The requirements for establishing a local business presence in Singapore are minimal and, according to the World Bank, setting up a business takes only two and a half days on average.
Holding companies in Singapore are typically registered as private limited companies (or “subsidiaries”), and this company structure is by far the preferred business arrangement for small and medium-sized foreign companies operating in the city-state. While navigating business establishment procedures in Singapore is relatively simple, investors should seek the advice of a professional services firm to consider the legal and tax implications that inevitably accompany the establishment of a local business presence.
Self-incorporation without the assistance of a professional services firm is only permitted if all directors, the company secretary, and initial shareholders are Singapore National Registration Identity Card (NRIC), Employment Pass, or Dependant Pass holders. Otherwise, a professional services firm must be engaged to register on the company’s behalf.
Requirements for Incorporation
Individuals and business entities seeking to establish a holding company as a private limited company must meet the following basic requirements:
At least one shareholder
- A Singaporean private limited company should have at least one shareholder, but no more than 50.
- The shareholder can be a person or another legal entity, and 100 percent foreign shareholding is permitted.
- New shares can be issued or transferred at any time after the Singaporean company has completed the incorporation process.
At least one director that is a Singaporean resident
- A “resident” is defined as a Singaporean Citizen, Permanent Resident, or individual who has been issued an Entrepass, Employment Pass, or Dependent Pass.
- There is no limit on the number of additional foreign or local directors that can be appointed, but most companies will have at least two directors to fulfil requirements from banks and other financial institutions in the country.
- The shareholder and director are permitted to be the same person, and non-shareholders can also be appointed as directors.
- Directors must be at least 18 years old, and have no criminal record.
A company secretary who is a Singaporean Resident
- Within six months of incorporation, a company secretary must be appointed.
- For companies with a single director/shareholder, the same person is not permitted to also act as the company secretary.
- The minimum paid-up capital (share capital) for the registration of a Singaporean company is S$1.
- Paid-up capital can be increased at any time after incorporation, and there is no concept of authorized share capital for Singaporean companies.
A Registered Address
A physical (residential or commercial) local address must be provided as the registered address of the company. The address may not be a Post Office Box, and must be approved by the Urban Redevelopment Authority. Residential properties can only be used under the Home Office Scheme.
The Incorporation Process
As mentioned previously, the incorporation process for a private limited company can typically be completed in less than three days. For companies eligible for self-incorporation without the assistance of a professional services firm, registration can be completed online via the BizFile Accounting and Corporate Regulatory Authority (ACRA) portal.
Once the decision has been made to move ahead with self-incorporation, the following steps should be taken to register a private limited company:
1. Name Registration
The first step in the registration process involves reserving the company’s name. The name must not conflict with an existing name or contain any sensitive or offensive words, and can typically be approved in less than an hour. Existing company names can be searched on the UEN website. The following guidelines should also be kept in mind to expedite the name registration process:
- A private limited company name should have the word “Private” (or “Pte.”) or Sendirian (or Sdn.”), its Malay translation, as part of the name, inserted immediately before the word “Limited” or “Berhad” (“Ltd.” or “Bhd.”).
- Names including certain words (such as bank, finance, law, etc.) may require review by a relevant government authority and prolong the approval process.
After a name has been approved, it will be reserved for 60 days from the date of application. This period can be extended by filing an extension request.
2. Company Registration
After a company’s name has been approved, a formal incorporation request can be filed on ACRA’s BizFile with the following:
- Name application number or approved company name
- Company type
- Particulars of additional directors/shareholders/members
- Registered place of business
- Share capital details
- PDF of Memorandum and Articles of Association
Companies can typically be incorporated within 15 minutes after the registration fee has been paid (between S$50 and S$600 for locals, and S$300 to S$1,200 for foreigners). For companies that require approval or review, the process can take between 14 days and 2 months. The Referral Authorities Table outlines situations in which referral is required, and the governmental authority to which the referral should be made.
Official Certificate of Incorporation and Company Business Profile
The Company Registrar will send an official email after successful incorporation that includes the company registration number, and can be treated as the official Certificate of Incorporation. In order to receive a hard copy of the certificate, an online request can be made along with a fee of S$50. A business profile that contains the company’s particulars can also be obtained for a small application fee. This and the Certificate of Incorporation are often sufficient for all legal and contractual interactions, including opening a corporate bank account, signing an office lease, and subscribing to telephone/internet services.
The holding company (in the form of a private limited company) is permitted to begin operations after these documents have been successfully obtained, and a Unique Entity Number (UEN) has been issued.
Annual Compliance: General Meetings and Annual Returns
Annual compliance requirements for private limited companies are also relatively minimal and include holding an annual general meeting and filing of annual returns.
Within 18 months of incorporation, the first annual general meeting of the company must be held with no more than 15 months elapsing between subsequent annual general meetings without Registrar approval. If a resolution calling for the disposal of annual general meetings is passed by all members with voting rights, however, this requirement can be avoided. Within one month of the company’s annual general meeting, an annual return must be made containing the particulars of the company officers, registered address, and auditors. Typically, companies engage a professional services firm to file an annual return on their behalf.
This article is an excerpt from the March issue of Asia Briefing Magazine, titled “The Gateway to ASEAN: Singapore Holding Companies.” In this issue, we highlight and explore Singapore’s position as a holding company location for outbound investment, most notably for companies seeking to enter ASEAN and other emerging markets in Asia. We explore the numerous FTAs, DTAs and tax incentive programs that make Singapore the preeminent destination for holding companies in Southeast Asia, in addition to the requirements and procedures foreign investors must follow to establish and incorporate a holding company.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam, in addition to alliances in Indonesia, Malaysia, Philippines and Thailand, as well as liaison offices in Italy and the United States.
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