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Incorporation in Singapore

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Singapore Company Registration Guide

Most of the companies of Singapore are registered as private limited liability companies. A separate legal identity is there for the private limited liability company in Singapore. Shareholders are not liable for the debt of the company's beyond the amount of share capital they don’t have to contribute. Any person above the age of 18 years can register a Singapore company. A properly structured private limited company with all the rules and regulations has the benefits. In Singapore corporate body receives many tax benefits and hence this form of company is the most common type of business entity registered in Singapore.

Before Singapore Company Registration - What You Need to Know

  1. Company Name: The name must be approved before start of the company.
  2. Directors: A minimum of one director be the resident of the Singapore means that one should be a Singapore Citizen, a Singaporean Permanent Resident, or a person has been issued an Entrepass, Employment Pass, or Dependent Pass. Any number of additional local or foreign directors a Singapore Company can appoint. Age of the directors must be at least 18 years and must have the good record of banking.
  3.  Shareholders: A Singapore private limited company can have a minimum of 1 shareholder and maximum of 50 shareholders.
  4. Company Secretary: Within the 6 months of the incorporation of the company aqualified company secretary must be appointed. The company secretary must be a simple person who is ordinarily resident in Singapore.
  5. Paid-up Capital: For the registration of a Singapore company the minimum paid-up capital is S$1 and can be increased anytime after the incorporation of the company.
  6. Registered Address: To register a Singapore company, you must provide a local Singapore address as the registered address of the company.
  7. Taxation: Singapore registered companies benefited with very attractive tax exemptions and incentives. This is one of the important reasons to attract the entrepreneurs from around the world.

 

Considerations for foreigners when registering a company in Singapore
Foreigners wants to open a Singapore company, must take into consideration the following points:

  1. Singapore law doesn’t allow foreign individual or entities to self register a company regarding this company should engage with a professional firm to register a Singapore company.
  2. No requirement for the special Singapore visa if you only want to incorporate a private limited company but have no plans to relocate to Singapore. You can operate your company from overseas and for the visit in Singapore you can visit Singapore on a visitor visa whenever required to attend to company matters on a short-term basis. But for this company must have the local resident director since each company must have at least one local director.
  3. Employment Pass or Entrepreneur pass work permit is required if you plan to relocate to Singapore and operate your company.
  4. All company incorporation formalities can be handled without any visit to Singapore. But one must have the bank account. Most of the banks in Singapore require the physical presence of the company principals at the time of opening the company bank account.

 

Documents required for company registration

Following documents are required by the company registrar for the registration of company in singapore:

  1. Company Name
  2. Brief Description of Business Activities
  3. Shareholders Particulars
  4. Directors Particulars
  5. Registered Address
  6. Company Secretary Particulars
  7. Memorandum and Articles of Association (MAA). Singapore Company Registrar provides a standard MAA document that is suitable for most instances. 

Attached documents:

  1. For the non-residents:
    1. Copy of passport
    2. overseas residential address proof
    3. other Know-Your-Client (KYC) information such as a bank reference letter, personal and business profile, etc.
  2. For Singapore residents: Copy of Singapore identity card
  3. If the shareholder is a corporate entity: Copy of registration documents such as Certificate of Incorporation and Memorandum & Articles of Association.

 

Company registration procedure and timeline
In Singapore fully computerized work of company registration procedure is done by the Singapore Registrar of Companies. With this the process is fast and efficient without any bureaucratic red-tape involved. Normally the company can be incorporated in 1-2 days.
There are two distinct steps involved in the Singapore company registration procedure:
a) Company Name Approval
b) Company Incorporation
On the same day both steps can be accomplished with no delays related to the name approval or particulars of directors/shareholders.

Name Approval

Firstly the company name should be approved in order to set up a Singapore company and this can be obtained by filings the application with the Company Registrar. The service firm will do it on your behalf as the first step in the incorporation process.
Within few hours the name approval/rejection notification comes. If the name is referred to an external authority, then the approval of name can be delayed for 1-3 weeks.
For the quick name approval following points must be considered:

  1. Name should not be identical or too similar to any existing local company names.
  2. Company name does not infringe with any trademarks
  3. It must not be obscene or vulgar
  4. It must not be already reserved

After the approval the name will be reserved for 60 days from the date of application. You can extend the name for another 60 days just before the expiry date by filling an extension request.

Company Registration

After the approval of the company’s name, then within few hours the filing of the incorporation request as well as the approval from the Registrar of Companies can be completed by assuming that the incorporation documents are ready and have been signed by the directors and shareholders of the new company.
Also on the another side of this there are certain cases when the incorporation procedure can get delayed if the shareholders or directors are of certain nationalities, although this happens on a case by case only. The company registrar required some more information about a shareholder or director before approving the incorporation of the company.  This procedure can be delayed for 1-2 weeks under such circumstances. In order to incorporate a private limited company a registration fee of S$300 is payable to the Singapore Registrar.

After Singapore Company Registration - What You Need to Know
Registration documents issued

    1. Certificate of Incorporation
    2. Company Particulars Extract (Business Profile)
    3. Bank account opening
    4. Business licenses application
    5. Goods and Service Tax (GST) registration

Different types of Business Entities in Singapore

There are different types of business entities which you have to select while thinking of the start of the business in Singapore. This decision will help in determining the tax considerations, the rules or regulations that apply to particular types of business. Also the other sources of getting investment like your investors, banks and lenders will accordingly give help for your business.

