Exempt Private Company in Singapore: Requirements, Solvency and Filing Exemptions

An Exempt Private Company (EPC) is a Singapore private company with no more than 20 members, and no corporation holding any beneficial interest in its shares directly or indirectly.

A solvent EPC is generally exempt from filing financial statements and XBRL with ACRA, but must state its solvency status when filing its annual return. The company must still keep proper accounting records and prepare financial statements unless a separate statutory exemption applies.

An insolvent EPC must file financial statements with ACRA, using Simplified XBRL or Full XBRL depending on ACRA's filing criteria.

There are quite a few technical terms when it comes to Singapore companies. One term that often causes confusion is the Exempt Private Company, usually shortened to EPC.

For many small business owners, a newly incorporated private limited company will start out as an EPC. However, EPC status does not mean that the company is automatically exempt from preparing accounts, holding an AGM, filing an annual return, paying tax, or having its accounts audited. Each exemption has its own conditions.

This guide explains the EPC requirements in simple terms, including the difference between EPC status, solvency, audit exemption and XBRL filing.

What is an Exempt Private Company (EPC)?

An Exempt Private Company is not a separate legal structure from a private limited company. It is a category of private company under the Companies Act 1967.

In practical terms, an ordinary locally owned company with one or a few individual shareholders will usually be registered as an Exempt Private Company Limited by Shares. The company will still use the words "Pte. Ltd." in its name and will generally have the same legal personality and limited liability features as other private companies limited by shares.

The main difference is the ownership restriction. An EPC cannot have more than 20 members, and no corporation can hold any beneficial interest in its shares, whether directly or indirectly.

There is also a less common category for a private company that is wholly owned by the Government and declared to be an EPC by notification in the Gazette. Most privately owned businesses will qualify, if at all, under the ordinary ownership test.

EPC qualification criteria at a glance

You may also refer to ACRA's comparison of Singapore company types.

Is your company an EPC?

For a typical privately owned company, the following checklist provides a quick indication:

• The company is incorporated in Singapore as a private company.
• The company has no more than 20 members or shareholders.
• Every shareholder is an individual.
• No individual shareholder is holding shares for a corporation.
• No corporation has any direct or indirect beneficial interest in the company's shares.

If every point above is met, the company will generally qualify as an EPC. The company's Bizfile records or Business Profile will also usually describe its company type as "Exempt Private Company Limited by Shares".

Foreign individuals can be shareholders of an EPC. The EPC definition does not require shareholders to be Singapore citizens. However, the company must still meet the usual incorporation requirements, including having at least one director who is ordinarily resident in Singapore and appointing a company secretary within six months after incorporation.

Business owners who are still deciding on an ownership structure may refer to our Singapore business incorporation services.

What must an EPC file with ACRA each year?

Being an EPC does not remove the company's yearly compliance obligations. An EPC generally needs to complete the following:

1. Keep proper accounting records

The company must maintain records that properly explain its transactions and financial position. Bank statements, sales invoices, supplier invoices, expense records, payroll records and supporting documents should be kept up to date.

2. Prepare financial statements

A solvent EPC may be exempt from filing its financial statements with ACRA, but filing exemption is not the same as preparation exemption. An active EPC must generally still prepare financial statements that comply with the applicable Singapore accounting standards.

A separate exemption may apply to a qualifying dormant relevant company. That exemption depends on its own statutory conditions and should not be assumed merely because the company has little or no activity.

Where assistance is required, Leftright Corporate provides financial statement compilation services and complete accounting and annual compliance support.

3. Hold an AGM, or validly rely on an exemption or dispensation

A non-listed company must generally hold its AGM within six months after its financial year end, unless it is exempt from holding an AGM or all members have validly resolved to dispense with AGMs.

A private company may qualify for an AGM exemption where it sends its financial statements to all members within five months after the financial year end. Members retain certain rights to request a meeting even where an exemption or dispensation applies.

Read our guide on the timeline for Annual Returns and AGMs for a simplified overview.

