The short answer
A stock loan extracts capital while leaving the position intact — you keep ownership, voting, dividends, and the upside, and recover the full holding on repayment. A sale is permanent: the cash arrives once, but the upside, the votes, and future dividends are gone for good, and a large disposal can carry control and disclosure consequences. Because Singapore has no capital gains tax, tax is rarely the deciding factor — the real cost of selling is losing the position itself.
Two ways to turn a position into cash
When a founder or substantial shareholder needs liquidity, the instinctive move is to sell some shares. It works — but it is a one-way door. A stock loan offers a second route: borrow against the holding, take the capital you need today, and keep the shares registered to you. The question is not which raises cash — both do — but what each one costs you beyond the cash.
What you keep with a stock loan
A stock loan is a temporary, secured arrangement. The borrower opens an account with the designated custodian, over which the lender takes security, where the collateral shares are held, while beneficial ownership is preserved. Subject to structuring, you keep:
- Ownership and the upside — if the counter re-rates while the loan is outstanding, the gain is yours, not a buyer's.
- Voting and influence — your seat at the table and your interest on the register are undisturbed.
- Dividends — the income stream can be retained, depending on how the facility is structured.
- The full position on repayment — when the loan is repaid, the shares return to you in full.
For the mechanics, see what is a Singapore stock loan and the step-by-step in how to borrow against your SGX shares.
What a sale costs you
A sale converts the position to cash once and ends everything else. You forfeit all future upside, all voting influence, and all future dividends. A large or visible disposal by a major holder can also move the price against you and signal to the market. Any disclosure or regulatory obligations are a matter for your own Singapore legal counsel, engaged in parallel; we act as arranger and introducer and do not provide legal or regulatory advice. Our note on the quiet liquidity explores why visible selling is so often the most expensive option.
The tax point — and why it is a red herring
Singapore has no capital gains tax. In many jurisdictions, the tax bill on a sale is itself a reason to borrow rather than sell; in Singapore that argument largely falls away. This is a fair point to acknowledge: tax is usually not the deciding factor here. The decision turns instead on the position. The real, unrecoverable cost of selling is losing the shares — the compounding upside, the influence, and the income — not a line on a tax return.
Side by side
| Stock loan | Selling the shares | |
|---|---|---|
| Nature | Temporary, secured, repayable | Permanent and final |
| Ownership | Retained | Transferred away |
| Voting rights | Retained | Lost |
| Dividends | Retained (subject to structuring) | Lost |
| Future upside | Yours | The buyer's |
| Recover the position | On repayment, in full | Only by repurchasing at market |
| Tax (Singapore) | No capital gains tax either way — not the deciding factor | No capital gains tax either way — not the deciding factor |
When selling genuinely is the better choice
A loan is not always the answer. Selling is the right tool when you have decided to exit the position permanently, no longer want the exposure, are rebalancing out of a name, or need a quantum that exceeds a prudent loan against the holding. In those cases, a clean disposal — or a discreet, privately-negotiated block trade that minimises market impact — serves you better than borrowing. The honest test is simple: if you still want the shares in three years, borrow; if you genuinely do not, sell.
Weighing it against margin borrowing too? See stock loan vs. margin financing. To talk through your own position, the process and contact pages are the place to start, and the FAQ covers the common questions.