Singapore has long been recognised as a global business hub, offering foreign investors a stable political environment, robust legal framework, and strategic location in the heart of Asia. This comprehensive guide will walk you through everything you need to know about setting up your business in Singapore as a foreign investor in 2024.
Current Business Climate in Singapore
Singapore consistently ranks among the world’s easiest places to do business, thanks to its transparent regulations, low tax rates, and business-friendly policies. The city-state’s strategic location, excellent infrastructure, and strong intellectual property protection make it an attractive destination for foreign investors.
Legal Requirements for Foreign Company Registration
Eligibility Criteria
To register a company in Singapore as a foreign investor, you must meet these basic requirements:
Shareholders
A Singapore private limited company can have between 1 and 50 shareholders (Legal basis: Section 18(1b) of the Companies Act 1967), who may be individuals or corporate entities. Foreigners can own 100% of the shares, allowing full control over the company.
Directors
At least one director must be a Singapore resident, defined as a Singapore citizen, permanent resident, or an individual holding an Employment Pass or EntrePass (Legal basis: Section 145(1) of the Companies Act 1967). All directors must be natural persons aged 18 or older, with full legal capacity, and must not be disqualified from holding such a position (e.g., undischarged bankrupts or individuals convicted of offences involving fraud or dishonesty) (Legal basis: Section 145(2) of the Companies Act 1967).
Company Secretary
A qualified company secretary must be appointed within six months of incorporation. The secretary must be a natural person who is a resident of Singapore. In cases where the company has only one director, that sole director cannot concurrently serve as the company secretary (Legal basis: Section 171 of the Companies Act 1967).
Paid-Up Capital
The minimum paid-up capital required to register a company in Singapore is SGD 1. This amount can be increased after incorporation if necessary.
Registered Office
From the date of incorporation, a company must maintain a registered office in Singapore where all communications and notices can be sent. This office must also be open and accessible to the public for at least three hours during regular business hours on each working day (Legal basis: Section 142(1) of the Companies Act 1967).
Foreign Representatives
Foreigners residing overseas must appoint at least one locally resident-authorized representative. Foreigners who wish to be present in Singapore to manage the operations of a sole proprietorship or partnership must seek approval from the Ministry of Manpower after registering the business.
Types of Business Structures
Singapore offers several business structure options for foreign investors:
- Private Limited Company (Pte Ltd): This is the most common and preferred business structure in Singapore, offering limited liability protection to its shareholders. A Private Limited Company is a separate legal entity, meaning it can own property, incur debts, and enter into contracts in its name. Shareholders are not personally liable for the company’s debts beyond their share capital. This structure is popular among foreign investors due to its flexibility and tax benefits.
- Branch Office: A branch office is an extension of a foreign parent company and is not considered a separate legal entity. This means the parent company is fully liable for the debts and obligations of the branch office. While a branch can engage in commercial activities, it may not be eligible for certain tax exemptions available to local companies.
- Representative Office: This is a temporary setup, typically established for conducting market research or feasibility studies in Singapore. A Representative Office cannot engage in profit-generating activities and does not have a legal status separate from its parent company. It’s ideal for foreign companies looking to explore the Singapore market before making significant investments.
- Subsidiary Company: A subsidiary is a locally incorporated Private Limited Company, with the parent company as its major shareholder. It is considered a separate legal entity from its parent, providing limited liability protection. Subsidiaries can benefit from local tax incentives and have the flexibility to conduct any business activities permitted by law.
Step-by-Step Registration Process
1. Choose and Reserve the Company Name:
Criteria:
- The name must be unique and not identical to existing entities.
- It should not be obscene or vulgar.
- It must not infringe on existing trademarks.
Procedure:
- Submit the proposed name through ACRA’s BizFile+ portal.
- Upon approval, the name is reserved for 120 days.
2. Prepare Required Documentation:
Essential Documents:
- Company Constitution: You can draft your own or adopt ACRA’s Model Constitution.
- Directors’ and Shareholders’ Particulars: Copies of identification (e.g., passports) and proof of residential addresses.
- Proof of Registered Office Address: Documentary evidence of the local business address.
- Declaration of Compliance: A statement affirming adherence to the Companies Act requirements.
3. Appoint Key Personnel:
Requirements:
- Resident Director: At least one director must be a Singapore resident (citizen, permanent resident, or Employment Pass holder) (Legal basis: Section 145(1) of the Companies Act 1967).
- Company Secretary: Must be appointed within six months of incorporation. The secretary should be a natural person residing in Singapore (Legal basis: Section 171 of the Companies Act 1967).
- Shareholders: Minimum of one and a maximum of 50 shareholders (Legal basis: Section 18(1b) of the Companies Act 1967). Shareholders can be individuals or corporate entities, local or foreign.
Post-Registration Requirements
Business Licenses and Permits:
General Business License: Not typically required; however, specific industries may have mandatory licensing.
Industry-Specific Permits: Depending on business activities, licenses from relevant authorities may be necessary (e.g., food and beverage, education, finance).
Import/Export Licenses: Required for businesses involved in trading goods across borders.
Opening a Corporate Bank Account:
Procedure:
Select a bank that aligns with your business needs and prepare the necessary documents, which typically include:
- Certificate of Incorporation: Issued by ACRA upon successful registration.
- Company Constitution: The governing document of the company.
- Board Resolution: A formal decision by the company’s board authorizing the opening of the bank account and specifying the signatories.
- Identification Documents: IDs and proof of address for directors and authorized signatories.
Compliance and Ongoing Requirements
Annual Filing Obligations
Maintain compliance by:
Filing annual returns with ACRA
Singapore-incorporated companies must file annual returns with the Accounting and Corporate Regulatory Authority (ACRA) to keep the company’s information on ACRA’s register up to date (Legal basis: Section 197(1) of the Companies Act 1967).
Submitting financial statements
Companies must submit their financial statements in XBRL format unless exempted. This ensures transparency and compliance with regulatory standards.
Holding annual general meetings
Companies must hold AGMs to present financial statements to shareholders, though certain companies can qualify for exemptions or opt to dispense with AGMs under specific conditions.
Tax Requirements
Understand your tax obligations:
- Singapore imposes a flat corporate tax rate of 17% on chargeable income (Legal basis: Section 43(1a) of the Income Tax Act 1947). Additionally, partial tax exemptions and a three-year start-up tax exemption for qualifying start-up companies are available.
- Registration for GST is mandatory if your annual taxable turnover exceeds SGD 1 million. GST-registered businesses must charge GST on taxable supplies and can claim input tax credits on GST incurred on business purchases.
- Singapore offers various tax incentives to encourage economic growth and investment. These include the Start-up Tax Exemption Scheme, Partial Tax Exemption, and industry-specific incentives. For instance, the Start-up Tax Exemption Scheme provides newly incorporated companies with exemptions on their taxable profits in their first three years of operation, subject to qualifying conditions.
Estimated Costs
| Service | Estimated Cost (SGD) |
| Name Reservation | 15 |
| Company registration | 300 |
| Company secretary (Annual) | 600-1,200 |
| Registered address (Annual) | 500-1,000 |
Conclusion
Setting up a company in Singapore as a foreign investor requires careful planning and attention to detail. While the process is straightforward, working with qualified professionals can help ensure smooth registration and compliance. With its strategic location, favourable tax regime, and robust legal framework, Singapore continues to be an excellent choice for foreign investors looking to establish their presence in Asia.
Remember to consult with legal and financial professionals for advice specific to your business circumstances, as regulations may change and different industries may have additional requirements.
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