Guide For Companies Limited By Guarantee
- a22162
- Jan 23
- 3 min read
CLG Guide for Singapore
A Guide to Companies Limited by Guarantee in Singapore
What is a Company Limited by Guarantee (CLG)?
A Company Limited by Guarantee (CLG) is a legal structure in Singapore designed for non-profit organizations. Unlike traditional companies, CLGs do not have shareholders or share capital. Instead, they have members who act as guarantors, each committing to contribute a nominal amount (typically SGD 1) in the event the company winds up with outstanding debts. This structure ensures that profits are reinvested into the organization's objectives rather than distributed to members.
Key Features of a CLG:
Non-profit focus: CLGs are primarily used for charitable, educational, and community-based activities.
Limited liability: Members' liability is limited to the amount they have guaranteed.
No share capital: CLGs do not have shareholders or share capital, making them suitable for non-profit purposes.
Regulatory oversight: CLGs are subject to regulatory oversight by the Accounting and Corporate Regulatory Authority (ACRA).
Benefits of Setting Up a CLG:
Credibility and trust: The CLG structure enhances public perception of the organization's non-profit nature.
Tax exemption: CLGs can apply for tax exemption status, reducing their tax burden.
Limited liability: Members' personal assets are protected from the company's liabilities.
Access to funding: The CLG structure can facilitate access to grants and donations.
Setting Up a CLG in Singapore:
Prepare the necessary documents:
Constitution: The constitution must outline the company's objectives, membership rules, and the amount guaranteed by each member.
Application form: The application form can be submitted online through ACRA's BizFile+ portal.
Submit the application: Pay the registration fee and submit the required documents to ACRA.
Obtain approval: Once approved, the company can commence operations.
Regulatory Compliance:
Accounting and auditing: CLGs must maintain proper accounting records and undergo annual audits.
Corporate governance: CLGs must adhere to corporate governance principles, including maintaining a register of members and holding annual general meetings.
Tax obligations: CLGs must comply with tax regulations, including filing tax returns and paying any applicable taxes.
Conclusion:
A Company Limited by Guarantee is a valuable legal structure for non-profit organizations in Singapore. By understanding the key features, benefits, and regulatory requirements, organizations can leverage this structure to achieve their social and community impact goals.
How Bestar can Help
Guide For Companies Limited By Guarantee
Bestar can provide invaluable assistance to organizations considering or operating as a Company Limited by Guarantee (CLG) in Singapore. Here's how we can help:
1. Incorporation and Registration:
Drafting the Constitution: Bestar can help draft a comprehensive constitution that aligns with the organization's objectives and complies with all relevant legal requirements.
Navigating Regulatory Requirements: We can guide you through the entire incorporation process, including:
Preparing and submitting the necessary documents to ACRA.
Ensuring compliance with all applicable laws and regulations.
Advising on the appropriate company structure and governance framework.
2. Legal and Regulatory Compliance:
Tax Advice: Bestar can provide guidance on tax exemptions, filing requirements, and other tax-related matters.
Corporate Governance: We can advise on best practices for corporate governance, including board of directors' duties, member rights, and conflict of interest policies.
Contractual Matters: Bestar can draft and review contracts, including leases, service agreements, and fundraising agreements.
3. Fundraising and Grant Applications:
Legal Review of Funding Agreements: Bestar can review and advise on the legal implications of grant agreements and other funding arrangements.
Compliance with Fundraising Regulations: We can ensure compliance with all relevant fundraising regulations and best practices.
4. Other Legal Matters:
Intellectual Property Protection: Bestar can advise on protecting the organization's intellectual property, such as trademarks and copyrights.
Employment Law: We can provide guidance on employment contracts, employee benefits, and other employment-related issues.
Data Protection: We can help the organization comply with data protection laws and regulations.
5. Ongoing Support and Advice:
Staying Updated on Legal Changes: Bestar can keep the organization informed about changes in relevant laws and regulations.
Providing Ongoing Professional Counsel: We can provide ongoing professional advice and support on a wide range of issues.
By engaging the services of Bestar, organizations can ensure that their CLG is established and operated in full compliance with the law, minimizing legal risks and maximizing their impact.
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