Singapore Company Formation | A Guide for Non-Residents
4 min Read
Singapore company formation for non-residents is as quick and straightforward as for locals. The only difference is that you need to engage a registered filing agency to register your company with ACRA.
If you are a first-timer, you are on the right page! This guide provides valuable information on Singapore company formation for non-residents, which covers:
- What is ACRA?
- What differentiates a resident and non-resident Singapore company?
- Singapore company formation options for foreigners
- Essential requirements to set up a company in Singapore
- Steps to Singapore company formation
- Tasks to be done after company registration
What is ACRA?
ACRA stands for Accounting and Corporate Regulatory Authority of Singapore. It is the government agency in charge of the formation, regulation, and dissolution of businesses. It also provides the legal framework for your business to comply and keep data on all enterprises in the country.
Here are the activities that ACRA does:
- Registers all new companies in Singapore
- Provides the companies with UEN
- Administers the Companies Act
- Collects data on corporate details, such as nominee directors, corporate secretaries, shareholders, etc.
What differentiates a resident and non-resident Singapore company?
A Singapore “resident” company is one whose control and management of the business are exercised in Singapore, whereas a company that is “not resident” in Singapore, such as a branch office of a foreign corporation, will not be subject to Singapore’s taxation system.
Many businesses have chosen to become resident companies because of the privileges that only a resident company can receive.
Some benefits of a resident Singapore company include:
- Singapore’s vast network of Double Tax treaties;
- Singapore’s wide network of Investment Guarantee Agreements (if the company wants to invest abroad);
- Tax exemption on certain foreign-sourced incomes (dividends, branch profits, and service income); and
- Tax exemption schemes for Singapore companies.
Singapore company formation options for foreigners
If you’re a non-Singaporean looking to start a business in the city-state, it may be worthwhile to hire a professional service firm to help you register your business is a good idea. In the meantime, you can choose from three different Singapore company formation options:
A. Subsidiary company
In Singapore, companies can be 100% foreign-owned, allowing foreign companies to form a subsidiary company and possess 100% of their shares. A subsidiary company is a locally incorporated private limited company with another local or foreign corporation as the dominant shareholder.
Under Singaporean law, a subsidiary company is treated as a local Singapore company and is considered a separate entity (from its overseas parent company). As a result, the foreign company and its assets cannot be held liable for the subsidiary’s obligations and liabilities.
A well-structured local subsidiary company is also a tax-efficient corporate structure. In addition, the resident status of a subsidiary company qualifies it for favorable tax treaties, government incentives, and easier access to local money.
When forming a subsidiary company, keep the following in mind:
- The subsidiary company’s name can be different from the parent company’s. However, this is subject to ACRA’s approval.
- The Singapore Companies Act requires the appointment of one or more directors. At least one of these directors must be a Singapore citizen, permanent resident, or holder of an Employment Pass.
- A subsidiary company must hold its statutory documents and maintain a registered office address in Singapore.
B. Branch office
A Singapore branch office is a legally recognized business organization that functions as an extension of the overseas parent company.
Branch offices are permitted to engage in any form of business activity that is within their parent company’s scope, and they can repatriate their earnings and cash. As a result, branch offices are only taxed on the earnings generated by their Singapore operations.
Since branch offices are considered non-resident entities, the foreign company’s head office is responsible for any acts of commission or omission committed by the Singapore branch office. Branch offices are also excluded from several tax exemptions local and subsidiary companies can enjoy due to their non-resident status.
You may register a branch office if you are running a medium to large-sized business with specialized operations in other countries and want to perform a wide variety of business activities in Singapore
Here are some things to take note of when establishing a branch office:
- The name of the Singapore branch office must be the same as that of the head office and approved by ACRA before registration.
- The Singapore Companies Act mandates that each branch office designate at least one authorized representative who is a Singapore resident to accept services of process and notices.
- A branch office must have a registered office address in Singapore.
C. Representative office
A representative office is a temporary setup that allows foreign enterprises to investigate the market or handle their affairs in Singapore without engaging in any productive business activity.
There are no legal persons for representative offices. As a result, representative offices are unable to sign contracts, trade, lease warehouses, raise invoices, or open letters of credit – either directly or on behalf of their foreign parent companies. In addition, foreign companies are held liable for the activities of their Singapore representative offices.
Companies and individuals are often encouraged to set up a representative office in Singapore if their primary goal is to research the Singapore business environment before making any type of investment or if they have significant non-core activities to manage there.
When setting up a representative office, keep the following in mind:
- The representative office must be managed by a foreign company’s head office representative.
- A representative office cannot operate for more than three years and must upgrade to a branch office or subsidiary firm by the end of the third year.
- If your representative office operates in the banking, finance, or insurance sectors, you need to register your representative office with the Monetary Authority of Singapore (MAS). Otherwise, you’ll need to register with the International Enterprise Singapore (IE Singapore).
Essential requirements to set up a company in Singapore
Some pre-registration requirements that you must meet include:
- Company name – ACRA should approve your company name before incorporation. Read our guide on choosing a company name in Singapore to increase the chances of getting your desired company name approved.
- Business entity – There are various business entities non-residents can choose from in Singapore, but the most common and preferred one is the private limited company. Make sure to evaluate each option and finalize the company type based on your business needs
- Business activity classification – Every business in Singapore is required to choose a Singapore Standard Industrial Classification (SSIC) code that accurately describes its intended business activities. You can use this free tool to check your SSIC code.
- Company’s Constitution – When incorporating your company in Singapore, you must also submit a legal document called the Company’s Constitution, which contains all of the laws and regulations governing your company’s governance.
