Singapore, renowned for its robust economy, strategic geographical location, and business-friendly environment, has become a magnet for foreign entrepreneurs and investors looking to establish a foothold in Asia. For foreigners, dealing with unfamiliar and complicated corporate compliance requirements can be a tedious challenge. In this guide, we'll walk you through incorporating your foreign company in Singapore and performing common corporate processes such as choosing the right business structure for your needs.
Establishing a Foreign Business Entity in Singapore
Singapore offers multiple ways for foreign businesses to establish their presence in the region. Here's a breakdown of the four prevalent methods of setting up your operations in Singapore:
- Redomiciliation via Transfer of Registration: This process allows a foreign company to transfer its registration from its original location to Singapore. Once redomiciled, the company ceases its existence in the original jurisdiction and becomes a Singaporean entity, adhering to the Companies Act. It's an optimal route for foreign businesses aiming to shift their regional or global headquarters to Singapore without changing their corporate legacy or branding.
- Formation of a Representative Office: For foreign enterprises exploring potential business opportunities in the region, establishing a representative office can be a preliminary step. A representative office is a temporary setup which has no legal status and cannot engage in any commercial activities in Singapore. Its primary functions include conducting market analysis, feasibility assessments, and participating in trade exhibitions to showcase the services of the foreign parent company.
- Incorporation of a Subsidiary Company: Subsidiary companies in Singapore, typically known as Private Limited (Pte Ltd) entities, are those where a foreign or local company holds the majority shares. This structure has its own legal identity which is separate from its parent company. Incorporating a subsidiary company in Singpore is particularly suitable for foreign SMEs and smaller enterprises with established operations outside of the country.
- Registration as a Foreign Company: Any foreign company intending to conduct business in Singapore must register with the Accounting and Corporate Regulatory Authority (ACRA). To streamline this process, these companies can leverage the expertise of registered filing agents and local corporate service providers (CSPs) for tasks like incorporation, ensuring corporate compliance, managing annual tax filing and financial report submissions.
Choosing a Business Structure for your Company
Once you have chosen to incorporate your foreign company, understanding the available business structures is the next step. There are three main types of business structures available to foreign investors in Singapore: sole proprietorships, partnerships, and limited liability companies (LLCs). Each has its own benefits and drawbacks, so it's important to choose the right one for your needs.
- Sole Proprietorship: Ideal for individual business owners, but lacks personal asset protection. A partnership is a type of business structure in which two or more individuals or organizations share ownership of the business. Partnerships can be either general partnerships or limited partnerships. In a general partnership, all partners are jointly liable for debts and obligations incurred by the business; while in a limited partnership, only some partners have liability protection. Partnerships offer many benefits, including pooling resources and sharing risk; however, they can also be complex to manage due to differing goals and interests among partners.
- Partnership: Can be general, limited, or limited liability. Suitable for collaborations between individuals or entities. A partnership is a type of business structure in which two or more individuals or organizations share ownership of the business. In a general partnership, all partners are jointly liable for debts and obligations incurred by the business; while in a limited partnership, only some partners have liability protection. Partnerships offer many benefits, including pooling resources and sharing risk; however, they can also be complex to manage due to differing goals and interests among partners.
- Limited Liability Companies (LLCs): Private Limited Companies (Pte Ltd) are a top choice for foreigners with separate legal entity status and personal asset protection for shareholders. A Limited Liability Company is a type of business entity that offers owners personal liability protection from debts and obligations incurred by the company. LLCs are popular among small businesses and startups because they provide flexibility in how the company can be structured and managed. For instance, an LLC can be owned by one individual or by multiple shareholders. One downside of an LLC is that it may be subject to higher taxes than other types of businesses structures.
Key Requirements for Foreign Entrepreneurs
You don't need to fly into Singapore to start your company. With the help of many online corporate service providers like ATHR, foreigners are free to open and manage their Singapore companies remotely. Foreigners planning to live and work in Singapore may also explore common relocation schemes such as applying for an Employment Pass (EP) or an Entrepreneur Pass (EntrePass) from Singapore's Ministry of Manpower (MOM).
