Life brings about a lot of changes and this brings changes in your business as well. If you are a business owner then, an exit plan needs to be in place when you have to manage the changes. These changes can influence your business and its success significantly.
Any business owner needs a contingency plan in place so that the business ownership can be transferred effortlessly. For instance, if you plan to sell your business and retire, then ownership needs to be transferred. But there are certain factors at play that you need to understand if you are an entrepreneur in Singapore. Let us take a look at those:
1. If you are a sole proprietor or into partnership:
There could be a possibility of transferring the ownership. On the other hand, you can have changes in Sole Proprietorship or partnership. In this case, all the changes have to be registered with the Registrar online.
For this purpose, BizFile+ has to be used with SingPass within 14 days from the date of change. If the changes are not registered within this period, the owner has to face the relevant charges.
Things like address change, name of the business, or business activity does not require any kind of approval. But there are certain changes that need approval. For instance, you need approval if any of the partners are removed or new ones are added. This procedure has to be completed within 14 days from the first submission date.
If the application lapses the time window, the transaction and the request is rejected. In such a situation, the company representative has to submit the request again and has to repay the filing fee.
2. For company:
If a company decides to transfer the ownership of the business, there are applicable charges on the document signed while acquisition. The business owner has to pay the stamp duties to the Inland Revenue Authority of Singapore (IRAS). This is when the shareholders need to have share transfers.
In the case of share transfers, there has to be a “transferor” and “transferee”. The transferor is the existing shareholder and he transfers the share to the new person called transferee.
The business owner has to pay the duty on the actual price/share value according to the higher value of the either. The average price of the Stock Exchange of Singapore will be the real value of the shares thus transferred. The latest average rate of the shares is used if the average prices on the date of the document.
If the company is private, the net asset value (NAV) or the shares’ allotment rates in the target company is considered at the share transfer value. If the shares are from different classes, the NAV is dependent upon the rights of the class of the share.
If you have any plans of business ownership transfer in the future, We can help you with the complete understanding of the process. Contact our team today for further counseling and assistance.
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