Company Law and Business Organisations

Comprehensive practice vocabulary flashcards covering the concepts, definitions, statutes, and principles of Singapore Company Law and business organisations.

Company Law

The rules that govern and regulate business organisations and the relationships with and amongst stakeholders of these organisations.

Business Organisation

A legal structure (also referred to interchangeably as a business vehicle or business entity) established for the conduct of business.

Sole Proprietorship

A business organisation owned and fully controlled by one person, registered under the Business Names Registration Act 2014, where the owner bears unlimited personal liability for all business debts.

Unlimited Liability

A legal condition where an owner or partner is personally liable for all debts and liabilities incurred by the business organisation, without any cap on financial exposure.

Auditor

An independent party engaged to check and review a business entity's accounting records.

Partnership

A business structure comprising between $2$ and $20$ partners (except where otherwise permitted for certain professions under the Companies Act 1967) who manage assets collectively and carry unlimited, joint, and several liability under the Partnership Act 1890.

Joint and Several Liability

A legal responsibility where a creditor can sue any one partner individually, several partners, or all partners together for the entire debt, with each partner remaining individually liable until the full sum is repaid.

Limited Liability Partnership (LLP)

A business entity formed under the Limited Liability Partnerships Act 2005 with a minimum of $2$ partners that combines partnership flexibility with a separate legal personality, perpetual succession, and liability limited to agreed partner contributions.

Limited Partnership (LP)

A partnership structure formed under the Limited Partnerships Act 2008 without a separate legal personality, requiring at least one general partner with unlimited liability and management rights, and at least one limited partner with limited liability and no management rights.

General Partner

A partner in a limited partnership who enjoys management control and bears unlimited personal liability for all debts and obligations of the partnership.

Limited Partner

A partner in a limited partnership whose liability is restricted to their agreed financial contribution, who has no management rights, and who must be registered as such under the Limited Partnerships Act 2008.

Separate Legal Personality

The legal status conferred upon incorporation whereby a company is treated as an artificial legal entity separate and distinct from its members and directors (established in Salomon v A Salomon & Company, Ltd [1897]).

Perpetual Succession

The statutory characteristic of an incorporated company under Section 19(5) of the Companies Act 1967 allowing it to continue existing despite the death, bankruptcy, or replacement of all its members or directors until formally dissolved.

Private Company

A company with a share capital whose Constitution restricts the right to transfer its shares and limits its membership to a maximum of $50$ members (Section 18(1), Companies Act 1967).

Pre-emption Right (Right of First Refusal)

A constitutional restriction on the transfer of shares in a private company requiring that any shares to be transferred must first be offered to existing members before being sold to outsiders.

Public Company

A company other than a private company (Section 4, Companies Act 1967) that requires a minimum of $1$ member, has no upper membership limit, and is permitted to offer its shares to the public to raise funds.

Member

A person whose name is entered into a company's register of members; essentially an owner of the company who holds rights defined by shares or guarantee, distinguished from directors who manage the business.

Company Limited by Shares

A company in which the financial liability of each member to contribute in a winding up is capped strictly at the unpaid portion of the price payable for their shares.

Company Limited by Guarantee

A company—primarily used for non-profit purposes such as charities or clubs—in which the liability of each member is capped at the specific guaranteed amount agreed to be contributed in the Constitution in the event of winding up.

Unlimited Company

A company formed on the principle of having no limit placed on the liability of its members to contribute to the assets of the company until all company debts are fully satisfied (Section 4, Companies Act 1967).

Exempt Private Company (EPC)

A private company with no more than $20$ members in which no beneficial interest in shares is held directly or indirectly by any corporation, or a private company wholly owned by the Government and gazetted as an EPC (Section 4, Companies Act 1967).

Beneficial Interest

An equitable interest in property or shares held for a person's benefit (such as shares bought via an agent), as distinguished from legal interest registered under the owner's official name.

Solvent

The financial status of a company denoting its ability to pay its debts as and when they fall due.

Insolvent

The financial status of a company indicating that it is unable to pay its debts as and when they fall due.

Small Company

A private company throughout the financial year that satisfies at least $2$ of the following $3$ criteria in each of the previous $2$ financial years: total annual revenue $\le S\$10\text{ million}$, total assets $\le S\$10\text{ million}$, or number of employees $\le 50$, exempting it from statutory audit requirements.

Variable Capital Company (VCC)

A specialised corporate structure governed by the Variable Capital Companies Act 2018 and Companies Act 1967 whose sole object is to operate collective investment schemes with variable capital, share redemption without member approval, and the ability to pay dividends out of capital.

