INCORPORATE SINGAPORE COMPANIES
Singapore is a thriving and bustling economy, with one of the highest per capita income in the world. It is a leading international financial centre in Asia and one of the best places in the world to conduct business. Various studies have placed Singapore as the world’s 2nd best business hub, just after London.
With its open economy, strategic geographical location and excellent infrastructure, Singapore is a top location to launch pad investments into the region.
Singapore has a high quality and educated workforce. With English as its main working language, and most people also fluent in either Chinese, Malay or Tamil, Singapore makes a logical choice to bridge the cultural and language barriers when doing business with particularly China, Indonesia and India.
Singapore also has a stable and very pro-business government. Its effective income tax rates are among the lowest in the region. Furthermore, it has an extensive network of double tax treaties and international trade agreements which provide Singapore companies with a competitive advantage that set them apart from others.
At APACTRUST, we can assist clients to set up base in Singapore and do business with regional countries.
- Advantages of Singapore as a Base to Set up a Company, click here
- Rated #1 in the world by World Bank for ease of doing business.
- Rated #1 as the most politically stable country in Asia
- Rated #1 with the best labor force in the world
- Rated #1 in Asia for quality of life
- Ranked the third wealthiest nation in the world by Forbes Magazine
- Ranked as the third most globalized economy among 60 of the world’s largest economies
- Low corporate tax rates: about 8.5% tax on up to the first $300K profits and a flat 17% tax thereafter. In addition, newly Singapore set up companies enjoy full tax exemption on the first $100K of chargeable income for their first three years of assessment.
[Update – from 2020 onwards:
about 8.5% tax on up to the 1st $200K profits and flat 17% thereafter
Newly set up Singapore companies will enjoy a 75% tax exemption on the first $100K of chargeable income for their first three consecutive years of assessment]
- There are no capital gains taxes in Singapore
- There is no estate/death/inheritance tax in Singapore
- Dividends paid by a Singapore Company are not taxable in the hands of the shareholders
- Low personal tax rates start at zero percent and max out at 22 percent for chargeable income above $320K
- Generous Government grants, from time to time, provided for investments in technology, training and productivity enhancement solutions.
- Generous Tax Rebates, granted from time to time
[YA 2019: Corporate Tax Rebate of 20%, capped at $10K]
- Singapore has no restrictions on foreign ownership of business.
- The repatriation of profits and the import of capital are freely allowed. Shareholders, including investors who receive dividends out of company profits, are exempt from Singapore tax.
Singapore is one of the best places to set up company, run your business and launch pad into Asia Pacific.
- Minimum Requirements of a Singapore Pte Ltd
- Minimum Share Capital
- No minimum
- Any Currency
- Can be S$1/-
- Minimum Number of Shareholders
- Can be individual or corporation
- No local participation required. Can be 100% foreign owned
For nominee shareholders, click here
- Maximum Number of Shareholders
(Beyond which a Public company would be required)
- Minimum Number of Directors
- Must be individual. Corporate directorship is not allowed.
- At least one director must be a Singapore resident individual
For nominee directors, click here
- Company Secretary
- Must be Singapore resident individual
For Corporate Secretarial Services, click here
- Registered Office
- Required to be an approved address in Singapore
For Registered office Services, click here
- Minimum Share Capital
- Steps to Incorporation
- Provide the proposed Company Name.
Please provide us with at least 2 preferred choices of name in order of preference.
Certain names are not allowed to be registered such as:-
- undesirable name
- name that is identical to any existing entity
- name that has already been reserved
- name which the Minister has directed not to accept for registration
- name that infringe upon any trademarks
We will do an online name check and reserve the name for you if the name is available.
A reserved name can be held for 60 days from the date of application and can be extended for another 60 days.
- Complete our Incorporation Form
Online Incorporation Form (click here)
- Proposed Principal Activities
Please note that certain activities require licensing or approval from the relevant authorities (e.g. Funds management. Finance company etc)
- Share Capital
- There is no minimum share capital.
- Share capital can be in any Currency.
- Share capital can start from as low as S$1/-
Clients can choose to start with a minimal share capital and then inject in funds to increase the share capital after the company is incorporated.
- A minimum of 1 shareholder is required.
- Shareholder can be either individual or corporation.
- Foreign shareholders are permitted. Foreign shareholders can hold 100% of the shares in a Singapore Company.
For Nominee shareholder, click here
- Only individuals can be directors.
- Foreigners can be directors.
- However, at least one director must be a Singapore resident individual.
- An individual holding a Singapore Employment Pass may act as the local director provided it is the Company sponsoring his Employment Pass or a related group Company and subject to approval by the Immigration authorities.