- Director(s) – You need to appoint at least one resident director for your company who must be 18 years old and above. There is no limit to the number of resident and non-resident directors you can assign to your company. The sole requirements are that they are not bankrupt, do not have a criminal history of malpractice, fraud, or dishonesty, and are not disqualified under the Companies Act.
- Shareholders – To be able to incorporate your company in Singapore, you need at least one shareholder, while the maximum limit is dependent on your company structure.
- Company secretary – While a company director or shareholder can become a company secretary, a sole director and shareholder cannot be designated. At Biz Atom, we provide company secretarial services to ensure your company stays compliant always and never has to pay any penalties for missing deadlines.
- Paid-up capital – A minimum of $1 (or equivalent in any currency) can be considered a paid-up capital. This amount can be increased after incorporation.
- Registered office address – Your company office must be registered in Singapore and cannot be a P.O. box. But if you think it’s a little too early to invest in office space or are unsure of where to set up one, you can avail yourself of our registered office services.
The following are documents you must submit while incorporating your company:
- Company name registered with ACRA
- A brief description of business activities with the SSIC code
- Details of Singapore registered address of the company
- Particulars of shareholders
- Particulars of directors
- Particulars of company secretary
- A copy of the passport and residential address proof (overseas) for non-local directors and shareholders endorsed by the Notary Public.
- An EntrePass for non-local directors
- Signed Consent to Act as a Director
- Other Know-Your-Client (KYC) information includes a bank reference letter, personal and business profile, etc.
Steps to Singapore company formation
You will need to engage a professional to file on your behalf in order to register your Singapore business. Self-registration of a company by a foreign individual or entity is not permitted.
The Singapore company formation consists of only two steps:
1. Get your company name approved
Quick approval of the company name is possible if you follow the following guidelines:
- The company name must be unique and not be the same as another Singapore company.
- The company’s name should be easily readable.
- Any vulgar or indecent words should be avoided in the company name.
- The company name shouldn’t infringe any trademark and can’t violate any copyright issue.
- A company name that has previously been taken by another company is not permitted.
- If the company name comprises words like “Finance,” “Media,” “Bank,” “Broker,” “Legal,” “Educational,” and so on, higher authorities may need to approve it. Approval from a higher authority may take a few weeks, which will cause the procedure to be delayed.
The company name can be reserved for sixty days after it has been authorized. If you are unable to incorporate your business within sixty days, you can request a sixty-day extension by submitting an application to ACRA.
To improve the chances of your company name getting approved, make sure that it is available by checking it using this free tool and read the following guide:
2. Register your company
The second and final step is to submit an application to ACRA, which can be done online. Official registration with ACRA can be completed in less than an hour if all documentation is in order. However, the registration process may take a few extra weeks if ACRA needs to refer the registration to other government bodies for additional verification.
When the Singapore company formation process is complete successfully, ACRA will send official confirmation by email, confirming the company’s incorporation and providing its registration number. While the soft copy is considered a legitimate registration certificate, a hard copy can also be obtained through an online application.
Tasks to be done after Singapore company formation
After incorporation, a new company must accomplish a number of tasks before it can start operating. Some of the tasks are related to regulations, while other tasks relate to the nitty-gritty of commencing business operations. The following are some of the examples:
- Set up a bank account – To conduct business in Singapore, you will most likely need to open a local bank account. A bank would usually ask for a certificate of formation, the company’s constitution, a board resolution authorizing the account’s opening, and evidence of identity from the account’s beneficiaries. Most banks also require the physical presence of account signatories and the majority of the directors during the account opening.
- Get licenses and permits – Before starting operations, some businesses must obtain specific licenses and permits. The competent government organization will then issue you the necessary licenses and permissions, depending on the nature of your business.
- Maintain company registers – Following incorporation, a company needs to maintain a register of all its key appointments, such as CEOs, directors, company secretaries, shareholders, auditors, and controllers. Except for the register of members (shareholders) for public companies, all these registers must be maintained in electronic form with ACRA.
- Buy a company seal – All Singapore businesses are required by law to obtain a seal for the purpose of stamping official documents. Often known as a “common seal,” these metallic, ink-free seals make an embossed impression of the company’s name and registration number on official papers such as share certificates and loan paperwork.
- Create statutory books – Statutory books are your company’s legal records stored at its registered office in Singapore. They must be kept up-to-date and available for inspection because they are a public record that can be requested at any time.
- Hire staff – As in other countries, employment is a regulated area in Singapore. To ensure that you are in accordance with the applicable laws, you should educate yourself on the basic rules and regulations governing HR concerns in Singapore.
- Choose the company’s financial year-end (FYE) – A company’s financial year-end (FYE) is the final day of its accounting period. Companies can choose the FYE based on their preference. The accounting period can be either for 12 months or 52 weeks. The most common choices are 31 March, 30 June, 30 September, or 31 December.
- Apply for GST (if applicable) – The GST (Goods and Services Tax) in Singapore is a value-added tax (VAT). A standard tax rate of 7% is levied on goods imported into Singapore and on the supply of goods and services within the country. You must register for GST if your business generated more than S$1 million in revenue in the previous 12 months or is expected to do so in the following 12 months.
- Appoint an auditor – Unless your company is exempt from audit requirements, you must appoint at least one auditor within three months of registration.
- Issue share certificates – A share certificate is a legal document that proves you own a certain number of shares in a company. Singapore companies are required to issue share certificates to all of their shareholders. These certificates should be signed by two directors or one director and the secretary and issued under the corporate seal.
- Set up an accounting system – Not only will an accounting system help you track and manage the profitability of your business, but the tax regulations mandate that you must maintain accurate records of these transactions. An alternative to setting up your own accounting system is outsourcing this function to an external accounting firm.
For detailed information on post-company incorporation tasks, please read these guides:
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