First decision: sell the shares or sell the business?
There are two main ways to sell a private company in Singapore, and the choice shapes tax, paperwork and what happens to your staff.
| Share sale | Business (asset) sale | |
|---|---|---|
| What the buyer gets | The company itself, with all its history, contracts and liabilities | Chosen assets, contracts and the operating business, moved into the buyer’s entity |
| Stamp duty | 0.2% of the higher of price or share value, paid by the buyer unless agreed otherwise | Buyer’s stamp duty applies if Singapore property is included; shares in the asset pool are also dutiable |
| Employees | Stay employed by the same company; nothing transfers | Contracts move to the buyer under Employment Act s18A where the business is transferred |
| GST | Take tax advice on the share transfer | No GST if the deal qualifies as a transfer of a going concern |
| Why choose it | Continuity of contracts, licences and staff; the buyer will diligence past liabilities | Lets the buyer take only what it wants and leave most historical liabilities behind |
In our experience, most founder-led SME exits are structured as share sales, because contracts, licences and staff stay where they are. A business sale can make sense when the buyer wants only part of the operation or will not take on historical risk.
The five stages of a sale
1. Preparation
Before any buyer hears your name: an honest readiness assessment, a clean normalised EBITDA (see what your business is worth), clear positioning, and a defined profile of the buyers who would pay most. The deliverables are an information memorandum, a data room and buyer criteria. In our view, this is where most of the value is created, and where rushing costs the most.
2. Quiet marketing
A short, anonymous teaser goes to a screened list of buyers. Only those who sign a non-disclosure agreement and pass a capacity check see your name and numbers. The aim is that staff, customers and competitors do not know a sale is happening until the right time.
3. Offers and the letter of intent
Interested buyers submit indicative offers. The aim is to have several credible bidders at this point at the same time, because in our view competition, not negotiation alone, sets the price. You choose one to grant exclusivity under a letter of intent covering price, structure and key terms.
4. Due diligence
The buyer and its advisers test everything: financials, contracts, tax, employees, legal and operational risk. Information requests are run through a structured question-and-answer process. This is the stage where a retrade (a buyer cutting the agreed price after exclusivity) typically surfaces, which is why the letter of intent and the way diligence is run matter so much.
5. Completion
The sale and purchase agreement is negotiated and signed, conditions are satisfied, funds move and ownership transfers. Then the filings below begin.
The legal and tax checklist
Stamp duty on shares
Stamp duty on a share transfer is 0.2% of the purchase price or the value of the shares, whichever is higher. For a private company, IRAS generally takes value as net asset value from recent accounts, substituting market value for property where book value is not reflective of it (newly incorporated companies use a different basis). The buyer pays by default unless the agreement says otherwise, and the document must be stamped within 14 days of signing in Singapore (30 days after receipt if signed overseas) to avoid penalties.
Tax on the gain
Singapore does not tax capital gains. Gains of an income or trading nature are taxable, and whether a gain is capital or income depends on the facts. If the seller is a company, section 13W of the Income Tax Act gives certainty: gains on disposing of shares are not taxed where the selling company held at least 20% of the ordinary shares for a continuous 24 months before the sale, subject to conditions and exclusions, including for unlisted companies that trade, hold or develop property, and a requirement to file supporting information with the tax return. The earlier 2027 end date for this rule no longer appears in the statute.
GST on a business sale
If you sell the business rather than the shares, the transfer is outside GST when it qualifies as a transfer of a going concern: the business (not just assets) is transferred, the buyer will carry on the same kind of business, any part transferred can operate independently, the business is a going concern at the time, and the buyer is, or immediately becomes, a taxable person for GST.
ACRA filings
A transfer of shares must be lodged with ACRA within 14 days, and for a private company the transfer only takes effect when ACRA’s electronic register of members is updated. It cannot be backdated. Director changes are reported through Bizfile within 14 days.
Your employees
In a share sale, employment contracts are unaffected because the employer does not change. In a business sale where an undertaking is transferred, section 18A of the Employment Act moves employment contracts to the buyer on the same terms with continuous service, and the seller must inform affected employees and any trade union before the transfer. The Ministry of Manpower notes that a transfer of assets only, or a transfer of shares, is not a transfer for this purpose.
Personal data in due diligence
The Personal Data Protection Act allows employee and customer personal data to be shared with a prospective buyer for a business asset transaction without consent, within limits: only what is necessary to evaluate the deal, under a written agreement to use it only for that purpose, with the data returned or destroyed if the deal does not proceed, and with affected individuals notified after completion. We recommend running most diligence on anonymised data until late in the process.
Competition and takeover rules
Merger notification to the Competition and Consumer Commission of Singapore is voluntary. CCCS indicates it is unlikely to intervene unless the merged business would hold at least 40% of a market, or 20% to 40% where the three largest firms together hold at least 70%. The prohibition on mergers that substantially lessen competition applies whether or not you notify.
Companies that mainly hold property can face different stamp duty and tax treatment: take specific advice. This guide summarises official sources as at the date shown. It is not tax or legal advice; confirm the position for your transaction with your tax adviser and lawyer.
What founders underestimate
- Time. Preparation done well starts long before launch. The founders who sell best typically begin two to three years ahead.
- Confidentiality. A leak to staff or customers can damage the business you are trying to sell. Insist on NDA-first, staged disclosure.
- The price after diligence. The agreed headline is only safe if the process keeps competitive tension until signing.
- Choosing who runs it. Use five questions to choose an adviser before you sign an engagement.