What Is Share Capital
Share capital is the total amount that shareholders commit to a company in exchange for shares. It reflects the company’s funding through equity rather than debt. A company’s share capital may be issued and either fully or partially paid up.
- Issued share capital: The total value of shares the company has issued to shareholders.
- Paid-up capital: The portion of issued capital that shareholders have actually paid to the company. Unpaid portions remain obligations of those shareholders.
When a company issues new shares, both issued and paid-up capital can increase, depending on how much the shareholders pay.
Singapore does not require “authorized capital” (maximum capital allowed) under current law, which simplifies the capital framework for companies.
The minimum issued share capital required at incorporation is S$1 (or equivalent in another currency).
Types of Shares & Their Rights
A company may issue multiple classes of shares to meet different needs, with varying rights, privileges, or restrictions.
Common types include:
- Ordinary shares: The standard class. Holders typically have voting rights, rights to dividends (if declared), and rights to assets upon liquidation.
- Preference shares: May grant priority on dividends or assets but sometimes with limited or no voting rights.
- Redeemable preference shares allow the company to buy back the shares at a predetermined date or price.
- Convertible preference shares can convert into ordinary shares under certain terms.
- Non-voting shares: Shares that do not carry voting rights but may entitle the holder to dividends.
The company’s constitution (or articles) should clearly define the rights, privileges, and restrictions attached to each share class.
Shareholders & Their Roles
A shareholder is someone who holds shares in the company and thereby owns a portion of the company. Shareholders may be:
- Individuals
- Corporations
- Limited Liability Partnerships (LLPs)
A corporate shareholder (i.e. a company owning shares in another company) has rights equivalent to individual shareholders, as defined in share documentation and corporate law.
Most companies (especially private ones) use a register of members (shareholders) to keep track of share ownership.
In a Company Limited by Guarantee (common for non-profits), there is no share capital, and thus no shareholders — only members whose liability is limited to contributions they commit to in winding up.
Issuance, Transfer & Alteration of Shares
Issuing New Shares & Alteration of Share Capital
A company may issue new shares to increase capital. Other adjustments allowed under law include converting shares to stock, reconverting, consolidating or subdividing shares, and canceling shares that remain unissued or have been forfeited.
When shareholders fully pay previously unpaid shares, the company must notify ACRA via the Notice to Update EROM and Paid-Up Share Capital transaction in BizFile+.
To reduce share capital, the company may adopt either:
- A special resolution from members, plus a solvency declaration and a window for creditor objections.
- Or seek a Court Order approving the reduction, then file notice within prescribed deadlines.
Transfer of Shares
Shareholders may transfer shares to others, subject to restrictions in the company constitution and proper procedures. Only fully paid shares are transferable.
Typical transfer steps include:
- Preparing an Instrument of Transfer and possibly a Notice of Transfer.
- Obtaining board approval (if required by constitution).
- Paying stamp duty to IRAS within 14 days of the transfer instrument’s execution.
- Surrendering the original share certificate for cancellation or rectification.
- Updating ACRA’s electronic register of members (for private companies) before the transfer is legally effective.
- Issuing a new share certificate to the transferee within 30 days.
If the company has pre-emptive rights (existing shareholders’ right of first refusal), the transferor may need to notify and seek consent from the existing shareholders before transferring shares externally.
Reporting & Compliance Requirements
- Changes in shareholding or capital (e.g. allotment of new shares, payment of unpaid capital, updates to shareholder particulars) must be filed through BizFile+ (e.g. “Return of Allotment of Shares,” “Update Shareholder Information”)
- Keeping updated records and ensuring filings are made in a timely manner is crucial to compliance and preventing penalties.