Exempt Private Company (EPC) mechanics — Timeline and processing benchmarks

An exempt private company (EPC) is a Singapore private company with 20 or fewer members, none of which is a corporation. Under the Companies Act 1967 a solvent EPC is exempt from filing its financial statements with ACRA and may lawfully lend to its directors, making it the most common structure for owner-managed businesses and family holding companies.

Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.

What an exempt private company is

An exempt private company is defined in the Companies Act 1967 as a private company with no more than 20 members and in which no beneficial interest in its shares is held, directly or indirectly, by any corporation. The EPC is not a separate type of incorporation; it is a status a private company holds when it meets those two tests. The two practical advantages are the filing exemption for a solvent EPC and the relaxation of the general prohibition on loans to directors, both of which matter a great deal to owner-managed and family businesses.

Who benefits from EPC status

Owner-managed companies, family holding vehicles and small groups where the shares are held by individuals rather than corporate parents. Founders relocating to run the business often hold the shares personally precisely to keep EPC status, and this related guide explains the work-pass routes for an owner-manager taking up an executive role. Because the status also permits director loans, it is popular with entrepreneurs who move funds between themselves and the company as the business finds its feet.

Eligibility and the 20-member, no-corporate test

To qualify, the company must be private, meaning its constitution restricts share transfers and caps membership at 50; it must have 20 or fewer members; and it must have no corporation holding a beneficial interest in its shares. Introduce a corporate shareholder, or exceed 20 members, and EPC status is lost, with the fuller filing obligations then applying. This is why families that expect to bring in a corporate investor should model the consequences before completing the share issue, not after.

The filing and audit position, with numbers

  • Financial statement filing: a solvent EPC is exempt from filing its financial statements with ACRA, filing instead an online declaration of solvency with its annual return.
  • Audit exemption: separate from EPC status, a company is exempt from audit if it is a small company meeting at least two of three tests: revenue up to S$10 million, assets up to S$10 million, and up to 50 employees.
  • Annual return fee: S$60 to ACRA.
  • Corporate tax: the flat 17% rate applies, with start-up and partial exemptions.

The two exemptions are often confused, but they are independent: an EPC can be exempt from filing yet still require an audit, or vice versa, so both tests should be checked each year.

Step-by-step: setting up and keeping EPC status

1. Incorporate a private company with individual shareholders only. 2. Keep membership at or below 20. 3. Confirm solvency each year to use the filing exemption. 4. File the annual return with the solvency declaration. 5. Review the shareholder register before any transfer or issue that might introduce a corporate holder. 6. Reassess the small-company audit test annually as revenue, assets and headcount change.

Common mistakes and gotchas

The most frequent slip is letting a corporate shareholder in, for example through a restructuring or an external investor, without realising EPC status is lost. Others confuse the EPC filing exemption with the separate audit exemption, or assume the status is permanent when it depends on facts that can change year to year. Tax structuring interacts with all of this; this related guide covers holding-company tax planning, and the companion article sets out the full cost picture.

Official resources

FAQs

How many members can an exempt private company have?
No more than 20, and none of them may be a corporation holding a beneficial interest in the shares.

Does an EPC have to file financial statements?
A solvent EPC is exempt from filing its financial statements with ACRA; it files an online solvency declaration with its annual return instead.

Is an EPC automatically exempt from audit?
No. Audit exemption depends on the separate small-company test, not on EPC status, though many EPCs qualify for both.

Can an EPC lend money to its directors?
Yes. The general prohibition in the Companies Act 1967 on loans to directors does not apply to an exempt private company, which is one of its main attractions.

How is EPC status lost?
By admitting a corporate shareholder with a beneficial interest in the shares, or by exceeding 20 members. Either change ends the status and brings back the fuller obligations.

Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email [email protected]. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.