Regardless of your choice of operations, non-residents must seek the assistance of a registered filing agent to incorporate a foreign company with ACRA before setting up shop in Singapore. Here are other requirements and essentials you will need before registering your company:
- A Local Director: The Companies Act requires all companies to have at least one director who is a Singapore resident. Foreign nationals looking to do business in Singapore have the option of appointing a nominee director to fulfill this requirement.
- Company Secretary: By Singapore law, companies must appoint a Corporate Secretary within six months of incorporation to handle administrative tasks. The chosen individual or service should have a deep understanding of corporate law, outstanding organizational skills, and an ability to work well with all levels of an organization.
- Shareholders: A Pte Ltd can have between 1 to 50 shareholders, either individuals or corporations. ACRA requires corporate service providers and filing agents to perform checks on companies and their key officers or owners. Non-resident directors and shareholders are thus required to submit their proof of identity, proof of address and other relevant documents for verification.
- Registered Address: By Singaporean law, all companies must have a local registered address that is not a PO box. Many corporate service providers also offer Virtual Office services which allow business owners and employees to work remotely while still having access to essential business functions through the internet.
- Paid-up Capital: In Singapore, a company can be registered with paid-up capital as low as S$1. This point is one of many favorable conditions that makes Singapore an ideal country for foreign businesses to start or expand their business ventures in the region.A mandatory requirement. If you're overseas, appoint a local resident.
ACRA Registration Process Simplified
The first step in setting up your company is to register it with ACRA. Foreign companies must seek the help of a registered filing agent to prepare, submit and process the completed Business Profile form and pay the prescribed government fees. Here's a quick breakdown of the company incorporation process:
- Name Approval: Choose a unique company name for ACRA's review. The proposed name must reflect the company's business of nature and should not include vulgar language, restricted words or misrepresent the business in any way.
- Preparation and Filing of Documents: Foreign applicants may seek the assistance of a registered filing agent or corporate service providerto prepare all documents required for the registeration of the foreign company. This includes the company constitution and details of directors, shareholders, and the secretary.
- Submission to ACRA: Submitting applications to ACRA is a straightforward process. The government imposed fee varies based on the business entity type chosen. Typically, it takes around 1-2 days to register a company however, this can vary depending on factors such as availability of the proposed company name or if additional approvals are required.
- Opening a Bank Account: Once the foreign company has been registered with ACRA, the registration certificate may be submitted in an application for opening a corporate account with any local bank in Singapore. Today, most banks we work with even support opening accounts online!
- Secure Licenses: Depending on your business type, certain licenses or permits may be necessary. Foreign business owners looking to relocate to Singapore may also apply for an Employment Pass which may then be used to secure permanent residence status after working for a while in Singapore.
After Registration: What Next?
Post-registration, foreign companies will need to comply with various obligations under the Singapore Companies Act and other relevant laws to stay in business in Singapore. Some of these include:
- GST Registration: GST, or Goods and Services Tax, is a value-added tax levied on most goods and services sold for domestic consumption in Singapore. GST-registration is mandatory if a company's annual revenue exceeds S$1 million. Companies that do not fall under these conditions may also opt for voluntary registration for additional tax savings.Mandatory if annual revenue exceeds S$1 million.
- Annual Compliance: Companies registered in Singapore must compile their yearly financial statements following the Singapore Financial Reporting Standards. Furthermore, they are obligated to report their revenue figures and submit their Estimated Chargeable Income (ECI) using the ECI form to the Inland Revenue Authority of Singapore (IRAS) within three months post their company's Financial Year End.
Companies must also present their annual returns to ACRA within a month after conducting their Annual General Meeting (AGM), which should take place at least once every year.
How can we help you?
Singapore remains an attractive destination for foreign businesses. With this guide, you're equipped to navigate the registration process and tap into the myriad opportunities the Lion City offers.
ATHR offers business registration and compliance services to help online businesses get up and running in Singapore quickly and easily. Our incorporation package takes the hassle out of setting up your online business, from managing your business registration to ensuring you meet all relevant compliance requirements. With us, you can rest assured your online business is in good hands.
