To successfully register your company in Singapore, you must follow the guidelines laid out by ACRA, the Accounting and Corporate Regulatory Authority. ACRA, which also regulates business entities and public accountants, is to ensure the quality and delivery of business and accounting services. ACRA does publish some very useful information on their registration process that is available on their website. Information on their website expounds on how a foreigner can start a business in another jurisdiction, not just in Singapore. However, it covers various forms of business entities, regulatory requirements, how business entities should behave, and compliance services. If you are a foreign investor and have or found other members or employees to work on the company’s daily operation or if you would formally work for the Singapore company, the agency acts on behalf to facilitate the completion of the company registration in the quickest way possible to you. However, it is worthwhile to consider the various company types available in Singapore, as well as the legal, tax, classic, and annual report requirements inherent with a company that falls on your type of choice.
Most people who have set up companies in Singapore say it is one of the easiest places in the world in which to start, run, and do business. Anyone, no matter the nationality, can start a company in Singapore, but in practice, it is foreigners that do so most often due to the easy process and low cost. This article provides information on what you need to know if you are a foreigner planning to start a company in Singapore. It gives very useful information on the registration process, residency options after, company types, government grants and incentives that are available, and the fiscal compliments. Up to March 2021, I’d say that the first step when setting up in Singapore is to register a company, but with shortening approval times, this may now be the second step.
Requirements for Company Registration in Singapore
For a company’s local office, a foreign parent company must also register for Singapore Central Providence (CPF) as an employer if it has local employees and go to a local insurance plan and maintenance scheme. In Singapore, companies, both local and foreign, may also claim some incentives, such as tax exemptions, taxpayers’ benefits, self-employed people and long-term development plans. All companies must lodge annual tax returns with the Singapore Revenue Authority and renew their promises with the Ministry of commerce. In general, the registration of Singapore companies is quite simple, with few legal barriers to entry, so many foreign firms have chosen Singapore as a location for their offices. Once these have been completed, a foreign company can begin its operations in Singapore.
To register a company in Singapore, shareholders and directors must be at least 18 years of age and without a problem with bankruptcy or criminal record. A foreigner can register a company as a sole proprietor with the EntrePass or Employment Pass, whether it be a mail-order, manufacturing or import-export company. It is usually a condition that foreign holding companies engage the services of a local participant (such as a local entity or Singaporean resident) and reports such arrangements to a central bank. There is also no restriction on a foreigner’s ability to create a limited liability company. The investments of a foreign parent company can be used as capital for a child company. A foreign company can become a shareholder, but the company must be a private company limited by shares in Singapore. For this type of company, the number of some of the shareholders is limited to 50.
The registration process of a company in Singapore is simple and efficient. Are you a foreigner who would like to start and run a company in Singapore? Here’s how you can go about it.
Eligibility Criteria for Foreigners
The Companies Act provides that a foreign company is prohibited from conducting business in Singapore unless it is registered as an external company if it is a foreign-incorporated limited company, or as a foreign company which is a foreign-incorporated limited liability corporation but which is not a company incorporated outside Singapore. Hence, company registration in Singapore for foreigner needs to first establish which type of business entity they would like to establish in Singapore. This determination of business entity type will also inform whether the existing foreign company could benefit from the following mechanisms: the inward re-domiciliation feature; or utilize ownership and control of the Singapore company to avail of tax exemptions. The standard of company registration therefore squarely depends on the objectives of the parent company and the existing business operations.
Under existing regulations, a foreign incorporated company can establish a presence in Singapore via a wholly-owned subsidiary, a subsidiary, or a branch. For foreigners to be able to successfully register a company in Singapore, the business entity must first satisfy these eligibility criteria. The parent company of a local branch is its headquarters, and the branch has no separate legal status in Singapore. A subsidiary, also called a private limited company by shares, is a locally incorporated company with its own legal status, separate from that of its members or shareholders. Irrespective of the entry mode chosen, the business entity is required to ensure it complies with the relevant shareholders’ statutory requirements as well as other corporate governance regulations.
Minimum Paid-up Capital
Exempt private limited companies are private limited companies with no more than twenty shareholders, and none of the shareholders are corporations or the nominee for another corporation. It is important to note that companies limited by guarantee and foreign companies are not exempt private companies. These companies have an annual turnover of their corporate is not more than S$5 million. Furthermore, their corporate is typically not more than S$5 million. Furthermore, these companies must be dormant or have fewer than twenty employees. The exempt private companies also enjoy several compliance reliefs. For example, they need not prepare a cash flow statement for annual statutory audit requirements (for companies without more than S$5 million turnover and not more than $5 million in footing corporate assets.
