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Singapore Company Formation

Any person intending to conduct business or establish a place of business in Singapore must register a business entity with the Accounting & Corporate Regulatory Authority (ACRA).

Registration in Singapore has 4 stages. These are:

• Online registration with the Accounting and Corporate Regulatory Authority. This takes one day and costs approximately 320 SGD.
• Create the company seal, which takes 1 day and costs approximately 50 SGD.
• Submit the tax number on the Revenue Authority of Singapore website. This takes one day.
• Register for compensation insurance. This also takes one day.

The types of company organisations operating in Singapore are broadly categorised into:

• Business firm
• Incorporated company
• Branch of foreign corporation

Business Firm

A business can be registered as a sole-proprietorship or a partnership under the Business Registration Act. Essentially, it is considered as an unincorporated body, not being a legal entity. Foreigner, whether individual or corporation, may register a business provided that a local manager is delegated under the Act. A local manager is defined as a Singaporean, a permanent resident or an employment pass holder.

A partnership may consist of two partners but not more than twenty partners. If the number exceeds the maximum, the members must be individually registered as an incorporated company.

Incorporated Company

The kinds of business that can be registered under the Singapore Companies Act are classified according to their liability status, namely:

• Company limited by shares
• Company limited by guarantee
• Unlimited company

The most commonly incorporated company registered in Singapore is a company limited by shares. The liability of its members is limited to the nominal value of the amount of shares held by them. Such a company may be either a private or a public limited liability company.

A private company has the following restrictions:

• Restricts the right to transfer its shares
• Limits the number of its members to not more than fifty

Additionally, a private company may qualify for exempt private status which accords to it special privileges such as:

• Exemption from the annual filing of its audited accounts
• Making of loans to its directors and to director-related companies

It must however satisfy the following conditions:

• Limits the number of its members to twenty
• Its shares must not be owned by any corporation whether directly or indirectly
• Able to meet its liabilities as and when they would fall due

A public company is permitted to have more than fifty members. Its shares may be offered to the public for subscription and are readily transferable. Such a business must enroll a prospectus with the Register before offering its shares to the public. If the company wants to be listed on the Singapore Stock Exchange, it must to obtain the relevant approval from the Singapore Stock Exchange.

Before commencement of its operations, a public company has to acquire a certificate of entitlement from the Registrar.

Company limited by guarantee

A company limited by guarantee is commonly formed for educational, religious or charitable reasons. It does not have a share capital. Its members individually guarantee to contribute to the assets of the company in the event of its dissolution.

Branch Information

A foreign company incorporating a branch need not have any directors resident in Singapore, but it must appoint at least two local residents authorised to accept service of process and any notices required to be served on the foreign company.

Registration:

• Certificate of Incorporation
• Memorandum & Articles of Association
• Affidavit - to be signed by the secretary before a notary
• Annexure A (Memorandum of appointment of agents)
• A statutory declaration by the agent confirming particulars of the branch
• Information of the HQ: business activity, registered office address, and particulars of the directors, i.e., name, passport number, nationality, address, application date

Once registered, the branch of the foreign company is subject to filing and reporting requirements under the Companies Act. In addition to the audited accounts of its Singapore branch, the foreign company will usually also be required to file the accounts of its head office with the Registrar of Companies and Businesses annually. For this reason, not many foreign companies choose to register a branch. However, foreign banks and financial institutions may need to register branches to do business in Singapore in order to comply with capital adequacy requirements imposed by the relevant authority in Singapore.

Offshore Companies

By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.

The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:

• Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
  
• Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
  
• Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
  
• Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability
  

Characteristics of an offshore company:

• Memorandum and Articles of Association
  
• Certificate of Incorporation
  
• Registered Office/Agent
  
• Shareholders / Members
  
• Directors / Managers
  
• Company secretary
  
• Statutory Register
  
• Bookkeeping
  

Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.

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