Importance of company constitution in a startup company

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Written By Rae21

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The Singapore economy has been one of the best places to conduct a business that is why over the years many different businesses choose to start or expand here.  It is also a favorite place for entrepreneurs to set up a company. Businesses from mining, technology, engineering, and even food industries can all be found in the busy streets of Singapore. Although Singapore has the easiest policies when it comes to conducting business, the policies that a business has to go through when they want to incorporate company in Singapore are strictly implemented. This is to ensure that Singapore remains one of the top economies not just in Asia but also in the world. 

When you want to set up company in Singapore, one of the first things that you have to do is to formulate the company constitution. Company constitutions usually serve as the backbone of the company. That is why this is legally required before you can completely incorporate company in Singapore. To some, it may just be another piece of document. However, it plays a great role in the success of the company. To know more, let us discuss what the constitution is and the importance of making a comprehensive constitution for your company. 

What is a constitution?

This is a legal document that is required by the Singaporean government to make sure that all entities are fit and ready to set up company in Singapore. The Companies Act of Singapore is the main law that requires company constitution. In 2015, the Companies Act was updated and the company constitution was made mandatory for any new entities when they incorporate company in Singapore. The company constitution is required before you set up company in Singapore because it plays a great role in the management of the company.  Let us talk about a few points that make the constitution a vital part of every company. 

#1 Clear rules and regulations

It can be compared to any country. The company constitution serves as a backbone or a blueprint of everything important in the company. It sets the mission and vision and other goals that are required to get the company going.  If a business owner wants to be to have a successful business. Entrepreneurs have to set the track or the path that the company must take. One of the few things to set this path clearly is to set the rules and regulations that the company must-have. These important guides and notes are all written and the company constitution. 

#2 Set guidelines on directors

When you incorporate company in Singapore, one of the few things that you have to do is to appoint a director. The way a director is selected doesn’t concern the Singaporean government. That is why the steps and their rules that cover how to appoint a company director is solely dependent on the company itself. These rules can also be found in a company constitution. Directors can be selected from the shareholders, while those other directors can be selected by the board. 

The constitution explains in detail how to appoint or how to remove a director of the company. It also explains how to appoint temporary directors in cases in which a permanent director cannot fulfill his or her duties. This is only one of the reasons why a constitution should be set before one can incorporate company in Singapore.

#3 Guides on share transfers

As stated, a company constitution includes all the necessary rules and regulations that cover the company. This includes the guide on how to transfer shares from shareholder to shareholder. This makes sure that all the shares in the company are in safe hands and trustworthy individuals. These guides cover even those that want to acquire a share even before one can set up company in Singapore. 

#4 Backbone of future planning

The company constitution serves as the backbone of the future planning and future endeavors of the company. Before you incorporate company in Singapore, you already have in mind what kind of company you want. These goals are set in stone once put in the company constitution. The future decisions of the company will be highly dependent on the existing constitution. The company constitution has the mission and vision of the company.  

Know more

There are many things that you have to remember before you can complete the set up company in Singapore. It is more advisable when hiring external help to make things faster and more convenient for you and your company. WLP Group is a reliable and proven third-party firm that can help you when you incorporate company in Singapore. Visit us today to know more. 

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