Few things can easily turn off a potential entrepreneur like a large minimum paid-up capital requirement. For example, some businesses need are listed as S$1. The minimum paid-up capital requirement refers to the amount the shareholder/s of a new company must subscribe to before the company is formally allowed to commence business operations. With effect from 15 May 2003, the Singapore government waived this requirement. As such, the minimum paid-up capital for businesses was conveniently lowered to S$1. On another consideration, most businesses require loan capital. With a lower paid-up capital, businesses will find it easier to secure attractive loan packages.
Appointment of Local Director
After the company is registered, the company incorporated wishes to step down, find a replacement, or arrange for naturalization status. This allows the foreign directors to take over the management or set up their own companies without any restriction at any time they wish to. Simply complete the online form filing and submit it via the BizFile portal with the requisite registration fee, and it will be completed instantly.
As the local director only needs to be a natural person and not a shareholder, property agent and management services companies here commonly provide these services to foreign companies. The fees for reputable agents start from a couple of thousand dollars onward. Considering the extensive procedures and documentation required otherwise to set up a locally-incorporated company here, these services are offered at quite reasonable rates.
A Singaporean or a Foreign Entrepreneur? Foreign business persons should be quite familiar with the concept of the nominee director, which is quite common in countries such as Thailand, Indonesia, Laos or the Philippines. The requirement for a local director in Singapore may similarly be addressed with external help here.
The company that you are registering may be locally incorporated, which means the shareholders may be foreigners themselves or the company may have directors who are foreigners. However, to set up a company here, one local director is compulsory. The local director must be someone ordinarily resident in Singapore. Although the home address of the director has to be provided in the form, there is no proof required or any checks made to verify this piece of information.
Step-by-Step Process for Registering a Company in Singapore
- Prepare company documents such as the firm constitution detailing the company’s profile, the roles and responsibilities of shareholders and directors, and the mode of operation. Articles of association outlining the company’s internal management rules and regulations, and initial shares and company registration information. Representation of the company’s registered office and registered address. A consent letter or notice of approval for all registered office directors, company secretaries, managers, shareholders, and partners. A declaration of compliance with ACRA requirements prior to signing. The identification of all directors and company secretaries, as well as shareholder details and their respective financial investments.
- Choose a company name that is not identical to that of any existing local company and not in the list of prohibited company names. Company names are not allowed to contain trademarks and business names belonging to other organizations. You are also not allowed to choose names that infringe on copyright or local laws.
- Ensure that you are eligible to register a company in Singapore by passing the requirements of ACRA (Accounting and Corporate Regulatory Authority) on company incorporation. One of these requirements is that the company must have at least one director who is a Singaporean citizen, permanent resident, or holder of a valid work pass, employment pass, or dependent pass. The company must also have a physical Singapore address, not a PO box.
When planning to register a company in Singapore, this is the overview of a step-by-step process that you need to follow. The entire process is quick and should not take more than a few hours.
Name Reservation and Approval
Upon choosing activities, directors, and shareholders’ personal details, which are mandatory data required to be submitted, you can proceed with registering your company. For non-Singaporeans, you are required to engage the services of a registered filing provider who will submit the registration on your behalf. If your documents are in order, the entire process should not take more than 24 hours. However, the waiting time might be longer if your chosen organization name is in the “reserved” status. During this time, you should prepare your hardcopies of the applications that have to be posted to the following addresses listed on the website, kept securely for actual interviews in person with the authorities. After your business is incorporated, do not forget to prepare and maintain records of your business such as minutes of meetings, share records, and accounting.
Every company in Singapore needs to have a unique and original name, different from all other registered companies. You may check the availability of your chosen name by logging in to your SingPass on the BizFile+ website. The name search costs S$15 after the revival is conducted. Once you have obtained approval for the name, it will be reserved for 120 days for any paid extensions. However, note that you have the option of submitting a reservation order, which means that there could be a delay in the date you actually submit the company registration. The organization submitted, which could result in delays in moving forward.
Preparation of Incorporation Documents
The four documents mentioned — in (b)/(c)/(d)/(e) — are needed when your company first becomes an ACRA member. The nominee director has a duty to vote at the general meeting of its member unless funds or misapplication towards the nominee director. When opening the ACRA records, the company submits the Decision to the Parties to the Company and the Shareholders Agreement in the current composition, and these records are reflected in the formal RTS and are also replicated in the company’s RTS after they have been executed.
- Consent to Act as a Director – Appointing the nominee director shall be passed in the AGM, and the board meeting shall also be held in order for the nominee director to approve and adopt the legal documents (including the nominee agreement) required for his duties.
