Approval, Permits and Licenses
There is no restriction on the types of business that may be undertaken as long as the proposed activities are permissible under the Singapore law., However, there are some activities that require special licenses from the government agency responsible for regulating the specific industries e.g. banks, insurance, fund management companies, private schools and travel agents.
Special import licences will also be required if the Singapore government categorises a particular product as being a threat to the general health, security, safety or social decency . e.g. tobacco and tobacco products, liquor and cosmetics.
Regulation of Foreign Investment
There are no controls on currency exchange.
Foreign investment in local banks and newspaper publishing companies is controlled. On the other hand, foreign investment in commercial, industrial or retail properties is unrestricted but certain restrictions are placed on foreigners acquiring landed and certain non-landed low-rise residential properties.
Limited Liability Partnership (LLP)
An LLP gives the owners the ﬂexibility of operating as a partnership whilst giving them limited liability. It combines the beneﬁts of a partnership with those of private limited companies.
The LLP is a body corporate and has a legal personality separate from its partners. The LLP has perpetual succession. Any change in the partners of a LLP shall not aﬀect its existence, rights or liabilities.
The partners of the LLP will not be held personally liable for any business debts incurred by the LLP. However, a partner may be held personally liable for claims from losses resulting from his own wrongful act or omission. That said, a partner shall not be personally liable for such wrongful acts or omissions of any other partner of the LLP.
An LLP is required to keep such accounting and other records which suﬃciently explain the transactions and ﬁnancial position of the LLP.
Sole Proprietorship or Partnership
These are the simplest forms of business organisation and are usually more suitable for small-scale businesses. Both the sole proprietor and the partners are subject to unlimited liability with regard to the debts of the business.
Any person who is carrying on business in Singapore either as a sole proprietor or in partnership is required to register a business firm with ACRA. However, some forms of businesses, which are carried out by professionals such as architects, engineers and doctors, are instead required to register with their respective professional bodies. A sole proprietorship or partnership may be required to appoint a manager who is responsible for the management of the business. Where the sole proprietor or each of the partners of a business firm is a foreigner, the manager must be a Singapore citizen, a Singapore permanent resident or a valid employment pass holder.
A foreign oﬃce may establish a presence in Singapore by setting up a representative oﬃce.
A representative oﬃce is prohibited from carrying on a business in Singapore, as technically it has no legal corporate status in Singapore. Registration of a representative oﬃce should be considered when a foreign company wishes to test the business environment in Singapore before making investment decisions. It must conﬁne its activities to market research, feasibility studies, promotional and liaison work on behalf of the parent company.
Approval for the establishment of a representative oﬃce must be obtained from IE Singapore.
A foreign company which intends to carry on business in Singapore, but which does not wish to incorporate a Singapore company may register a branch under the Companies Act. The registration must be completed before the branch commences business.
Under the Singapore Companies Act, a branch is classiﬁed as a foreign company. There must be at least two agents (being natural persons resident in Singapore) who are duly appointed by the company (i.e. head oﬃce) by way of a power of attorney or memorandum of appointment.
A foreign company is required to ﬁle with ACRA audited Singapore branch accounts and its own audited accounts within two months of the company’s annual general meeting being held. These accounts are available for inspection by the public on payment of a small fee.
Private Company (LLC or Pte Ltd)
A private company is easily identifiable by its name which contains the word “Private” (abbreviated to be “Pte.”) or “Sendirian” (a word in malay and abbreviated to be “Sdn.”).
A private company is a locally incorporated company where the number of shareholders is limited to 50.
The liabilities of the shareholders in respect to its debts or the contribution of assets upon winding up is limited to the amount that the shareholders have committed to.
There are 2 types of public companies in Singapore. The first type is one which generally desires to raise capital from the public. It includes all those companies whose shares are listed on the Singapore Exchange Limited (SGX), either on the main board or the secondary board known as Catalyst. A company with more than 50 shareholders is a public company even if its shares are not listed on the SGX.
The other type of public company is the company limited by guarantee. Commonly used for the purpose of charity or to serve other national or public interests.
Inward Re-Domiciliation Regime in Singapore
The Companies (Amendment) Act 2017 introduced an inward re-domiciliation regime in Singapore and the regime became effective from 11 October 2017.
Under the regime, a foreign corporate entity is allowed to register in Singapore, subject to meeting the various requirements regarding size and solvency. In addition, there should not be any prohibition by the country of origin for de-registration.
The decision to re-domicile a foreign corporate entity in Singapore should be made in good faith. Once done, it allows the foreign corporate entity to leverage on the existing corporate branding and identity whilst benefitting from the multiple benefits of Singapore including the political stability, global connectivity via direct flights to major cities, transparent tax system and highly-skilled workforce.
The re-domiciled entity is subjected to the same compliance regulations as for any corporate entity incorporated under the Companies Act, Cap. 50 in Singapore, which means that it will need to conduct the General meetings, keep accounting records, prepare financial statements and submit an Annual Return under the applicable sections of the Act.
The process takes up to 2 months from the submission of all required documents.
If you are considering re-domiciliating your corporate entity to Singapore, please contact us to discuss your plans.