: Legal Requirements and Why It Matters to Your Business

Published on
August 3, 2023
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Paid-Up Capital in Singapore: Legal Requirements and Why It Matters to Your Business
Understand paid-up capital in Singapore, its significance to your business and important legal requirements. Learn more.
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Let’s say you and your partner start an innovative IT business in Singapore called Technove, offering custom software solutions. The company starts with a combined investment of S$100,000 (S$40,000 from you and S$60,000 from your partner), establishing a modern office, hiring skilled developers, and obtaining necessary licenses. This initial investment forms the paid-up capital, enabling Technove to provide high-quality software services, expand offerings, and thrive in the competitive IT market.

But there's more—let’s explore the concept of paid-up capital in detail.

What Is Paid-up Capital?

Paid-up capital is the total amount of money you and other shareholders have invested in your company in exchange for the issued shares.

When you formed your company, you authorised a certain number of shares to be issued, and you and other shareholders invested capital to purchase these shares. The money collected from all of you for the issued shares forms the paid-up capital of your business.

In Singapore, every company is required to maintain a certain amount of registered paid-up capital. 

<div class="highlight-text"><p class="custom-p">Paid-up capital must be in cash — and it needs to be deposited into the company’s corporate bank account immediately upon incorporation.</p></div>

What Makes Paid-up Capital Crucial for Businesses?

Having enough paid-up capital is essential for your business for several reasons:

  • Financial Stability: It creates a solid financial foundation, helping your business withstand economic challenges and initial startup hurdles.
  • Credibility: It enhances your business's credibility and reputation in the market.
  • Operational Flexibility: You can efficiently manage day-to-day operations, invest in essential equipment, and recruit skilled talent.
  • Ability to Attract Investors: A well-capitalised business is more likely to attract external funding and investment, supporting your expansion plans and business development.
  • Dividend Distribution: It determines the share of profits distributed to shareholders as dividends, ensuring fair distribution based on their investment.
  • Borrowing Capacity: It enhances your business's creditworthiness, increasing the chances of obtaining favourable borrowing terms when seeking loans or credit.

How Is Paid-up Capital Different From Share Capital?

Companies can raise funds by selling their shares to investors. The share or authorised capital represents the total amount the company can raise by selling its shares.

Some shareholders pay the total share price immediately, while others still owe money for their shares. The portion already paid is 'paid-up capital,' while the money still owed is 'unpaid share capital.'

What Can You Use Your Paid-up Capital For?

It can facilitate business operations, provided there are no constitutional restrictions. It serves as an additional monetary source, eliminating the necessity for relying solely on corporate reserves. In times of financial challenges, the unused paid-up capital and other company assets can be utilised to repay creditors.

What Is the Minimum Amount of Paid-up Capital Needed in Singapore?

The minimum paid-up capital needed to register a company in Singapore is S$1 or its equivalent in any internationally accepted currency.

However, recent changes in regulations have removed the paid-up capital requirement for New EntrePass applicants, making it accessible for global startup talent.

It is important to note that companies in regulated industries might have higher minimum paid-up capital requirements; for instance, insurance companies need S$300,000, while telecom and travel agencies require S$100,000. Public accounting firms have a requirement of S$50,000.

Once your company is registered, you can increase the paid-up capital while following your company's rules and guidelines.

How to Increase the Paid-up Capital Requirement for Your Business in Singapore?

You can do so by: 

  1. Increasing shareholder’s contribution during company registration
  2. Allocating fresh shares to current stakeholders or prospective investors
  3. Adding retained profits over time
  4. Issuing bonus shares to existing shareholders
  5. Increasing through rights issues for existing shareholders
  6. Converting shareholders' loans into shares
  7. Mergers or acquisitions 

What Are the Legal Requirements for Paid-up Capital in Singapore?

General Requirements

  • Paid-up capital must be in cash—and it needs to be deposited into the company’s corporate bank account immediately upon incorporation.
  • Minimum paid-up capital must be contributed during company registration based on the industry. For instance, telecom service providers or travel agencies need a minimum paid-in capital of S$100,000 during licensing.
  • Accurate records of changes in paid-up capital must be maintained for regulatory purposes.
  • When applying for an Entrepreneur Pass via EntrePass, it is recommended to have a minimum paid-up capital of SGD $50,000 to improve the chances of approval.

Shareholder Requirements

  • A Singapore limited liability company must have at least one and not exceed 50 shareholders, individuals or private-owned companies, domestic or foreign.
  • Shareholders own the business through acquired shares and must manage paid-up capital prudently to maintain company credibility.
  • Issuing new shares may require necessary documents and shareholder consent through general meetings submitted to ACRA for updating the company profile.
  • Once paid-up capital is received, shareholders cannot withdraw their stake as it is used for business needs.

How Do You Deposit Your Paid-up Capital Into Your Aspire Account?

Follow these simple steps:

  1. Open an Aspire Account: Sign up for an Aspire account on their website or mobile app.
  2. Verify Your Identity and Business: Verify your identity and submit necessary business documents during the account opening process.
  3. Check Account Details: Aspire will give you the account number and instructions for depositing funds after successfully opening your account.
  4. Transfer Funds: Initiate a bank transfer from your company's current bank account to the account details provided by Aspire during sign-up. Note that opting for a SWIFT transfer may incur extra fees.
  5. Confirm the Deposit: Once the funds are transferred and reflected in your Aspire account, you'll receive confirmation, and the deposit details will be available in your transaction history.

For step-by-step instructions, view these instructional videos:

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Content Team at Aspire is a society of seasoned writers & experts specialising in finance, technology and SaaS space. With 50+ years of collective experience, they help make business finance more profitable for readers. They write about finance tools, finance insights, industry trends, tactical guides to grow your business & also all things Aspire.
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