- Statement of Nominee Director and Consent to Act as Nominee Director – This is only required for companies that have a nominee director holding an executive position. If you do not have a local director or if you have a local director whose services are no longer required, a nominee director might be necessary for you to pass a message to the local director whose signature and local address are required in the incorporation papers. If your company’s directorship and the secretary are Actions Global corporate secretaries, this document may not be necessary.
- Constitution – Table F company can adopt the standard constitution prescribed under the Companies Act while other corporate structures may require a tailor-made constitution. A one-person company may not be the Table F company – a constitution might need to be specially prepared for it. An individual can, however, opt to adopt a Table F company constitution for a one-person company structure.
Before submission of your company to ACRA with the electronic record, you need to prepare and sign the following incorporation documents:
Submission and Approval of Incorporation Documents
With effect from the year 2017, Section 22 of the Companies Act requires mandatory compliance with the constitution by companies incorporated in Singapore, provided the constitution is lodged at the point of incorporation. It is the preference of a number of directors for this to be submitted after the company is incorporated. Themed bank accounts for your new company can be opened, and frequent delays in bank account openings are observed in the event the constitution is submitted. Our Government Electronic Business for filing your constitution. Submitting an earlier constitution before setting up the board can be an advantage, providing the future directors and shareholders wish to govern how the company will be run. If the shareholders want to increase the directors’ powers in the articles, a resolution will need to be lodged to consider changes to the submission otherwise.
Name and address of company officers: Corporate Secretary and Director. The personal particulars of these officers should be in accordance with their identity cards and passports. All foreigners who intend to open a business in Singapore must include a locally-residing company director in order to successfully incorporate a private limited Singaporean company. It is therefore a legal requirement. If the incorporation document does not show that you are a director, it will not be approved. This means you will not be able to complete the incorporation and will need to plan for the transition period of appointing a director prior to approval into the document. Among acceptable appointees as company officers are holders of the Employment Pass, Entre Pass, or Dependent Pass. Singapore permanent residents are also acceptable.
Opening a Corporate Bank Account
In addition to providing the necessary documentation, all business account holders are likely to need to visit Singapore in person. If you do have any additional requirements for opening your corporate bank account, you should check with the bank and bring any extra documentation or information that may be required. Once you have completed the necessary steps for establishing your business, you are ready to begin your operations in Singapore. When incorporating your company in Singapore, remember to plan ahead and seek out the necessary assistance when needed. The more prepared you are in the beginning, the smoother the process of registering and setting up your business will be.
– Identity Documents: Identification documents (i.e. identity cards, passports) of all individuals involved in the company.
– Proof of Company’s Structure: Business profiles, shareholder certificates or MCI documents of the company’s ownership structure may be required.
– Proof of Company’s Business Activities: Documents detailing the company’s business activities may be demanded.
– A Valid Business Address: Present a utility bill of the physical or virtual office address used as the business address.
– Documents of the Directors, Shareholders, and Authorised Personnel: Notices of appointment detailing the list of authorised signatories provided by the company.
– A Recent Financial Copy of the Company: A latest ACRA-certified company business profile or company information report that includes the business registration number (UEN), the information of the company’s shareholder, directors, company secretary, and the company’s paid-up capital.
– The Company’s Constitution: The company’s constitution if your company has one. – All Corporate Documentation: Copies of Annual Return in Singapore companies, certificate of incorporation, as well as all corporate documents issued by ACRA.
– Other Documents: Any other documents required by the bank. – Due diligence checks: This can take different forms across different banks or even for the same bank.
When you have decided on your bank of choice, you need to prepare the necessary documentation.
Additional Considerations for Foreigners
The Act requires an individual or foreign company to engage a Registered Filing Agent (RFA) to submit an application to register a company on their behalf. RFAs are experienced filing agents that are responsible for reviewing and submitting applications for the registration of a company. Almost all local service providers are RFAs and can handle all the requirements of the registration process. If you are a foreign company, you will not be able to engage a professional service provider in Singapore on your own to initiate the process of registering a company. A professional service provider is someone like a CPA firm that is able to provide clear and concise advice on corporate establishment in Singapore. There are two options you may undertake to begin the registration process of a company. The first is to appoint a professional service provider in Singapore. Such an appointment allows the Assistant Registrar of the Shah Wali, being of the view that the appointment is in the public interest, to register the company.
