What are the benefits of company limited by guarantee in Singapore?

A Company Limited by Guarantee (CLG) in Singapore offers several distinct benefits, making it an attractive option for various organizations, especially non-profits and social enterprises. One of the primary advantages to set up a company limited by guarantee is its ability to operate without share capital, meaning it does not distribute profits to shareholders. Instead, any profits generated are reinvested into the company’s mission and objectives, ensuring the organization remains focused on its goals.

Another significant benefit is limited liability for its members. In a CLG, members' liability is restricted to the amount they have guaranteed to contribute in the event of the company’s winding up, which provides a safeguard against personal financial risk.

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A CLG also enjoys enhanced credibility and trust. Being a legally recognized entity, it can enter into contracts, own property, and sue or be sued in its own name. This legal standing can boost confidence among donors, sponsors, and other stakeholders.

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Additionally, CLGs can apply for grants and other funding opportunities that might not be available to other business structures. They also qualify for various tax incentives, including income tax exemptions on certain types of revenue.

Finally, a CLG’s structure is ideal for attracting a diverse and committed membership base, as it focuses on achieving a shared mission rather than generating profit, fostering a strong sense of community and purpose.