Understanding Section 32 of the Companies Act 1967
Private companies in Singapore enjoy certain advantages over public companies — such as fewer compliance requirements, greater privacy, and tighter control over ownership. However, if you fail to maintain the legal requirements for being a private company, you risk losing your private company status and being treated as a public company.
Here’s what every entrepreneur should know.
1. When Can a Private Company Lose Its Status?
Under Section 32 of the Companies Act, the Registrar may determine that a private company has ceased to be private if:
- Membership Limit Breach – The company does not comply with the rule in Section 18(1)(b) that limits private companies to a maximum of 50 members (excluding certain employees).
- Alteration of Constitution – The company changes its constitution so it no longer contains the required restrictions for a private company, such as limits on share transfers or member numbers.
- No Share Capital – The private company no longer has a share capital (an unusual situation but still covered by law).
2. What Happens if You Lose Private Status?
If the Registrar or Court determines that your company has ceased to be private:
- You become a public company from the date stated in the notice or court order.
- The company name will automatically change — the word “Private” or “Pte” will be removed.
- Within 14 days of the change, you must file with the Registrar:
- A statement in lieu of prospectus (instead of the public company prospectus).
- A declaration confirming compliance with Section 61(2)(b) (relating to share allotment rules).
3. Relief from Losing Private Status
The Court may allow the company to retain private status if it finds that the breach or alteration was:
- Accidental
- Due to inadvertence or other sufficient cause
- Just and equitable to grant relief
This relief is subject to conditions the Court deems fair.
4. Restrictions on Returning to Private Status
Once a company becomes public under this section, it cannot convert back to private without Court permission.
5. Penalties for Non-Compliance
- If the company fails to file the required documents within 14 days after losing private status → Fine of up to $2,000 per offence, plus daily default penalties.
- If the company fails to comply with any private company restrictions in Section 18(1) → Fine of up to $5,000 or imprisonment of up to 12 months (for officers in default).
Summary Table: Default & Loss of Private Company Status
Situation | Consequence | Action Required | Possible Penalty |
Membership exceeds 50 or constitution altered | Loss of private status | Lodge statement in lieu of prospectus + compliance declaration within 14 days | Fine up to $2,000 + daily penalty |
No share capital | Loss of private status | Same as above | Same as above |
Breach of Section 18(1) restrictions | Criminal offence | Correct breach immediately | Fine up to $5,000 or 12 months’ imprisonment |
Becoming public under this section | Cannot revert to private without Court approval | Seek legal advice | N/A |
Entrepreneur Takeaway:
Maintaining private company status is not automatic — it requires constant compliance with your constitution and membership limits. Even small oversights, such as an unapproved constitution change, can turn your company into a public entity with heavier compliance burdens.
Disclaimer: This article is based on Section 32 of the Companies Act 1967 (Singapore) and is provided for general guidance only. It does not constitute legal advice. For advice tailored to your specific circumstances, please consult a qualified lawyer or corporate advisor.
Need Help with Understanding Directors’ Powers & Related Party Rules in Singapore?
Contact us now for expert guidance on understanding When a Private Company Loses Its Status in Singapore!