While Singapore ranks highly based on the World Bank’s Doing Business Report, the ease of doing business in the country is assessed based on local businesses. However, if you are a foreign entrepreneur planning to set up a business in Singapore, you may find it a little bit tough to register a company. The incorporation process may be lengthy and even more tedious if the necessary preparation is lacking. Many local service providers offer comprehensive assistance to help set up business entities in Singapore. This article outlines the key aspects of registering a company in which you may require assistance from a professional service provider.
Work Visa and Employment Pass
For aspiring employers, the Employment Pass, abbreviated to EP, is a work visa of critical importance for anyone. It is open to managers, professionals, and specialized technicians, and lets the holder stay, live, and work in Singapore. It must be noted that fresh university graduates with no prior work experience are not eligible. Individuals must meet established criteria in areas such as merit, qualification, experience, and age (primary school examination or age 57 and older). The EP requirement applicant to work for a well-established and acceptable local employer are cancelled. Possession of relevant qualifications in education and work experience must be confirmed. Technically, the ability to explain to another company should not be an obstacle to the issuance of an EP; however, evidence that is not shown to solve the cross-ward processing requirement within 21 calendar days of the task. Since March 2020, the Singapore Ministry in charge of authorized signatures on the immigration regulations (MOM) has approved changes in the sub-requirements. Thus, in view of the S Pass, the salary limit has been raised from $2,300 to $2,400. In fact, employers have received EPs for new applicants from any subject who do not meet MOM wage requirements at age 18 for education– especially for the shortage of electric equipment. Conversely, the duty role secretary’s salary held under the transition duties has been reduced to for workers over the cutting edge working there. MOM’s minimum wage has also been abolished.
To start working legally in Singapore, a foreigner must first obtain a work visa. Once the work visa has been processed, actual employment can begin.
Taxation and Compliance
And as we all know, tax collections become the source of government revenue. This revenue, in turn, will be reallocated in state budgets for the betterment of its citizens. When its 5.5 million citizens are better able to live comfortably without having to bear the burden of impotent national debts, the human development index (HDI) in Singapore also steps up to rank 9th place in the world, the highest in the Asian continent, and is recognized as the 3rd economy that best improves human development. Similar to the collection of 17% corporate tax under the guise of reinvesting it for the good of its citizens, this is also a form of The Gini Coefficient supersonic making some countries envy Singapore. In addition to corporate taxation, check out also the consumption taxes that currently amount up to 7%. This number – 7% – includes the Goods and Services Tax (GST) was initiated as an attempt by the government to equilibrate lower corporate tax collection.
No company gets away with operating without paying taxes, and conditions are no different across the seas in Asia. While Singapore set itself apart from the likes of Cayman, Bermuda, and Malta by showing an iron reliance on its corporate tax despite nearly all countries planning to eradicate the rates in the next few years. Even with the low 17% in 2019 – this 17% used to be 20%, so, who knows how the percentage can go even lower – Singapore doesn’t plan to further lower their tax rates below 17% since about 180 to 200 million dollars from tax royalties will never be collected loss annually. Over the years, this tax collection gradually goes up as more and more companies operate in Singapore generating a healthy profit that is subsequently levied for tax collection by the Inland Revenue Authority of Singapore (IRAS).
Engaging Professional Services
Generally speaking, due to language and cultural differences, service professionals from your homeland are more likely to consider your needs and concerns rather than local professionals. The consequence is that their charges are generally higher. But given that businesses in Singapore have to comply with the regulations to avoid being penalized, and that a sound market strategy is the key to a successful business, our recommendation is to involve service professionals who are experts in this field. If you are new to the business and have not drafted a business plan yet, we suggest you seek the assistance of foreign professionals, as they know more about your background and can therefore offer better recommendations. However, even if you decide to do all this on your own, you might still need the assistance of professionals in the field to avoid any future crisis. Based on the information offered above, you can find the service professionals who have served foreign businesses to assist you for smoother company establishment without too much hassle, and you can set up a company in Singapore even without traveling around there.
Engaging professional services. Since engaging professional services is the most effective and popular approach, we will discuss it in detail. The first thing to be aware of is that some local professional firms, especially accounting firms, like to target clients of certain industries, such as trading, retail, F&B, and so on, as these industries usually require bookkeeping and accounting services. Therefore, if you plan to involve professional assistance in your registration process, you should first understand their professional background and the industries they target, so you can reduce your searching time and necessary efforts. Furthermore, not all service professionals have rich experience in this field, so you need to look for a reliable business incorporation firm with a group of service advisors. You can ask them some questions to screen them, such as how many foreign clients they have served, how long they will usually finish the registration process, how many company names they would recommend to you, if their fees are simple and clear with no hidden charges, and so on.