S$2.00 holding company ??

[peckhs]

HI, need someone to enlighten me please ...

Here's the scenario:-
Company A has a paid up capital of S$2.00 and 2 directors with S$1.00 share each.
Company B has a paid up capital of S$2000000.00 and 2 directors with no share in the company.
However, Company A owns all the shares in Company B.
The directors in both companies are the same.
Question is, can a $2.00 company own a S$2000000.00 company?
If yes, what the logic/rationale for doing that?

Thank you.

 

[OhYea]

Re: S$2.00 holding company ??

HI, need someone to enlighten me please ...

Here's the scenario:-
Company A has a paid up capital of S$2.00 and 2 directors with S$1.00 share each.
Company B has a paid up capital of S$2000000.00 and 2 directors with no share in the company.
However, Company A owns all the shares in Company B.
The directors in both companies are the same.
Question is, can a $2.00 company own a S$2000000.00 company?
If yes, what the logic/rationale for doing that?

Thank you.

Hi Peckhs,

Yes it can be done.

The flow would be:

Each of the Director put in S$1 in to Company A.
Other than the S$2, they loan another S$2 mil into company A, so now Company A has S$2 paid up capital and owe S$2 mil to the directors.

Now Company got total S$2,000,002 in it bank account.

Then Company A, as a legal entity, invest S$2,000,000 in Company B. Company B become a wholly own subsidiary of Company A.

For Company A, the directors have two options, either to loan the S$2 mil to Company A or capitalise theS$ 2 mil in Company.

for whatever reason, If they opt to capitalise the S$2 mil, the fund will never flow back to them, but if they structure it as loan to the company, they company will need to pay back to them.

 

[peckhs]

Re: S$2.00 holding company ??

Ok....
So am I right to say that if Company B goes under , the directors' liability is only $2.00?
tks

 

[OhYea]

Re: S$2.00 holding company ??

Ok....
So am I right to say that if Company B goes under , the directors' liability is only $2.00?
tks

o wuld say the directors' liability is not the $$, it is their duty as a directors.