For Nominee director, click here
- Company SecretaryTo be provided by APacTrust
- Registered AddressTo be provided by APacTrust
- Proposed Principal Activities
- Sign all incorporation documents
Upon Receipt of the Incorporation Form, we will prepare all the necessary incorporation documents for your signatures. These include the Company’s Constitution, Share Allotment, Consent to Act etc.
Thereafter, please return the signed original documents to us together with payment for our fees for us to commence the incorporation process with ACRA.
- Timeline for Incorporation
If documents are complete and in order, a company may be incorporated within a few hours in the same day.
Once the Company is incorporated, we will forward you a copy of ACRA’s Notification of Incorporation which will state the incorporation number and incorporation date of the Company. We will also provide you with a free printed business profile of your newly setup company from ACRA.
- “Know Your Client”
We are required under the law to conduct due diligence and appropriate ‘Know-Your-Client” process.
For this, we would require documents to prove the identity of all directors, shareholders and ultimate beneficial owners (natural persons).
Please contact us for details.
- Provide the proposed Company Name.
At ApacTrust, we provide nominee shareholders and directors services.
For director requirements, click here
For shareholder requirements, click here
- Post Incorporation Compliance
- Company Secretarial Matters
- Different Business Entities
There are many business structures to carry on a business in Singapore. One of the most common ways would be to start a Private Limited Company (“Pte Ltd Company”). There are also different business entities like sole proprietorship, general partnership, limited partnership and limited liability partnership.
A sole proprietorship is the least complex way of starting a business.
In order to become a sole proprietor, one must register the business name with ACRA and comply with the Business Names Registration Act 2014 and the administrative requirements thereafter.
Sole proprietorships are convenient and easy to manage.
The sole proprietor is accountable only to himself and is subject to much fewer regulations. For example, a sole proprietor is spared from preparing statutory audited financial statements. He is only required to maintain accounts for tax purposes. He needs to pay tax on the sole proprietorship profits at his personal income tax level. This may or may not be tax advantageous if his personal income tax rate is higher than the corporate tax rate.
One other significant disadvantage of a sole proprietorship is that the sole proprietor remains personally liable for all the business’s debts. This is because the sole proprietorship is not a separate legal entity from the sole proprietor.
Another major drawback is the sole proprietorship limited access to capital and financing. Most investors may not find investing in a sole proprietorship appealing.
A startup may choose to register a sole proprietorship first and then upgrade it to a Pte Ltd Company at a later date when the business expands.
Like a sole proprietorship, partners in a partnership own the assets of the partnership but will also personally incur all of the liabilities and obligations of the partnership. General partnerships offer no liability protection to the owners. Each partner has personal and unlimited liabilities for all the partnership debts. Each partner may also be personally liable for the actions of the other partners in relation to the partnership. Personal assets of an individual partner can be considered as partnership assets and be used to satisfy partnership debts.
Profits generated by the partnership are taxed at the personal level of the individual partners. Losses suffered by the partnership can be offset against the partners’ personal income. This may or may not be tax efficient to the individual partners as compared to setting up a Pte Ltd Company, especially if their marginal personal tax rates are higher than that of the corporate income tax rate. The prevailing corporate income tax rate in Singapore is 17%. On the other hand, marginal personal tax rates for high earning individuals can reach 18% to 22%.
A general partnership cannot have more than 20 partners. This is with the exception of partnerships for certain regulated professions such as lawyers and public accountants.
A general partnership is formed by registering with ACRA and generally by the partners entering into a Partnership Agreement. The Partnership agreement acts like a “constitution” and will “govern” the relationship between the partners, how the partnership is run, how the profits are to be distributed etc.
The limited partnership (LP) is a hybrid of a sole proprietorship and a general partnership. It was first introduced in 2009 in Singapore.
There are two types of partners in a limited partnership: the general partners and the limited partners.
General partners in a LP have similar rights and liabilities as partners in a general partnership. For example, general partners oversee the day-to-day operation of the LP. While they are entitled to take part in the management of the LP, they are also subject to unlimited personal liabilities for the debts and obligations of the LP.
On the other hand, a limited partner in a LP is not personally liable for the debts or obligations of the LP beyond his agreed contribution. This is generally spelt out in the Partnership Agreement. Conversely, a limited partner is not entitled to participate in the management of the LP and is not an agent for the other partners and the LP. However, if the limited partner participates in the management of the LP, he may no longer avail himself of the limited liability protection and may incur unlimited personal liability for the LP as if he is a general partner. Limited partners are basically silent investors not involved in management.
The limited partner has to register under the LP Act or he will be deemed to be a general partner.
