Mistakes to Avoid While Registering Your Private Limited Company
Opening a private limited company is an exciting adventure with many opportunities and difficulties. While registering a new company, such as company formation in Singapore, many business owners frequently make mistakes that could later cause delays, extra expenses, or even legal problems. This blog aims to provide helpful insights to help navigate the complexities of the startup landscape by highlighting some of the major mistakes entrepreneurs frequently make when registering a private limited company.
Mistakes to Avoid While Registering Your Private Limited Company
- Choosing the Correct Entity Type
One of the most important parts of your brand identity is your company name. However many business owners ignore performing a thorough search to make sure the name is available and not already being used by another company. Using a name that is already registered may result in changing expenses and legal problems. Some company registration consultants like Relin Consultants help to find your correct entity type.
As per the Trademark Act, you must ensure that your company’s name, brand, logo, and other intellectual property differ from any existing, pending, or registered trademarks. The purpose of registering a trademark is to keep other brands from misusing the owner’s intellectual property. Therefore, it is strongly advised that you make sure your company’s name does not violate the intellectual property rights of already-existing brands. Conducting a public search in the government’s trademark database is advisable.
- Inaccurate description of the company
The application form for company incorporation must include a description of the company. It must include the name of the company, the activities it engages in, its present address, its unique brand, the target market, and its goal. The key documents such as the Memorandum of Association (MoA), the Articles of Association (AoA), the business plan, and policies are based on the proper description of the company that was established upon its incorporation. It will help you in organizing the company’s post-incorporation growth and expansion.
- Unnecessary Appointment of Directors
A company does not have to appoint all of its shareholders as directors. A company’s board of directors should be a strong group that includes industry experts, market analysts, shareholders, and lawyers. The Board of Directors must use knowledge, experience, and expertise to make several important decisions. Not every shareholder in the business may have these abilities.
In addition, the director of the company bears the responsibility of overseeing the business’s entire administrative system. Even the smallest errors made by him can cause chaos in the company. As a result, it is always a good idea for a business owner to keep ownership and management of the company separate and to choose the Board of Directors and individual directors with the utmost care and consideration.
- No founders/Shareholder’s agreement
One of the most important documents to be drafted, approved, and signed by all of the company’s shareholders is the shareholder’s agreement. The names and addresses of the shareholders are included, along with information about share issuance, allocation, capital, lock-in period, terms of investment, transfer provisions, dividend declaration, distribution, ownership inheritance, nominee information, etc. Resolution of shareholder disputes can become very difficult in the absence of such a written agreement. Therefore, it is recommended that newly established business owners draft the Shareholder’s document at the time of incorporation.
- Not getting professional help
The majority of entrepreneurs either don’t know what regulations they need to follow to launch their businesses or choose not to because doing so would require expensive legal fees. However, they frequently overlook the fact that the fines associated with non-compliance are far higher than what experts charge. Furthermore, your company may have to close if legal action is taken against it. Therefore, it is advised that you work with experts and seek compliance services from them to prevent such serious consequences for your company.
- Wrong office address
Filling out the application’s address section can be confusing for applicants. The application requests two different types of addresses: the physical address of the company’s director, who will sign it, and the address of the main office, or headquarters, where all significant business operations will be carried out. The proof of residency, which should not be older than two months, must support the address details. Phone bills, water, and electricity bills are the only acceptable forms of identification for the application.
