INCORPORATING A COMPANY IN SINGAPORE: REQUIREMENTS, PROCEDURE AND TIMING
Thanks to a unique infrastructure, flexible tax system and minimal bureaucracy, Singapore is a favourable and prestigious country, in which to establish a business.
When setting up a business in Singapore, the most common legal form for foreign investors is the private company limited by shares (Pte. Ltd.). A private limited company is defined as a local incorporated company with no more than 50 shareholders. Shareholders' liability is limited to the amount of their paid-up capital contribution.
There are many advantages of a private limited company for foreign investors. It protects the personal assets of individual investors, unlike a ole proprietorship or partnership, and provides tax benefits under certain conditions. With a rivate limited company, the dividends payable to shareholders are not taxable. Additionally, it allows shareholders and foreign directors to apply for an Employment Pass.
Requirements to incorporate a company in Singapore
- A minimum of one shareholder. 100 per cent foreign ownership of shares by individuals or legal entities is allowed.
- At least one director must be a ingaporean resident, i. e. a Singaporean citizen, a Singaporean permanent resident (PR) or a foreigner holding a valid Employment Pass (EP). Note that there are no restrictions on the number of additional local or foreign directors.
- At least one corporate secretary must be a ingaporean resident and qualified to hold the position. Specifically, the corporate secretary must have experience in the custody, maintenance and control of documents according to Singaporean law.
- There are no requirements for minimum paid-up capital when incorporating a private limited company in Singapore. It is possible to register a company with paid-up capital of one Singapore dollar. Note that the share capital can be held in any currency.
- A local registered address in Singapore is required for a private limited company. Post Office Box addresses are not allowed.
Thus, the formula for the requirements to incorporate a rivate limited company in Singapore is as follows:
1 Shareholder + 1 Director + 1 Company Secretary S$1 + 1 Registered Address =
A Singapore Private Limited Company
Once the decision is made to register a company in Singapore, the standard procedure is divided into three steps. The preparation phase (step ) consists of the approval of the company name, preparation and signing of all necessary documents. The incorporation phase (step 2) entails the submission of the actual application to the authorities. The follow-up phase (step 3) consists of opening the necessary bank accounts and, if necessary, obtaining licences and/or permits.
Before incorporating a private limited company, one must consider the following:
1. Choice and definition of the business activity of the company. Keep in mind that some business activities are subject to further control through the state authority of Singapore and that it may be necessary to obtain relevant permits or licences. Basically, such requirements apply to banks, financial and insurance companies, touristic and recruitment agencies, private educational institutions, and restaurants and bars. Special requirements exist for importing goods into Singapore, and for the sale and manufacture of some goods, foodstuffs and liquors on the territory of Singapore; for these activities, special permits are required and are issued through special authorities. Hence, before incorporation, a company should receive advice about the necessity and conditions of licences/permits.
2. Choice of the company name and verification of its "uniqueness". It is advisable to have at least two to three variants in case the first choice is already registered or is not approvable due to other reasons. Such reasons may be: infringement under trademarks or patents, indecency, etc. Note that names containing words such as "school", "tourist agency", "bank", "financial institution", etc. are subject to additional approval by the regulatory body of company registration in Singapore. Using such words listed above in the company name may prolong the application process by up to two months, whereas the normal incorporation process takes only a few hours.
3. Definition of the paid-up capital amount. The company can be incorporated with S$1, but a larger amount of paid-up capital is advisable and sometimes necessary. For example, one of the conditions for incorporating a tourist business is to have a paid-up capital not less than S$100,000.
4. Determination and approval of the company's shareholders and the amount of their individual paid-up capital.
5. Determination of the director(s). To meet the requirements of Singaporean law, a ominee director will be appointed, who will act as director until the foreign director receives an Employment Pass. Once an Employment Pass is obtained, the interim nominee director will resign.
6. Preparation of all necessary documents and their signing.
The Singapore company incorporation process is online and takes from several hours to several days to complete. The length of this period depends on several factors: the company name approval by the registration authority and the preparation and the signing the necessary documents.
Opening a bank account for the company can take anywhere from one day to several weeks and it depends on the chosen bank, and the director's physical presence at the bank for signing the necessary documents to open the bank account.
Based on the company's activities, additional permits or licenses may be required and must be applied for. Most permits and licenses can be obtained online and can take from a couple of days to several weeks, depending on the complexity of preparation and the necessary documents and
Text Zlata Sheve
Design Gleb Osipov