For many businesses, whether startups, entrepreneurs or multinationals, Singapore – with its international reputation and credibility, pro-business ethos, robust legal institutions, and educated, professional workforce – is the ideal place to incorporate a company. As a business and financial hub for the Asia Pacific and South-East Asia regions, Singapore has consistently topped the world rankings as one of the easiest places in the world to do business, holding the number-one slot in the World Bank’s annual Doing Business report for over a decade.
So what are you waiting for? Let our guide show you how you can incorporate a company in Singapore.
How to incorporate a company in Singapore
Every new company must be registered with the Accounting and Corporate Regulatory Authority (ACRA). The process is completed by registering an appropriate company name with ACRA, paying the required fee and depositing a copy of the proposed company’s constitution and other relevant documents required by the Registrar.
According to the Companies Act, the company’s constitution must state the company’s name, regulations and whether the liability of company members is limited or unlimited.
On registration of the company’s constitution, the Registrar issues a notice of incorporation stating the date of incorporation, type of company. The Registrar will also provide a Unique Entity Number (UEM), which is issued by the government to any entity registered in Singapore.
In addition, incorporation must also comply with the requirements of Part III of the Companies Act. The minimum requirements under the Act are as follows:
- A minimum of one shareholder, who can be a director and may be an individual or another company. 100% foreign shareholding is allowed.
- Initial paid-up capital of at least S$1.00. Paid-up capital refers to the amount of money which the company receives from selling its shares to shareholders. After the company meets the minimum requirement for paid-up capital, it can increase the share or paid-up capital at any time.
- A locally-resident director – that is, a Singapore citizen, Permanent Resident, or a long-term pass holder with a residential address in Singapore. However, this requirement may be satisfied by a nominee director who is not required to hold any shares. Apart from the requirement for a local director, there are no limits on adding more local or foreign directors.
- A company secretary, who must also be a natural person ordinarily resident in Singapore. He or she is responsible for regulatory compliance and must be appointed within six months of incorporation.
- A local, registered address. This must be a physical address and cannot be a PO Box. A residential address may be used for certain types of business.
What type of company should you register your business as?
Singapore law recognises a number of different business organisations, including sole proprietorships, partnerships, and limited liability partnerships.
However, for ease of conducting business, the preferred method of business organisation in Singapore is to register as Private Limited companies.
A private limited company is one whose memorandum or articles of association restrict the right of the company’s members to transfer their shares in the company, for example, by requiring that shares should be offered to existing shareholders before they are sold or transferred to outsiders, or requiring that the company’s board of directors approve transfer of shares. The maximum number of shareholders in a Private Limited company is 50.
Some advantages of incorporating a Private Limited company in Singapore are that shareholders are not personally liable for the debts and losses of the company. This means that in legal proceedings against your business, your personal assets, including your home, cash, and bank accounts, cannot be seized. As a separate legal entity, the company can sue in its own name and does not cease to exist if shareholders change. Instead, ownership of the company can be transferred freely between shareholders, and new shareholders can be added to raise capital. Additionally, due to lack of capital gains tax in Singapore, shareholders are not taxed for dividends.
There can also be serious tax benefits to incorporating a new Private Limited company in Singapore. For example, Inland Revenue Authority of Singapore (IRAS) offers a tax exemption scheme for new start-up companies which renders the first S$100,000 of taxable income tax-exempt, and charges only 50% tax on the next S$100,000 of taxable income. IRAS also offers annual tax rebates to help business cope with increases in the cost of doing business.
Alternatives to Private Limited companies include public companies limited by shares and for companies involved in non-profit activities, public limited companies limited by guarantee. Public companies may be listed on a stock exchange and raise capital by offering shares and debentures to the public. A public company must register a prospectus with Monetary Authority of Singapore before publicly offering shares and debentures.
The article was originally posted at irblaw.com.sg