Foreign Company

A company, corporation, society, or other body incorporated outside Singapore, or an unincorporated body that may sue, be sued, or hold property in an officer's name under its law of origin, which does not have its head office or principal place of business in Singapore (Section 4, Companies Act 1967).

Independent Contractor

A person or organisation that contracts to carry out work for an entity and is not subject to that entity's direct control except for terms specified in a mutually binding agreement.

Charge

A form of security interest over a debtor company's movable or immovable property given to a creditor (e.g., a bank) enabling the creditor to take possession of and sell the property to recover unpaid debt in the event of default.

Subsidiary

A company whose board composition is controlled by another company, or where another company controls more than half of its voting power, or where it is a subsidiary of another holding company (Section 5(1), Companies Act 1967).

Wholly Owned Subsidiary

A subsidiary company where $100\%$ of its membership is held exclusively by its holding company, a nominee of the holding company, another wholly owned subsidiary, or a nominee thereof (Section 5B, Companies Act 1967).

Nominee

A person or organisation in whose name an ownership interest is formally registered while true beneficial ownership belongs to another party.

Ultimate Holding Company

A holding company of a subsidiary that is not itself a subsidiary of any other corporation (Section 5A, Companies Act 1967).

Related Companies

Corporations deemed related under Section 6 of the Companies Act 1967 by virtue of one being the holding company of another, the subsidiary of another, or co-subsidiaries of the same common holding company.

Group of Companies

A parent entity and all of its subsidiaries as defined under the Financial Reporting Standards and Accounting Standards Act 2007, where each entity nevertheless remains a distinct legal person.

Proper Plaintiff Rule

The procedural rule originating from Foss v Harbottle (1843) establishing that when a wrong is done to a company or director duties are breached, the company itself is the proper claimant and must sue in its own name.

Indoor Management Rule (Turquand's Rule)

The legal doctrine from Royal British Bank v Turquand (1856) establishing that third parties dealing with a company in good faith are entitled to assume that all internal rules and company approval formalities have been properly met.

Board Resolution

A formal, binding decision made by a company's board of directors, usually recorded in writing.

Lifting the Corporate Veil

The judicial or statutory exception where the court disregards a company's separate legal personality to look directly at the underlying controllers or members and impose personal liability on them.

Bill of Exchange

An unconditional written order signed by one person addressing another to pay on demand or at a determinable future time a specified sum of money to a named person or to bearer.

Promissory Note

A legal instrument wherein the maker promises in writing to pay a determinate sum of money to another party (the payee) either on demand or at a fixed future date under specific terms.

Dividend

A distribution of a portion of a company's profits to its members or shareholders.

Wrongful Trading

A statutory offence under Section 239 of the Insolvency, Restructuring and Dissolution Act 2018 where a company incurs debts when insolvent, or debts that result in insolvency, without reasonable prospect of meeting them in full.

Memorandum of Association

A historical constitutional document before 3 January 2016 that defined a company's structure, name, and aims to the outside world.

Articles of Association

A historical constitutional document before 3 January 2016 that contained internal regulations governing meetings, director appointments, share transfers, and governance procedures.

Constitution

The single foundational document of a company, resulting from the statutory merger of the Memorandum and Articles of Association on 3 January 2016, which acts as a statutory contract binding the company and members.

Model Constitution

A standard set of constitutional regulations prescribed by the Minister under the Companies (Model Constitutions) Regulations 2015 that private companies or companies limited by guarantee may adopt in whole or in part.

Subscriber

A party named in the Constitution of a new company who agrees to form the company, take up a specified initial share allocation, and become an initial member.

Resolution

A binding decision made on behalf of a company, commonly formulated as a written statement passed by its directors or members.

Special Resolution

A resolution passed by a majority of not less than three-fourths ($75\%$) of members entitled to vote and present at a general meeting, requiring at least $14\text{ days'}$ written notice for private companies and $21\text{ days}$ for public companies (Section 184(1), Companies Act 1967).

General Meeting

A formal meeting of the members of a company, taking the form of an Annual General Meeting (AGM) convened annually or an Extraordinary General Meeting (EGM) convened on an ad hoc basis.

Classes of Shares

Different categories of shares issued by a company that confer distinct rights on their holders, such as differential voting powers or preferential dividend rights.

Entrenching Provision

A constitutional clause permitted under Section 26A of the Companies Act 1967 that imposes stricter alteration requirements (such as unanimous member approval or a vote higher than $75\%$) to amend specific entrenched provisions.

Entrenched Provision

A specific regulation or clause within a company's Constitution that is protected by an entrenching provision against ordinary alteration procedures.