Company, exempt private

An exempt private company is a type of private limited company in certain jurisdictions that enjoys exemptions from certain regulatory requirements and reporting obligations.
Written by
Reviewed by
Updated on Jun 6, 2024
Reading time 3 minutes

3 Key Takeaways

Copy link to section
  • Exempt private companies are often smaller and have restrictions on share ownership.
  • They offer a simplified regulatory framework for businesses that meet specific criteria.
  • The exemptions can vary depending on the jurisdiction and specific regulations.

What is a Company, Exempt Private?

Copy link to section

An exempt private company, also known as an EPC, is a specific classification of private limited company that exists in certain jurisdictions, such as Singapore and Malaysia. These companies are typically smaller in size and have restrictions on the number of shareholders and the transferability of shares. They are exempt from certain regulatory requirements, such as the need to file audited financial statements with the relevant authorities.

Importance of Exempt Private Companies

Copy link to section
  • Reduced Regulatory Burden: EPCs offer a simplified regulatory framework, making them attractive for small businesses and startups that may find it challenging to comply with the full range of reporting obligations.
  • Cost Savings: By being exempt from certain requirements like audits, EPCs can save on compliance costs, allowing them to allocate resources more efficiently.
  • Confidentiality: EPCs are not required to make their financial information public, which can be beneficial for businesses that value privacy and confidentiality.
  • Flexibility: The relaxed regulatory environment allows EPCs more flexibility in their operations and decision-making processes.

How Exempt Private Companies Work

Copy link to section

To qualify as an EPC, a company must meet certain criteria, such as restrictions on the number of shareholders (often limited to 50), prohibitions on public offerings of shares, and limitations on share transfers. The specific requirements can vary depending on the jurisdiction.

EPCs still have to comply with certain basic regulations, such as maintaining proper accounting records and filing annual returns. However, they are exempt from more onerous requirements like preparing audited financial statements and holding annual general meetings.

Examples of Exempt Private Companies

Copy link to section

Exempt private companies are commonly found in various industries, including:

  • Small and Medium Enterprises (SMEs): Many small businesses opt for the EPC structure due to its simplicity and cost-effectiveness.
  • Family Businesses: EPCs can be a suitable option for family-owned businesses that want to maintain control within the family.
  • Startups: Startups often choose the EPC structure in their early stages when they have limited resources and need a flexible regulatory environment.

Real-World Applications

Copy link to section

Exempt private companies play a significant role in fostering entrepreneurship and economic growth. By providing a simplified regulatory framework, they encourage the formation and growth of small businesses, which are essential for job creation and innovation. In jurisdictions like Singapore and Malaysia, EPCs have been instrumental in promoting a vibrant startup ecosystem.


Sources & references

Arti

Arti

AI Financial Assistant

  • Finance
  • Investing
  • Trading
  • Stock Market
  • Cryptocurrency
Arti is a specialized AI Financial Assistant at Invezz, created to support the editorial team. He leverages both AI and the Invezz.com knowledge base, understands over 100,000 Invezz related data points, has read every piece of research, news and guidance we\'ve ever produced, and is trained to never make up new...