SINGAPORE Law and Practice Contributed by: Sim Bock Eng, Josephine Choo, Aw Wen Ni and Vincent Ho, WongPartnership LLP
10.2 Common Charitable Structures The three most common legal structures for non-profit organisations in Singapore are: • a CLG; • a society; or • a charitable trust. CLGs Of the three, only CLGs benefit from limited liability (limited to such an amount that the members had guaranteed to contribute to the assets of the company in the event that it is wound up). CLGs may also be registered as charities, allowing them to benefit from income tax exemptions. However, CLGs also suffer from a greater number of administrative requirements in their setting up, including the need for a registered office, requirements regarding directors and more complex annual reporting requirements. Societies Like CLGs, societies may be registered as charities and benefit from the associated tax exemptions. An advantage that societies have over charities is fewer administrative requirements (eg, their officers are not subject to statutory qualifications). However, socie - ties do not have a separate legal identity from their members, and members may be personally liable for any liability incurred. Charitable Trusts Finally, charitable trusts are a useful structure for the investment and disbursement of assets for the pur - pose of charity. They also benefit from limited public disclosure and tighter control; generally, there does not need to be an auditor or audited financial state - ments unless required by the trust deed, and con - trol resides entirely with the trustees. Like societies, however, charitable trusts have no independent legal personality, and trustees must bear all legal liabilities.
It is often not just a question of selecting a structure for the charitable intentions of the client. Charities and the manner of giving have developed over the years, and many clients’ philanthropic objects have devolved beyond the traditional concept of giving. Most charities currently include the concept of empowerment: giving in a manner such that the pro - ject would generate profit to be self-sustaining, or run - ning a social enterprise that will benefit the underprivi - leged without sacrificing profits entirely. A structure would thus have to be created to allow such entrepre - neurial intentions whilst capitalising on the incentive schemes and benefits to which a charity is entitled. The Code of Governance The Charity Council developed the Code of Govern - ance to set out principles and best practices in key areas of governance and management that charities are encouraged to adopt. The Code was first devel - oped in 2007, with the most recent revised Code issued on 4 April 2023. Key changes include the introduction of environmental, social and governance concepts. The Code is meant for all registered charities and Institutions of a Public Character (IPCs) in Singapore. While compliance is not mandatory, charities are encouraged to review or consider amending their gov - erning instrument, by-laws and policies as necessary to adopt the Code for the best interest of the charities. All charities and IPCs to which the Code applies are required to submit a governance evaluation checklist.
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