30 Dec How a Private Limited Company Can Qualify for Audit Exemptions in Singapore?Email This Post
Singapore is one of the most attractive destinations in the world to set up a business. A private limited company is the most suitable option for incorporating a business in Singapore. Private limited companies in Singapore receive various benefits in the form of tax savings, limited liability and minimum compliance obligations. However, the Companies Act in Singapore has introduced the “small company” concept. The private companies in Singapore get audit exemption if they fulfil “small company” criteria. This is done so as to reduce the overall compliance cost and regulatory burden on private companies.
Let us first understand the meaning of a small company.
Meaning of Small Company
According to the Companies Act in Singapore, a company is considered a small company if it fulfils two out of the following three conditions:
- The annual revenue of the company is up to S$10 million.
- The total value of the company’s asset is up to S$10 million, or
- The number of full-time employees in the company at the end of the financial year do not exceed 50.
A company that qualifies to be a small company is not required to have its accounts audited and appoint an auditor. Besides the private companies or small companies, group companies i.e. holding or subsidiary of private companies also get audit exemption if they qualify as a small group company.
Group Company Audit Rule
A group company is a holding company and its subsidiaries that together are a part of a group and has a common source of control. A group company can avail the exemption of annual audit if the holding and subsidiary companies individually;
- Belong to a small group and
- Fulfil at least two of the small company qualifying conditions.
To qualify as a “small company”, all the companies comprising the group must fulfil at least two out of the following three conditions in the immediate two preceding financial years;
- The group’s consolidated revenue must not exceed S$ 10 million
- The value of the group’s consolidated assets must not exceed S$ 10 million
- The total number of employees of the group must not exceed 50
Therefore, if the company wants to avail the audit exemption, the subsidiarity and holding company as a group must fulfil the above mentioned criteria.
Change in Company Status
When a company acquires the status of a “small company”, it will continue to enjoy the audit exemptions until it is disqualified. Disqualification of a small company occurs when;
- The company is no more operating as a private company in the financial year, or
- The company does not qualify the criteria of “small company” for the two immediately preceding financial years.
If you are looking to avail audit exemptions for private companies in Singapore, you may get in touch with IMC Group.