Following includes the different types of Business Entity in Singapore:

1) Sole-Proprietorship
2) Company
a. Private limited company
b. Public limited company
3) Partnership
a. General Partnership
b. Limited Partnership
c. Limited Liability Partnership (LLP)
4) Singapore Foreign Office

1) Sole-Proprietorship

When the business is run by the individual itself without any partner and the profit or loss will incurred on him then this type of business is called the sole proprietorship business or sole trader or Proprietorship. All the assets are belonging to the individual himself and all the debts are also on the owner. So this means owner has personal liability.

Advantages of Sole-Proprietorship

  1. Main advantage of sole-trader is ease of establishment in Singapore. As few rule and regulations are incurred as compared to other businesses.
  2. Profit belongs to a single person.
  3. Complete control of business operation as no interference of any other person.
  4. Tax filling is very simple.
  5. While terminating this business it is very easy.

Disadvantages of sole-Proprietorship         

  1. All the capital must be invested by the individual himself who is very difficult.
  2. Alone you are responsible for the debts because one has control over the business.
  3. No corporate tax benefit.
  4. You can sale the business only by the sale of business assets.
  5. Limited capital.

 

2) COMPANY
In Singapore the private limited company is most common and known as “Pte Ltd” company. A Private limited company provides the flexibility to the owners to protect the personal assets from business liabilities of the company. Special tax benefits are also providing in Singapore for the company.
Two types of company are there:

  1. Private limited company
  2. Public limited company

a) PRIVATE LIMITED COMPANY
The company register under the Singapore Companies Act, Chapter 50 are said to be the Private limited company (Pte Ltd). Small and middle sized business are generally incorporated in Pte Ltd company. Pte Ltd has its own legal identity, separate from its shareholders (who own the company) and its directors (who manage the company). Corporation tax is paid by the company on their profits. Under the Singapore new one tier tax system directors of the company pays the income tax on the behalf of the employee’s officers on any salary fixed by the company and the shareholders gets the dividend. Private limited company is the most advanced and flexible with many advantages to the owners. Following are the advantages or benefits provided by the Singapore to the private limited company:

  1. Shareholders are not liable to pay any debt beyond their share capital in case of loss incurred by the company.
  2. A Private limited company has its own legal entity.
  3. Easy to transfer the ownership.
  4. Raising of the funds are easy in this type of company.
  5. Singapore’s single tire policy also beneficial for the shareholders as on time tax is charged on profit at corporate level then the dividend is distributed in shareholders without any further tax deduction.
  6. No effect is on the company because of the death of the shareholder or any change in the ownership of the shareholder.

DISADVANTAGES

  1. Hard rules and regulation of private limited company as compared to proprietorship.
  2. Closing of the company is very complex than any other form of business.
  3. Directors must not make any hidden profit out of the company and they must exercise their powers for the benefit of the company only.
  4. Directors have to disclose certain information about their interests in the company's shares, contracts and debentures.
  5. Private limited company is very expensive to set-up.

b) PUBLIC LIMITED COMPANY
This is divided into two parts which are as follows:

  1. Public Company limited by shares
  2. Public Limited Company by Guarantee

i) PUBLIC COMPANY LIMITED BY SHARES
It is locally incorporated company where the number of shareholders can be more than 50. By offering shares and debentures to the public public limited company can raise their capital funds. In order to raise its capital, a public company must register a prospectus with the Monetary Authority of Singapore.
ii) PUBLIC COMPANY LIMITED BY GURANTEE
A public company limited by guarantee is the non-profit making concerns which include the professional bodies, trade societies, charitable trust, clubs etc.
If you want more information plz contact with our advisory team GNV Consultancy

 

3) PARTNERSHIP

When the business is run by the partners (Owners) or more than one person and all the profit and loss is also divided by the partners. Generally there are two to twenty partners in the partnership business if more than twenty partners then it will be called the company.
A partnership consisting of foreign individuals will not be registered by the Registrar unless the manager of the business is local resident of Singapore. In Singapore the Partnership can be of three types:

1) General Partnership: In Singapore a general partnership is not a very attractive way to start a business because like a sole proprietorship, partners are personally liable for all the debts and liabilities of the business and each partner can be held responsible for the actions of another partner.

2) Limited Partnership: More attractive way to setup the business in Singapore is the Limited Partnership than the general partnership. In addition with the general partner concept it introduces the concept of a limited partner. The liabilities of limited partners are not more than the investment in the partnership. In a limited partnership the partners are unable to participate in the management process of the business.

3) Limited Liability Partnership (LLP): Newly and the advanced business incorporation structure in Singapore in the LLP. LLP includes the mixed features of the partnerships and companies. In Singapore LLP was introduced in 2005 through enactment of Limited Liability Partnership Act. After registering with LLP owners gets the flexibility to operate its business as in partnership and also enjoying many of the benefits of a corporate body. In Singapore LLP is basically meant for the professionals who would like to have joint practice. Partners must get into very detailed agreement about the profits and the holding of management. Sometimes it gets so complicated that to draw up the agreement the lawyers are required.

Advantages

  1. Partnerships face fewer statutory controls than companies.
  2. No returns are required to be submitted by the partnerships, except for income tax.
  3. The internal structure of partnerships is very flexible.
  4. Limited Personal liability means one is not responsible for the debts.
  5. Separate legal entity.
  6. A partnership is simple and cheap to set up.

Disadvantages

  1. Minimum 2 partners are required all the time.
  2. Not easy to transfer the partnership.
  3. No corporate tax benefits.

 

4) SINGAPORE FOREIGN OFFICE
Foreign companies wishing to set up branches in Singapore, but for tax reasons most prefer to set up a subsidiary. The Companies has the choice to establish a company, branch or subsidiary.

 

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