LP will not dissolve on the death, dissolution, bankruptcy or liquidation of a limited partner.
Limited Liability Partnership
A limited liability partnership (LLP) gives owners the flexibility of operating as a partnership while having a separate legal identity like a Pte Ltd Company.
This means that the LLP is seen as a body corporate and has a legal personality separate from its partners. Thus, debts of a LLP remain at the LLP without extending to become the personal liabilities of the individual partners. Partners will also not be personally liable for the wrongful act, misconduct, omission or gross negligence of any other partners in the LLP.
Also, like a Pte Ltd Company:-
- LLP can sue and be sued in its own name. It has its own legal rights and obligations.
- LLP has perpetual succession until it is dissolved under the Limited Liability Partnership Act.
- Any changes in the partners of a LLP will not affect the existence, rights or liabilities of the LLP
However, unlike a Pte Ltd company, a LLP has no directors or shareholders. The partners are the owners who direct and manage the LLP. However, a LLP must appoint at least one manager, who is a natural person, of at least 18 years of age and ordinarily reside in Singapore.
The relative rights and obligations of the partners vis a vis each other and the LLP are generally spelt out in the Partnership Agreement. The Partnership Agreement would also spell out how the LLP is to be managed and how profits are to be split. Matters not covered under the Partnership Agreement will be governed by the first schedule of the Limited Liability Partnership Act.
A partner of a LLP may cease to be a partner by following the terms in the Partnership Agreement or in the absence of a Partnership Agreement, by giving thirty days’ notice of his intention to resign.
Private Limited Company
private limited company is a limited liability company incorporated under the Companies Act in which the shares are held by less than 50 persons (can be individual and/or company) and the shares are not available to general public to acquire. In Singapore, most of the privately held companies are set up as private limited companies with their names end with “Private Limited” or “Pte Ltd”.
A private limited company is the most preferred type of business entity for serious entrepreneurs (as opposed to sole proprietorship or limited liability partnership) in Singapore.
To incorporate a private limited, please contact us.
- Branch vs Subsidiary
- What is a Branch Office and what is a Subsidiary Company?
A branch office is a registered entity that is only an extension of its parent organisation (main/head office). Branch office bears the same name and carries on the same business as that of the parent. It may be located at different areas in the same country or in different countries. Legally, there is no separate legal identity between the branch and its parent.
A subsidiary company is a limited liability company incorporated whose shares are held by another company known as the Holding Company or Parent Company. A subsidiary has a separate legal identity from its holding company. It can carry on the same or different business activities as its parent. A subsidiary company may have a completely different name from that of the holding company.
- Advantages and Disadvantages of Branch Office versus Subsidiary Company
Advantages and disadvantages of both types of organisation are summarised below:
BRANCH OFFICE SUBSIDIARY COMPANY Liabilities Liabilities of the branch extend to the parent. Liabilities are limited to the Subsidiary. Ownership Interest A branch is a mere extension of the parent. Hence, the parent “owns 100%” of the branch. The holding company can have varying ownership interest up to 100%. Compliance Administration A Singapore branch office owned by a Singapore parent company is easier in compliance administration as there is no requirement to perform separate annual compliance filings and corporate secretarial formalities.
However, where the branch office is owned by a foreign company, the local branch will have to comply with local corporate secretarial formalities and annual filing requirements including provision of audited financial statements of the Foreign Head Office and the Singapore branch.
The subsidiary company has to comply with Singapore annual filing requirements and corporate secretarial formalities. Taxation A Singapore branch office owned by a Singapore business entity is not taxed under its own name as it is an extension of the local parent. The branch’s profit will be consolidated and taxed at the parent’s level.
If the branch office is owned by a foreign company, the profits generated by the Singapore branch will be taxed in Singapore. The prevailing corporate tax rate is 17%.
Branch office usually does not enjoy tax benefits and exemptions meant for local resident companies. Furthermore, they generally cannot access the double taxation treaties entered into by Singapore.
A subsidiary incorporated in Singapore is taxed under its own name. The prevailing corporate tax rate is 17%.
It may enjoy tax benefits and exemption if it meets qualifying criteria.
Generally a resident company is able to access the double taxation treaties of Singapore.
- Registration of Branch Office in Singapore
Before any activity can be carried out in Singapore with a view to generate profit on a regular basis, it has to be registered with the Accounting and Corporate Regulatory Authority (“ACRA”) as a business entity. A foreign company with intention to carry out business activities in Singapore has to register a business entity with ACRA before doing so.
