Frequently asked questions about Singapore company incorporation
EPCs are distinct from other companies as these entities must have no more than 20 shareholders and all their shares must be owned by natural persons. These companies are exempted from Audit requirements if the turnover is less than 5 million SGD.
Local and foreign entities that plan to set up operations in Singapore must follow these basic requirements:
- The company must have a minimum of one shareholder.
- It must have a minimum of one director who is a qualified local resident. Directors must be 18 years old and above and must be natural persons.
- The company’s director can also be its shareholder.
- A minimum S$1 paid up capital is required.
- The company must have a company secretary who meets all the requirements for the post.
The overall registration process of a company may take a day or more to complete due to the following requirements:
- Reservation of name. The incorporation process requires a company to reserve a name that it will use in its operation. This process can be completed in less than 60 minutes, but might be longer if the name to be registered is similar to existing business names or it contains words that are deemed inappropriate.
- Signing and submission of required documents. Registering a company in Singapore requires a number of documents to be signed. The length of time needed to complete this process solely depends on the ability of the company to have the documents properly signed. Generally if you visit our office in person then this step can be done in approximately 1 hour.
It is better to have a representative in Singapore. The incorporation process does not require the physical presence of a company representative as transactions can be done through email and notarized documents can be sent via couriers. Opening a bank account that is related to the Singapore company operation, however, may need an actual person to be present in the financial institution as one-on-one interviews are often conducted prior to approval.
Singapore has very few business types that require license to operate. In general, registration and incorporation with ACRA are the only requirements. If your business falls under the licensing category, you may need to secure a license from relevant government agencies before you start any business transaction.
Singapore’s Registrar of Companies keeps a record of the business profiles of directors and shareholders. This information is available to the public upon request and payment of required fees.
Companies are required to have a local address registered before they can start their business operations. The address can be anywhere within the country, but post office box are not permitted. Business owners can also use their home address as their base of operation as long as prior approval is secured from relevant government entities, like Housing Development Board and Urban Redevelopment Authority. Transcend can provide you registered address for your Singapore entity. In this case all the correspondence we receive in our office for your company will be forwarded to your foreign address periodically. The postage charges will be applicable extra in this case.
The Companies Act of Singapore allows 100% business ownership of any company type operating within the country. Foreigners are also not required to get approval as they are accorded the same treatment as that of local business owners. Therefore you do not need to give any shareholding to the local Director.
Relocation is not a mandatory requirement to operate a Singapore company. Foreign owners may choose to manage their companies remotely and visit the country at their own convenience. For those who opt to relocate, Singapore provides foreigners with Employment Pass so that they can personally manage their Singapore business. Decision of approval of pass is with Ministry of Manpower Singapore.
Employing a specific number of employees is not mandatory. Many foreign companies operate their Singapore operations without any employee. Companies can employ foreign staff, provided that they comply with the requirements set forth by relevant government agencies. Foremost among these requirements is securing work passes appropriate to the role that the foreign employee will perform, complying with CPF regulations and payment of levies where appropriate.
Singapore’s Accounting and Corporate Regulatory Authority (ACRA) requires all companies to file annually either an audited or an unaudited account depending on the companies’ category. For example, exempt private companies with yearly turnover not exceeding S$5 million are only required to submit unaudited accounts. Audit is not compulsory for these entities. Audit will become compulsory if any of following conditions is met;
- Your company has corporate shareholder or
- Turnover of your company exceeds 5 Million SGD in a year
Paid up capital is the amount that is injected in the bank account of the company. These are the funds provided by the shareholders for the operations of the company. While legally a company can start with only 1 $ paid capital, in reality the amount depends on your business plan. For example;
- Travel agency must have minimum paid up capital of 100,000 SGD
- A telecom SBO license needs minimum paid up capital of 100,000 SGD
- Application for Employment Pass (EP) relocation visa. The chance of getting an approval is higher when the paid up capital is higher
No. You can use this paid up capital money for your business purpose. Like for paying purchases, paying salaries and so on.
No. unfortunately this is not allowed. The money can be used only for genuine business purposes. It can not be withdrawn for your personal purposes. If you withdraw money like this it can become a conflict of director’s duty to act in the best interest of the company, which is an offence under Singapore companies act.
According to Singapore companies Act section 199 (4) If accounting and other records are kept by the company at a place outside Singapore there shall be sent to and kept at a place in Singapore and be at all times open to inspection by the directors. So if you wish you can maintain accounts in your home country however the complete set of accounts must be sent to us periodically to comply with above requirement.
A Singapore company is treated the same way as any tax resident companies in Singapore. As such, it will enjoy all tax exemptions and incentives accorded to local companies, which include:
- Protection from double taxation as outlined in the Avoidance of Double Taxation Agreements that Singapore signed with other countries;
- Tax exemption on income generated from dividends and services rendered outside of the country;
- Tax exemptions given to start-up companies, provided that the subsidiary meets all the eligibility requirements.
Additional questions about Subsidiary company registration
In case of a subsidiary company the shares are owned by a foreign parent entity. Since the ownership of this company is with other corporate we need following additional documents;
- Certificate of incorporation of foreign parent entity
- Memorandum and articles of association of parent entity Certificate of incumbency (Showing current shareholders and directors) of parent company
- A certified copy of board resolution confirming its decision to incorporate a subsidiary in Singapore and the person authorized to act as foreign director of this new Singapore entity.
While incorporating a company in Singapore you have two options. The shares in the Singapore entity can be owned by individuals (Like the owners of parent entity) or by the foreign corporate. Below are the advantages and disadvantages of corporate shareholding. Based on this you should be able to decide how you wish to proceed. Advantages of corporate shareholding
- If the foreign parent entity has many shareholders, then it’s not practical to incorporate Singapore entity with individual shareholding by them. In this case corporate shareholding is obvious choice.
- In case of corporate shareholding the reputation of foreign parent can benefit the Singapore entity. For example if the parent entity is quite successful with few million dollars turnover, then this reputation can help you in application of business licenses, credit facilities with banks, employment passes and so on.
- Because of the corporate shareholding audit will be mandatory for the company. This will be added cost. For companies with 100% corporate shareholding the tax incentives are not available.
- The link between Singapore Company and foreign parent company in this case is obviously clear. This may need reporting of Singapore entity profits in your home country.