What is a Singapore "Company Limited by Guarantee"?
What is this and how to work with them?
in Singapore, we love to create TLA`s (TLA = "Three Letter Acronym") and there is one that you must know: a "company limited by guarantee" is a "CLG".
A CLG is an entity that does not have share capital or shareholders. Instead, members act as guarantors and agree to pay a fixed sum in the event that the company winds up.
Here are some examples for CLG`s:
- NUS National University of Singapore
- NTU Nanyang Technological University
- National Skin Center
- JTC Corporation (formerly the "Jurong Town Corporation")
- National Healthcare Group (NHG)
- Agency for Science, Technology and Research (A*STAR)
Unlike companies that distribute profits to shareholders, CLGs are prohibited from distributing profits in the form of dividend, bonus or otherwise to its members. They instead retain profits within the company and reinvest them.
CLGs are registered with the Accounting and Corporate Regulatory Authority Singapore (Acra) and governed by the Companies Act.
CLG´s can be set up following an initiative of the Singapore government or established by an Act of the Singapore Parliament.
Before you start working with a CLG, find out whether the law firm that you are going to select for representing you in the contract negotiations represents either the Singapore government directly or other CLGs in Singapore.
Then you should check whether there could be a conflict of interest arising from that relationship.