Singapore Company – Shares and Share Capital


Every company limited by shares incorporated in Singapore must have a share capital. Share capital of a company refers to the amount invested in the company for it to carry out its operations. The share capital may be altered or increased, subject to certain conditions. A company’s share capital may be divided into different classes. The different classes of share capital and the rights attached to these classes may be provided for in a company’s memorandum or articles of association. The Companies Act (Cap 50) sets out specific provisions and obligations for a company in relation to the shares and share capital of the company.



2.1 A share is the interest of a member in a company. A member does not own any of the company’s assets as the company is a separate legal personality. A members ownership of shares in a company gives him two rights which are to participate on the terms of the memorandum and association when the company is a going concern and if and when the company is wound up, the right to participate in the assets of the company remaining after the debts of the company have been paid. A member is also liable for the amount, if any unpaid on the shares held by him.

2.2 The directors of a company can allot or issue shares only if they are authorized by its members to do so. A company must keep a register of the class and extent of members shareholdings open for inspection.

2.3 Shares issued by companies incorporated in Singapore have no par value. This means that the liabilities of the members are measured by the amount of consideration, unpaid on the shares held by them. Also, companies are not required to have an authorized capital which is the maximum value of shares which a company may issue.


3.1 A company may have as many different types of shares with different conditions attached. Generally, a company issues two main types of shares: ordinary shares and preference shares.

Ordinary and preference shares

3.2 Ordinary shares are the most common class of shares in companies. They carry voting rights and entitle the shareholders to variable rates of dividends. Dividends are payments to shareholders, from the profits of the company.

3.3 Preference shares are shares that have preferential rights over ordinary shares, usually in respect of dividend distributions. The specific rights and benefits of preferential shares are commercial decisions decided by each company and they are contained in the memorandum, articles or resolutions creating such shares.

3.4 A company may not issue preference shares or convert any issued shares into preference shares unless the relevant rights pertaining to those preference shares have been set out in the company’s memorandum or articles of association. These include voting rights, whether the dividends associated are cumulative or non-cumulative, and whether there is a right to participate in the company’s surplus assets and profits.

Redeemable Preference Shares

3.5 A company having a share capital, may, if authorized by its articles, issue preference shares which may be redeemable. Such shares give holders a right to repayment of their capital either at a fixed date or at the option of the company.

3.6 When this happens, the shares that are redeemed are cancelled but such cancellations shall not be taken as reducing the share capital of the company. Such shares shall not be redeemed unless they are fully paid up. Lastly, such shares shall not be redeemed out of the capital of the company unless all directors have made a solvency statement in relation to the redemption. If a company redeems any redeemable preference shares, it shall give notice to the Registrar in the prescribed form (including the solvency statement, if applicable), specifying the shares redeemed, within 14 days after the redemption is performed.


4.1 Share capital can consist of issued, paid up and unpaid share capital. Issued share capital refers to the value of shares issued to shareholders. Paid-up capital refers to the amount of share capital that has been paid to the company by members of the company. It is not compulsory for the payments to be made in cash. It is possible for a company to issue shares which are partly paid-up, and the unpaid portion is the unpaid share capital. Shareholders will be liable to pay the company the portion unpaid on their shares if a call is made. If the articles of a company are silent, calls will be made by resolution of the general meeting. Directors of a company can also make calls on behalf of the company. It has also come to our attention that quantum of the share capital in a company’s financial may be different from the share capital reported to ACRA in some situations. This could be due to permitted uses of capital such as paying for expenses directly related to the allotment of shares.

4.2 A member of a company is not liable for the debts contracted by the company except if the company carries on business without having at least one director who is ordinarily resident in Singapore for more than 6 months and the said member (who for the whole or any part of the period that the company so carries on business after those 6 months) knows that the company is carrying on business in such a manner. If so, the member shall be liable for the debts contracted by the company during the period and may be sued for it.



5.1 Allotments refers to the process by which people become members of a company. In an allotment, subscribers to a company’s memorandum agree to take up shares of the company. Where a company makes any allotment of its shares, other than a deemed allotment (i.e. no formal allotment to subscribers to the memorandum), the company is required to lodge with the Registrar a return of allotment within 14 days, stating the following:

a) number of shares in the allotment;
b) amount (if any) paid or deemed to be paid on the allotment of each share;
c) amount (if any) unpaid on each share referred to in (ii);
d) where there exist different classes of shares, the class of shares to which each share in the allotment belongs; and
e) full name, identification, nationality and address of, and number and class of shares held by each of its members, or if the company has more than 50 members, each of the 50 members who hold the most number of shares in the company after the allotment (excluding treasury shares).

5.2 The return of allotments need not state the particulars in (e) if the company’s shares are listed on a stock exchange in Singapore. When the allotment is made for consideration other than cash, additional reporting is required.

