Who this is for: Singapore owners running profitable sole proprietorships who plan to sell in the near future and want to maximise price, protect contracts and people, and reduce friction at closing. This guide explains, plainly and practically, how to convert a sole proprietorship into a private company limited by shares before you go to market, what must be transferred, and how to avoid consent and licence bottlenecks.
For legal or media queries, please write to Waltson at waltson.tan@28falconlaw.com or send a WhatsApp message to +65 8079 0028.
Why incorporate before you sell
A sole proprietorship is not a separate legal entity from the owner and carries unlimited personal liability. That structure makes a share sale impossible (there are no “shares” to sell) and is often unattractive to buyers who prefer acquiring an operating company. By incorporating a private company limited by shares and migrating the business across, you create a sale-ready vehicle for a future share sale, preserve continuity for staff and customers, and improve execution certainty.
The conversion—at a glance
- Incorporate a private company limited by shares
- Register a new company (commonly ending with “Pte Ltd”). A Singapore private company can have up to 50 shareholders. Open a new corporate bank account in the company’s name.
- Transfer the business into the company
- Legally document the transfer of assets and key contracts (and certain liabilities, if intended). Where licences or permits are non-transferable, plan fresh applications issued to the company.
- Switch operations under the company
- Issue invoices, enter new contracts, and run payroll under the company. Notify counterparties, banks and stakeholders of the change.
- Cease the sole proprietorship on ACRA
- After the migration is complete, file the cessation of the sole proprietorship on ACRA’s BizFile portal.
Step-by-step pathway (Singapore context)
Step 1 — Incorporate the private limited company
Reserve the name and incorporate a private company limited by shares. At this stage you set the shareholding cap table and issue shares to founders/investors. A private company may have up to 50 shareholders.
Step 2 — Open the company bank account
Open a new bank account in the company’s name. This separates personal and company funds and lets you run receipts and payments cleanly from day one.
Step 3 — Transfer assets and contracts (document these properly)
Prepare a transfer schedule covering the assets and (if intended) liabilities that will migrate to the company. Different assets require different instruments. For example, intellectual property (IP) assignment agreements and/or deeds of novation for registered IP, novation or assignment agreements for contracts, and delivery/installation notes for equipment.
Step 4 — Manage consents and counterparty communications
Some contracts restrict assignment or novation, so you will need counterparty consents. Map these early. For critical customers and suppliers, plan sequencing (e.g., sign consent letters before the transition) to prevent service interruption.
Step 5 — Licences and permits
Where a licence or permit is non-transferable, file a fresh application in the company’s name. Build statutory lead times into your timeline and consider interim operating arrangements that do not breach licence conditions.
Step 6 — Operational switch-over under the company
Begin issuing invoices, purchase orders, and payroll out of the company, and make sure your accounting system, point-of-sale (POS) system, payment gateways and e-commerce platforms reflect the new legal entity. Notify customers, suppliers, landlords and banks of the switch.
Step 7 — File cessation of the sole proprietorship with ACRA
Once the business has been fully migrated and you no longer trade as a sole proprietor, notify ACRA via BizFile that the sole proprietorship has ceased business.
Comprehensive transfer checklist (use this as reference)
- Cash & banking: open company account; update settlement instructions with payment providers; move standing instructions.
- Receivables & payables: ledger cutover; ensure invoices after cutover date are issued by the company.
- Tangible assets: equipment, inventory, fittings etc., Identify, tag, and deliver; update insurance coverage.
- Intellectual property: trademarks, domain names, proprietary content/code. Prepare assignment agreements, deeds of novation, and registrar change requests, where relevant.
- Leases & real estate: review assignment/novation conditions; obtain landlord consent if required.
- Customer contracts: identify non-assignable agreements; obtain novations or re-contract customers under the company.
- Supplier & service contracts: telecoms, cloud/SaaS, logistics, maintenance—map renewal dates and consent rules.
- Licences & permits: list all; identify those that cannot be transferred; file new applications under the company.
- Employment & payroll: if staff are moving into the company before a share sale, prepare new employment contracts under the company and align benefits and CPF accounts.
- Tax & compliance: update IRAS and other agencies where required (e.g., GST registration status) in line with your advisors’ guidance.
- Data protection: update privacy notices and data processing records to reflect the new legal entity as controller/processor where applicable.
- Stationery & channels: update letterheads, website footers, terms and conditions, ecommerce storefronts, payment pages, and app store profiles with the company’s registered details.
Where this puts you for the actual sale (share vs asset)
After you’ve migrated the business into the company, you can pursue a share sale (buyer acquires the company’s shares) or, if you wish, still run an asset sale. A share sale usually reduces execution friction because the company remains the same legal entity—contracts and day-to-day operations can continue subject to any change-of-control clauses. An asset sale can be used to ring-fence legacy items or to carve out only selected assets.