4. File an annual return

Under section 197 of the Companies Act, every live Singapore company must file an annual return with ACRA, including companies that are inactive or dormant. For a typical non-listed EPC, the annual return is due within seven months after the financial year end.

The annual return updates or confirms key information such as the company's registered office, business activities, directors, company secretary, members, share capital and financial information where applicable.

Leftright Corporate also provides a one-time ACRA Annual Return filing service.

5. State the company's solvency status

When an EPC files its annual return, the filer must state whether the company is solvent, insolvent, or is otherwise required by law to file accounts. A company is solvent for this purpose where it can meet its debts as and when they fall due.

A solvent EPC that relies on the filing exemption makes the relevant online declaration as part of the annual return process. This should be based on the company's actual financial position, not simply whether the bank account has a positive balance on the filing date.

6. File financial statements where required

An insolvent EPC must file financial statements with ACRA. The required filing format depends on whether the company meets ACRA's criteria for a smaller and non-publicly accountable company.

7. Complete separate IRAS filings

ACRA annual return filing and IRAS corporate tax filing are separate obligations. An EPC may still need to file its Estimated Chargeable Income and Corporate Income Tax Return with IRAS. Our corporate tax filing and computation service covers the IRAS side of the annual compliance process.

Solvent vs insolvent EPC: what changes?

Solvency does not decide whether a company is an EPC. It decides whether the EPC can rely on the financial statement filing exemption.

Do EPCs need to file XBRL?

The answer depends mainly on solvency.

• Solvent EPC: Financial statements generally do not need to be filed with ACRA. As no financial statements are filed, XBRL is generally not required.
• Insolvent EPC that is smaller and non-publicly accountable: File Simplified XBRL financial statements together with a PDF copy of the financial statements authorised by the directors.
• Other insolvent EPC: File Full XBRL financial statements.

For XBRL purposes, ACRA currently treats a company as a smaller company where both its revenue and total assets for the current financial year do not exceed S$500,000. This is different from the "small company" test used for audit exemption.

You may refer to ACRA's current financial statement and XBRL filing requirements, or read our separate Guide to Audit and XBRL Requirements in Singapore.

Audit exemption: EPC vs small company

EPC status and audit exemption are not the same thing. This is one of the most common misconceptions about EPCs.

The old EPC-specific audit exemption was replaced for financial years beginning on or after 1 July 2015. Audit exemption now generally depends on whether the company qualifies as a small company.

A private company qualifies for small company audit exemption if it meets at least 2 of the following 3 criteria for the immediate past two consecutive financial years:

1. Total annual revenue of S$10 million or less.
2. Total assets of S$10 million or less.
3. 50 employees or fewer at the end of the financial year.

For a newly incorporated company that is less than two years old, the test is applied to the available current financial year. Where the company is part of a group, both the company and the entire group must meet the applicable small company and small group conditions.

This leads to two important results:

• An EPC that fails the small company test may need to have its financial statements audited.
• A private company with a corporate shareholder may still qualify for audit exemption, even though it is not an EPC.

ACRA's current small company audit exemption guide should be checked where the company is close to the thresholds or belongs to a group.

EPC vs private limited company vs public company

An EPC is itself a private limited company. The table below compares a typical EPC with an ordinary private company limited by shares and a public company.

What are the benefits of EPC status?

1. Potentially simpler ACRA financial statement filing

The main practical benefit is that a solvent EPC does not normally need to file its financial statements with ACRA. This avoids the need to prepare an XBRL filing solely for the annual return.

2. Financial statements are not filed on the public register

Where the solvent EPC relies on the filing exemption, its full financial statements are not lodged with ACRA as part of the annual return. The company must still prepare and retain proper financial information for directors, shareholders, banks, IRAS and other parties who may lawfully require it.

3. Greater flexibility for certain loans to directors

Section 162 of the Companies Act restricts certain loans, quasi-loans, credit transactions, guarantees and security arrangements involving directors for companies other than EPCs. This means an EPC has more statutory flexibility in this area.