Registration with ACRA can be done via engaging the services of law firms, accounting or corporate secretarial service firms. Below are some considerations for registering a branch office:
Name: Name of the Singapore branch office has to be the same as the parent organisation, unless that name is identical to another existing local business, or is undesirable (vulgar, obscene or offensive in nature) or prohibited by order of the Minister for Finance. Officers: The Singapore branch has to appoint at least 1 authorised representative who is at least 18 years old and is ordinarily resident in Singapore (Singapore citizen, permanent resident or a foreigner who has been issued with an employment pass in Singapore).
Foreign companies could relocate their staff to the Singapore branch office by applying for employment passes for the staff after the successful registration of branch office.
Registered Address: The Singapore branch is required to have a registered office address in Singapore.
The documentation needed for the branch office registration is as follows:
- Certified true copy of the Certificate of Incorporation of the parent organisation;
- Certified true copy of the Constitution (Memorandum and Articles of Association) of the parent organisation (where applicable);
- Latest audited financial statements of the parent organisation as required in its country of incorporation;
- Particulars of shareholders and directors of the parent organisation; and
- Details of registered address in Singapore;
If any of the above documents are not in the English language, it will have to be translated into the English language by a recognised translator.
Time taken to complete registration of branch office is 1 to 2 days if there is no necessity to seek approval from relevant authorities for the type of business activities of the branch office. Otherwise it may take 1 to 2 months to complete the registration.
- Incorporating a Singapore Company
The following summarises the procedure of incorporating a limited liability company in Singapore:
Name Restriction: There is a need to reserve the desired name of the new company before incorporation. Up to 3 choices of names can be submitted to us to check for availability. Usually the desired name is approved for use unless that name is identical to another existing local business, or is undesirable (vulgar, obscene or offensive in nature) or is prohibited by order of the Minister for Finance. Shareholders: At least 1 shareholder is required for incorporation.
Either an individual or a business entity can be the shareholder. There is no restriction on foreign shareholdings.
Bearer Shares: No bearer shares are allowed in Singapore.
However, APacTrust will provide nominee shareholders if required to ensure confidentiality of beneficial ownership (subject to client due diligence).
Share Capital: No minimum. Share Capital can be as low as S$1.00. Directors: A minimum of 1 individual director is required who must be a Singapore resident individual.
No corporate directorship is allowed.
Company Secretary: A Singapore resident individual is required to be appointed as the Company Secretary (APacTrust can provide you with such service). Registered Office Address: Singapore registered address is required (APacTrust can provide if required). Time Frame to Incorporate: For application of name: 1 to 2 hours.
For incorporation: half a day to 1 day.
Bank Account: Bank account can be easily opened in Singapore with most major local and international banks.
APacTrust can assist in providing bank introduction.
- What is a Branch Office and what is a Subsidiary Company?
- Characteristics of a Private Limited Company
Setting up a Private Limited Company (“Pte Ltd Company”) is by far, the most popular and common business form.
A Pte Ltd Company is an artificially created person. It is a separate legal entity from its members and those who manage its operations.
The key characteristic of a Pte Ltd Company is that the company remains unchanged even if the identity of its stakeholders changes.
A company can own property in its own name. Even if one person owns all the shares in a company, he does not own the company’s property or have any equitable interest in the company’s property.
Also, debts and liabilities of the company will remain at the company. Members of a company cannot be held liable for the debts of the company.
A company can open a bank account in its own name. It can also sue and be sued in its own name.
The greatest advantage of having a Pte Ltd company as a business form is the limited liability protection it offers to the owners. Shareholders are not liable for any debts of the company beyond the agreed paid up capital.
Also, a company has much easier and wider access to financing and capital as compared to sole proprietorships or partnerships. New investors can participate easily in many different ways through different types or classes of shares, bonds, financing instruments and structures etc.
A Pte Ltd Company is managed by its directors. Shareholders, who are not directors, cannot participate in the management and operation of the company.
Directors of a Singapore Pte Ltd Company must only be natural persons of at least 18 years of age. Every Singapore Pte Ltd Company must have at least one director who is ordinarily resident in Singapore.
The income of a Singapore Pte Ltd Company is taxed only at the company’s level. The corporate tax rate for Singapore is currently 17%, which is generally lower than the marginal tax rate of high earning individuals, which can run from 18% to 22%.
A Pte Ltd Company can distribute dividends to its shareholders from its after taxed profits, without paying any further taxes such as dividend withholding tax. Dividends from after-taxed profits are not taxable in the hands of the receiving shareholders.
Shareholders of a Singapore Pte Ltd Company can be both individuals and body corporates.
A Singapore Pte Ltd Company can be owned by both locals and foreigners. Foreign ownership of up to 100% is generally allowed in Singapore.
- Employment Passes & Visas
- Directors’ Duties
- Bank Accounts