Governance and approvals to keep in mind
If you later transact as an asset sale and intend to dispose of the whole or substantially the whole of the company’s undertaking or property, obtain company approval in accordance with the Companies Act. Build this into the timetable so it does not become a late-stage blocker.
Execution pitfalls (and how to avoid them)
- Treating the transfer as “just administrative”
Each asset class has its own legal instrument and evidence of transfer. Skipping paperwork risks title disputes and weakens your negotiating position during buyer diligence.
- Missing non-assignable contracts
Some key contracts restrict assignment or novation—engage counterparties early and prepare plan B (re-contracting) where needed.
- Licences left to the end
Non-transferable licences require fresh applications. File early and model the lead time into your long-stop date.
- Commingled banking and accounting records
Open the company account at the start and migrate billing promptly to avoid messy cutovers that degrade buyer confidence.
- Cessation filing delayed
Once the business has fully moved into the company, file cessation of the sole proprietorship with ACRA to keep registries clean and avoid counterparties using outdated records.
Two owner scenarios (how the pathway changes)
Scenario A — Clean pre-sale migration, then share sale
You incorporate, move assets, contracts and licences into the company, run three billing cycles under the company to establish clean books, then launch a sale process focused on a share sale. This favours continuity, reduces counterparties’ workload, and typically shortens the path to closing once a buyer is chosen.
Scenario B — Selective migration for carve-out buyers
You incorporate and migrate only the business lines you intend to sell, leaving legacy items behind. This prepares you for either a share sale of the company holding the carved-out assets or a more surgical asset sale that buyers often prefer when they want only specific lines.
Timeline approach (sequence over speed)
Avoid over-focusing on duration. What matters is sequence control: incorporate → bank account → transfer schedules & consents → licence applications → operational switch-over → ACRA cessation of the sole proprietorship. If you keep this order and maintain a live checklist, you will de-risk buyer diligence and protect valuation.
What sophisticated buyers look for post-conversion
- Clean, documented title to assets inside the company (deeds, assignments, delivery notes).
- Counterparty consents/novations for material contracts (or evidence why not needed).
- Licence coverage in the company’s name and current compliance status.
- Bank statements and management accounts that reflect trading in the company for a reasonable runway pre-process.
- No remaining liabilities in the sole proprietorship that should have migrated (or a clear rationale for exclusions).
How we can assist you: Pre‑Sale Incorporation Pack (Singapore)
If you intend to have a clean, sale‑ready structure, we will incorporate your company, draft the transfer suite, map consents and licences, and project manage the operational switch‑over for you, so you can focus on running the business. Ask for our fixed‑fee Pre‑Sale Incorporation Pack with clear scope, milestones, and deliverables.
FAQ
Why can’t I sell my sole proprietorship by way of a share sale?
A sole proprietorship is not a separate legal entity and has no shares to transfer. Incorporate a private company, migrate the business into it, then sell the company’s shares.
How many shareholders can a private company in Singapore have?
In general, a private company limited by shares can have up to 50 shareholders.
Do I need to incorporate if I plan an asset sale instead?
Not necessarily. An asset sale transfers selected assets and liabilities to the buyer. However, many buyers prefer acquiring a company for continuity and simplicity; incorporation preserves that option.
Will all my contracts automatically move to the company?
No. Contracts generally require assignment or novation to move to a different legal entity, and some prohibit transfer without consent. Identify and engage counterparties early.
Can I transfer all licences to the company?
Some licences and permits cannot be transferred. Where transfer is not allowed, file fresh applications in the new company’s name and plan for lead times.
When should I file cessation of my sole proprietorship?
After you have fully migrated trading to the company and no longer use the sole proprietorship, submit the cessation filing via ACRA’s BizFile portal.
Does this improve my sale valuation?
It improves execution certainty and buyer confidence and both factors support value. It also enables a share sale route that typically reduces operational friction at closing.
What if I only want to sell a product line, not the whole business?
Incorporation still helps. You can migrate the chosen line into the company and then sell either the shares of that company or the specific assets, depending on buyer preference.
For legal or media queries, please write to Waltson at waltson.tan@28falconlaw.com or send a WhatsApp message to +65 8079 0028.
Disclaimer: Our articles are intended for your general information only. They are not intended to be nor should they be regarded as or relied upon as legal advice. These articles neither constitute nor substitute independent legal advice, and you should still seek independent legal advice for your legal matters. You should consult qualified legal professionals before taking any action or omitting to take action in relation to the matters discussed in our articles.
