Written by: Christopher Chitty
Singapore's business friendly attitude with its zero restriction policy on foreign companies setting up on the island makes the city state one of the world's most attractive destinations if not the best for companies interested in establishing a foothold in South East Asia.
As the crossroads of East and West, Singapore's natural port is strategically equipped to be the launch pad into the region.
Foreign companies wishing to expand their presence in Asia through Singapore can decide if they prefer to register a Subsidiary Company, a Branch Office or a Representative Office. All registrations must be carried out by a professional firm in Singapore to ACRA (Accounting and Corporate Regulatory Authority).
You can find more information regarding the rates here.
The basic requirements needed to register any one of the three are a local registered address, at least 1 local resident director, a local resident and qualified company secretary and a minimum of 1 and a maximum of 50 shareholders be they natural persons or corporates. A minimum paid up capital of SGD 1.00 is also required. Some of the above requirements may not be necessary depending on the type of company registered.
Registering your company can be done quickly and online within 24 hours.
Determining which option best suits your company largely depends on your specific business plans and goals. This guide will provide an overview on each model to highlight their differences and requirements should you choose to set up in Singapore.
A subsidiary company is a separate legal entity from its parent company. As the Singapore government allows 100% foreign ownership in companies, a foreign company may establish a local limited liability company also known as a Subsidiary company in Singapore and retain 100% of the shareholding.
Most mid-size businesses tend to choose a subsidiary company as a means of starting in Singapore. This is because although the parent company is exempt from the tax liabilities of the subsidiary company, the subsidiary company will be treated as a local resident company. This makes it eligible for the various tax exemptions and incentives available to local companies. The estimated registration time taken will be 1 to 2 days.
As a result of the company being treated as a separate entity from the parent company, it is permissible for the subsidiary company to have a different name from that of its parent. This name will be subjected to approval by the Registrar of Companies. One or more directors must be appointed as dictated by the Companies Act and at least one of those directors must be a Singapore resident (citizen, permanent resident or employment pass holder). The Singapore subsidiary company must maintain a registered office in Singapore and retain all legal documents in that office. This can be a commercial office if you are renting one or a home office. The registered office is generally where you intend to keep all the legal documents regarding the subsidiary company.
A Singapore subsidiary company has no definite time for length of operations. It can remain registered until such time when the parent company decides to close it.
As a subsidiary company generates income in the country, it is permitted to open up a bank account at any of the many banks in Singapore. The subsidiary company independent of the parent company will be subjected to all existing local corporate tax rates.
A branch office, like a subsidiary, has to be a registered legal entity residing within Singapore. However, where the subsidiary company is treated as a local resident company separate from the parent, the branch office is treated as an extension of the foreign company. This means that the foreign company's head office bears all responsibilities for any liabilities committed by the branch office. In addition, as the branch office is considered a non-resident entity, it will not be eligible for any tax exemptions and incentives which are available to local companies in Singapore.
The name of the branch office must be the same as that of the head office but it will still need to be approved before registration can commence. Most of the time, names are approved without much hassle unless the name is considered offensive or is identical to an existing company name. The time taken for the registration to be approved or declined is around 1 to 2 days.
Unlike the subsidiary office, the branch office is required to appoint 2 agents who are ordinarily residents in Singapore. The branch office must also have a registered office address in the country.
The branch office is allowed to conduct any type of business which falls within the scope of its parent company. It is also allowed to return all earnings and capitals to its head office. Operations carried outside of Singapore will not be taxed as only earnings obtained from operations within the country will be subjected to all existing local corporate tax rates. The branch office however, is expected to submit its own audited accounts as well as that of its head office.
Typical types of companies that choose to have branches in Singapore are banks and financial organizations.
As a branch office generates income in the country, it is permitted to open up a bank account at any of the many banks in Singapore.
A representative office has no legal status. It is a temporary setup meant for foreign companies who are interested in doing business in the region but wish to proceed with caution. The representative company therefore allows the parent company to conduct market research, feasibility studies or liaison work before it makes the decision to proceed with upgrading to a Subsidiary or Branch office. It cannot partake in any revenue generating exercises. As a result of this, there will be no taxation or annual filing.
The Representative Office can still open a bank account to run its cost centre. However it must be funded by the parent company.
The Representative Office must possess the same name as the parent company with the additional tag of ‘Representative Office'. All liabilities will be extended to the parent company.
Even though it has no legal status, the office needs to be registered. It will typically take 3 to 5 working days for the application to be approved, provided all details are in order.
The Chief Representative must be someone who will relocate from the main headquarters and the total number of employees the representative office can have is five.
While the subsidiary and branch offices have an indefinite validity period, the representative office has to be renewed every year for a maximum of 3 years after which it has to be upgraded to a Subsidiary or Branch.
Representative Offices dealing in banking and insurance will need to register with the Monetary Authority of Singapore (MAS) and comply with their respective guidelines or requirements. For all other industries, you will need to register with International Enterprise (IE) Singapore.
The Government is very pro-business and its dedication to ensuring that Singapore remains a lucrative and attractive country to foreigners is at the forefront of all its policies. With relaxed immigration rules and 100% foreign ownership given to any businesses, the Government continues to make the process as easy as possible by providing you with most necessary information and links on a single page.
If you wish to find out if the name you have chosen for your company is available or if you like to know how to obtain licenses & permits, head over to the Government's EnterpriseOne website where more pertinent information is available.
If you are ready to register your business, you can head over to the Bizfile website to begin your foray into South East Asia.
Additionally if you are unsure on how to start your business and want help putting some things in perspective, you can read our 'Starting a Business in Singapore' guide.