Issued capital vs Paid-up capital in Singapore

In Singapore, issued capital and paid-up capital are two important concepts related to a company’s share capital, but they refer to different aspects of a company's financial structure.

8/22/20242 min read

1 U.S.A dollar banknotes
1 U.S.A dollar banknotes

Issued capital vs Paid-up capital in Singapore

In Singapore, issued capital and shares refer to key components of a company’s equity structure. Here's a breakdown of each:

1. Issued Capital:

- Definition: Issued capital is the portion of a company’s authorized capital that has been issued to shareholders. It represents the actual amount of capital that the company has received from shareholders in exchange for shares.

- Purpose: It shows the amount of equity that the shareholders have invested in the company.

- Example: If a company has an authorized capital of SGD 1,000,000 and it issues 500,000 shares at SGD 1 each, the issued capital would be SGD 500,000.

2. Shares:

- Definition: A share represents a unit of ownership in a company. When you own shares in a company, you are a part-owner of that company, and the extent of your ownership is determined by the number of shares you hold relative to the total number of shares issued.

- Types of Shares:

- Ordinary Shares: These typically carry voting rights and the right to dividends, which are paid out of the company’s profits.

- Preference Shares: These usually have a fixed dividend rate and do not carry voting rights, but they have priority over ordinary shares when it comes to dividends and repayment in the event of liquidation.

- Par Value: In Singapore, shares can be issued with or without a par value. Par value is the nominal or face value of the share. However, most shares in Singapore are now issued without par value following the Companies (Amendment) Act 2005.

Key Differences:

- Issued Capital vs. Paid-up Capital: While issued capital refers to the total value of shares that have been issued to shareholders, paid-up capital refers to the amount of issued capital that has been fully paid by shareholders. In practice, issued capital is usually equivalent to paid-up capital in Singapore.

Importance in Singapore:

- Compliance: Companies in Singapore must have a minimum issued capital of SGD 1 to be incorporated. There is no maximum limit on issued capital.

- Equity Financing: Issued capital represents the company’s equity financing and determines the ownership structure among shareholders.

Understanding issued capital and shares is crucial for managing equity, securing financing, and maintaining proper corporate governance in a Singapore company.

In Singapore, the threshold of issued capital that determines membership in the Singapore Business Federation (SBF) is SGD 500,000.

Membership Requirements:

- Automatic Membership: All companies with an issued capital of SGD 500,000 or more are automatically registered as members of the SBF. This is mandated under the Singapore Business Federation Act.

- Annual Subscription Fee: These companies are required to pay an annual subscription fee to the SBF as part of their membership obligations.

Key Points:

- Issued Capital Below SGD 500,000: Companies with an issued capital below SGD 500,000 are not automatically registered but can choose to join the SBF as voluntary members if they wish.

- Representation: The SBF serves as a unified voice for the Singapore business community, representing the interests of its members in various forums and with the government.

Being a member of the SBF can provide various benefits, including access to business networking opportunities, advocacy, and support for internationalization efforts.

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