5.3 A company must, within 2 months after the allotment of any shares or within 1 month after the date a transfer of shares is lodged with the company, have the share certificate ready for delivery. If a share certificate is lost or destroyed, the owner may apply to the company for a duplicate certificate. For shares that are listed, the share certificates are deposited with the Central Depository System and are registered in the name of the Depository or its nominees.



6.1 A share is a movable property. A person who is allotted or transferred share(s) and whose name appears on the company’s register of members in respect of the share(s) has legal title to the share(s). Notwithstanding, a person can also hold shares registered in the name of a nominee, who will hold the shares on trust.

6.2 In the case of shares which are sold but not registered in the purchaser’s name, the purchaser has equitable interest but no legal title to the shares. Legal title to the share’s rests with the person whose name appears on the register of members.



7.1 Shares are freely transferable unless restricted by the company’s memorandum or articles. Restrictions on transfer of shares generally exist in private and public (non-listed) companies. Public listed companies usually will not have restrictions on share transfers.

7.2 Directors generally have no discretion to refuse registration of transfers of shares unless the powers are provided for in the company’s articles. Where such discretions are provided for, the powers have to be exercised bona fide in the interests of the company and not for any collateral purpose.

7.3 Transfers of shares involve transfers of legal title to the shares. Transfers are done by execution and delivery of proper instrument of transfer to the company. In the context of scripless trading of shares listed on the stock exchange, no transfer forms are required as the shares remain registered in the name of the central depository. Where there has been a transfer of shares, a company may lodge with ACRA a notice of that transfer shares in the prescribed form or report such transfers in the annual returns.



8.1 The Companies Act requires a company to maintain its share capital, but allows court free capital reductions, giving limited financial assistance, using capital to buy back shares with an added option to hold them in treasury and redeem redeemable preference shares subject to certain safeguards. One of the safeguards is the satisfaction of the requisite solvency test. The various exceptions to capital maintenance are as follows.


Buy Back of Shares & Holding Them as Treasury Shares


8.2 A company may acquire its own shares as long as this is permitted by its articles. The total number of shares that may be purchased or acquired by a company during the relevant period shall not exceed 10% of the total number of shares in the class ascertained. Within 30 days of the buyback of the shares, the directors of the company are required to lodge a notice containing key information relating to the buyback with ACRA. Sections 76C, D, DA, E of the Companies Act provides for the various situations and conditions in which buy backs can take place.

8.3 Companies can pay for such shares bought back, using its capital so long as the company is solvent. A company is solvent if the company is able to pay its debts in full at the time of payment for the shares bought back and will be able to pay its debts as they fall due in the normal course of business during the period of 12 months immediately following the date of the payment; and the value of the company’s assets is not less than the value of its liabilities (including contingent liabilities) and will not after the proposed buyback become less than the value of its liabilities (including contingent liabilities). After the shares are bought back, they can be either cancelled or held in treasury. Treasury shares can be held by the company, or may be sold, transferred or cancelled in accordance with section 76K. The maximum amount of shares a company may hold, after a share buyback is 10% of the total number of shares or 10% of the total number of shares of each class.

Reduction of Share Capital

8.4 Companies have the choice of getting a Court to approve the special resolution to reduce their share capital under section 78G of the Companies Act (Cap 50) or proceed by an alternative mode under section 78B (for private companies) or section 78C (for public companies).


Court-free Method of capital reduction

8.5 There are several procedural steps to be taken and it is advisable that companies obtain professional advice. Directors have to provide the solvency statements (if the nature of reduction requires one) and inform the Comptroller of Income Tax and comply with the publicity requirements. For both private and public companies, the notification to the Comptroller of Income Tax must be sent within 8 days beginning with the resolution date. For publicity requirements, they may refer to the requirements in the Companies Act as well as Practice Direction No 2 of 2006 which is available on ACRA website.

8.6 Creditors may apply to court to cancel the resolution. If there is no such objection after 6 weeks but no later than 8 weeks after the resolution date, the company can lodge the relevant form with ACRA for the reduction to take effect. Companies are advised to lodge the relevant form and documents within the time stipulated in the Act; if not, Bizfile will reject their filing for non-compliance with the Act.


Financial Assistance Prohibitions

8.7 A company is prohibited from giving any financial assistance, directly or indirectly, for the purpose of, or in connection with the acquisition of shares, or units of shares in the company or the holding company of the said company under section 76(1) of the Companies Act. The objective behind FA prohibitions is to ensure that the capital of a company is preserved intact and not eroded by deliberate acts done otherwise than in the ordinary operations of the company undertaken in the pursuit of its objects for which it was established. Other secondary purposes are to prevent market manipulation and management of the company from interfering with the normal market in the company’s shares by providing support from the company’s resources to selected purchasers. Exceptions are found under subsections (8), (9), (10) and (11) of section 76.