What are the key requirements for setting up a Singapore Company?
|Type of Company
|Has a maximum of 50 shareholders.
|is one which:
• Has a maximum of 20 shareholders.
• No corporation is a shareholder.
• The Minister has deemed to be an EPC under the Companies Act.
|• May have more than 50 shareholders.
• May raise capital by offering shares or debentures to the public.
• Must register a prospectus with the Monetary Authority of Singapore (MAS) before making any public offers.
|• Is usually formed to carry out non-profit making activities such as promoting arts, etc.
• Is one which has members instead of shareholders. These members agree to pay a fixed sum in case the company is wound up
Every business needs a name to differentiate itself and to make it easy for others to find the business. The first step is to choose a suitable name and submit a name application via BizFile+, ACRA’s electronic filing and information retrieval system. Once the name application is approved, you can proceed to incorporate the company.
A director is the person in charge of managing the affairs of the company. He must make decisions objectively and in the best interests of the company. Every company must have at least 1 director who is locally resident in Singapore. Here are the basic requirements for a company director. He must be:
- At least 18 years old;
- Of full legal capacity;
- A Singapore Citizen, Singapore Permanent Resident or EntrePass holder.
- A director may also be an Employment Pass (EP) holder. However, a EP holder wishing to become the director of a must first get a Letter of Consent (LOC) from the Ministry of Manpower.
- Cannot be disqualified from acting as a director of a company e.g. an undischarged bankrupt.
A company must appoint a secretary within 6 months from its incorporation date. A company secretary must be:
a. A natural person;
b. Locally resident in Singapore.
The position of company secretary must not be left vacant for more than 6 months. The sole director of a company and the company secretary cannot be the same person.
Every company must appoint an auditor within 3 months of incorporation, unless it is exempted from audit requirements under relevant sections of the Companies Act.
Foreigners wishing to incorporate a local company in Singapore must do the following:
- Engage the services of a registered filing agent (e.g. a law firm, accounting firm or corporate secretarial firm) to submit the online application.
- Employ a director who meets the requirements described in the above section on Directors.
You may choose to reside outside Singapore after setting up your local company. However, if you wish to be present in Singapore to manage the company operations, you must seek approval from the Ministry of Manpower (MOM).
The company must have at least one shareholder. You will need to provide the personal identification details, contact information (telephone number and e-mail address), and residential address of each of the shareholders when submitting the application online.
You must also indicate the amount of issued capital i.e. the total amount that shareholders have paid for their shares. The minimum issued capital must be at least $1. However, there is no minimum paid up capital required.
A company may issue different types of shares with different conditions. Generally, a company issues two main types of shares:
- Ordinary shares: Carry voting rights and entitle shareholders to variable rates of dividends (i.e. payments to shareholders from profits of the company)
- Preference shares: Has preferential rights over ordinary shares, usually in respect of dividend distributions. The specific rights and benefits of preferential shares are commercial decisions decided by each company. They are contained in the Constitution or resolutions passed during meetings.
Note: Companies with paid-up capital of $0.5 million and above automatically become members of the Singapore Business Federation.
You must provide a registered office address during your application to incorporate a company. A registered office address refers to the place where all communications and notices to the company are addressed to, and the place where the company’s register and records are kept.
A registered office must be operational and accessible to the public during normal office hours, but need not be where the company conducts its activities (e.g. the registered office address may be in Raffles Place but the factory could be located in Tuas).
The constitution is a legal document that:
- Describes the key characteristics of the company.
- Contains the rules and regulations for its governance.
- Describes how its operations will be carried out.
- States the rights and responsibilities of the directors, shareholders and company secretary.
A copy of your company’s constitution must be submitted when applying to incorporate your company.
You must also decide on the first financial year end (FYE) of your new company. The FYE will determine when your corporate filings and taxes are due. Common choices by companies include 31 March, 30 June, 30 September or 31 December.
You must also decide whether your accounting period covers 12 months or over 52 weeks.
An Offshore Company is commonly set up in a tax haven like the British Virgin Islands, Samoa, Seychelles, Anguilla, Belize, Cayman Islands and Labuan. There are a number of benefits that you can take advantage of through offshore company formation plans; whether you are seeking asset protection, confidentiality, privacy, tax savings (depending on your jurisdiction) or simply growing your business outside. There are a number of pitfalls to keep in mind and choosing the right jurisdiction to form companies, based on your specific needs, is a critical first step. Each jurisdiction has a slightly different value proposition for international clientele and the benefits vary. Here are just some of the general benefits of offshore company incorporation:
The main reasons to incorporate offshore are:
• Asset Protection
• Estate Planning
• Tax Benefits
• Convenient Reporting Requirements