That flexibility should not be treated as permission to move company money freely. A director loan should still be properly approved, documented and recorded, and should take into account the company's constitution, directors' duties, solvency, tax treatment and the interests of the company and its creditors. See section 162 of the Companies Act.

4. A straightforward ownership structure for smaller businesses

Many owner-managed businesses, family companies and early-stage start-ups naturally meet the EPC ownership conditions. The structure is easy to understand while still providing the separate legal personality and limited liability features of a private limited company.

How can a company lose EPC status?

A company may cease to qualify as an EPC when its ownership or membership changes. Common examples include:

• Issuing or transferring shares to a corporate investor.
• An individual shareholder declaring that shares are held on trust or as nominee for a corporation.
• A corporate restructuring that gives a corporation an indirect beneficial interest in the shares.
• Increasing the number of members beyond 20.

Bringing in a corporate investor does not necessarily mean that the company must become public. It may continue as an ordinary private company limited by shares, provided it continues to meet the private company requirements, including the applicable limit on members.

What should the company do?

1. Inform the company secretary before completing the transaction. The proposed shareholding should be reviewed before shares are issued or transferred.
2. Update the statutory registers and ACRA records. Share allotments, transfers and beneficial ownership information should be recorded and filed where required.
3. Reassess financial statement filing and XBRL. A company that is no longer an EPC may need to file financial statements even if it remains solvent.
4. Reassess audit exemption separately. Losing EPC status does not automatically mean losing audit exemption. A private company with corporate shareholders can still qualify under the small company test.
5. Review any director loan arrangements. The section 162 position may change when the company ceases to be an EPC.
6. Make accurate declarations in the next annual return. Do not continue declaring the company as a solvent EPC after the qualifying conditions have ceased to be met.

EPC annual deadlines and late filing penalties

The usual deadlines for a non-listed EPC are based on its financial year end. Choosing a suitable financial year end can therefore affect the timing of both compliance work and tax reporting. You may read our guide on how to choose a company's Financial Year End.

The above assumes that the company does not maintain a branch register outside Singapore and has not obtained an extension of time. Special circumstances may change the deadline.

For annual returns with filing due dates on or after 14 January 2022, ACRA's current late lodgment penalties are:

• S$300 where the annual return is filed up to 3 months after the deadline.
• S$600 where the annual return is filed more than 3 months after the deadline.

ACRA may also take further enforcement action. Depending on the circumstances, this can include composition sums, prosecution, director disqualification or debarment, and striking the company off the register where the statutory grounds are met. ACRA's current examples indicate composition sums of at least S$500 for a late AGM breach and at least S$500 for a late annual return breach. The Registrar's power to strike a company off the register is set out in section 344 of the Companies Act.

Refer to ACRA's official pages on annual return deadlines, AGM requirements and late annual return penalties and enforcement.

Does an EPC automatically qualify for the start-up tax exemption?

No. The Start-Up Tax Exemption Scheme is an IRAS tax relief and is separate from ACRA's EPC classification.

For qualifying companies from YA 2020 onwards, the exemption for each of the first 3 consecutive Years of Assessment is:

• 75% exemption on the first S$100,000 of normal chargeable income, giving a maximum exempt amount of S$75,000.
• 50% exemption on the next S$100,000 of normal chargeable income, giving a maximum exempt amount of S$50,000.

The maximum amount of income exempted under the scheme is therefore S$125,000 for each qualifying Year of Assessment.

The company must be incorporated in Singapore, be a Singapore tax resident for the relevant YA, and meet IRAS's shareholding conditions. The company must have no more than 20 shareholders throughout the relevant basis period, with either all shareholders being individuals or at least one individual holding at least 10% of the issued ordinary shares. Investment holding companies and companies undertaking property development for sale, investment, or both are excluded from the start-up scheme.

See the current IRAS tax exemption scheme for new start-up companies for the complete qualifying conditions.

Frequently asked questions about EPCs