This section provides comprehensive information about incorporating a new entity in Singapore, be it a branch or representative office, a limited liability company, a sole proprietorship, a partnership, a limited partnership, or a limited liability partnership.
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.
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 one authorised representative (being a natural person 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 Singapore branch accounts and head office financial statements within 60 days of the company’s annual general meeting being held. If annual general meeting is not required to be held to table the head office financial statements, the Singapore branch accounts and head office financial statements should be filed with ACRA within 7 months of the end of every financial year.
Limited Liability Company (LLC)
The limited liability company, with share capital, is the most common vehicle contemplated by a foreigner interested investing in Singapore.
They must have a minimum of one director resident in Singapore and may have only one shareholder (individual or corporation). A LLC incorporated under the Companies Act is a separate entity from its shareholder(s). Equity participation by Singaporeans isn’t a requirement.
Every Limited Liability Company must have the word “Limited” or “Ltd.” at the end of its name and a Private Limited Company must have the word “Private” or “Pte”. All companies have to include their unique registration number in company documents, but they aren’t required to display their company name on the outside of their office premises.
A LLC should hold its AGM within 6 months from its financial year end. The annual return together with the audited financial statements in XBRL format (unless exempted) should be filed within 7 months from its financial year end. Every LLC is required to appoint an auditor unless it is a dormant LLC or a small company.
Sole Proprietorship or Partnership
A Sole Proprietorship or Partnership is an association of people carrying on business common with a view to profit.
There must be at least one authorized representative resident. These are the simplest forms of business more suitable for small-scale businesses. For most businesses, the maximum number of partners permissible is 20. The number of partners permissible is different in the case of certain professional partnerships regulated by law. Both the sole proprietor and the partners are subject to unlimited liability.
Limited Liability Partnership (LLP)
An LLP gives owners the flexibility of operating as a partnership whilst also offering them limited liability.
Every LLP shall have at least 2 partners. The partners may be individuals, a local company, a foreign company or another LLP. It combines the benefits of a partnership with those of a private limited company.
An LLP is a body corporate and has a legal personality separate from its partners. LLP Partners must have their contributions to Medisave paid up to date with the Board of the Central Provident Fund at the time registration of a new LLP.
Limited Partnerships are useful in “labour- capital” partnerships where one or more of the financial backers prefers to contribute money or resources while the other partner performs the work.
The structure must comprise at least one or more general partners and one or more limited partners. The LP and each partner is required to be registered with ACRA. An LP does not have a separate legal entity from its partners. The LPA requires that the name of the LP contains the words “Limited Partnership” or “LP” in order to put third parties on notice of the limited liability status of its limited partners. General Partners are responsible for the day-to-day management and operation (liable for the debt/obligations). Limited Partners play a passive role and are limited to the extent of their investment in the LP. Whilst an LP is not required to file its account or have them audited, it is required to keep proper accounting and other records that will sufficiently explain its transactions and financial position.
A foreign oﬃce may establish a presence in Singapore by setting up a representative oﬃce. It's for foreign entities that are keen on exploring the viability of Doing Business in Singapore or are interested in using Singapore as a launch pad into the APAC.
The proposed number of staff for the RO should be less than 5 people. All RO should be registered with Enterprise Singapore.
A representative office may operate in Singapore for a maximum of 3 years from its commencement date, provided that the representative office status is renewed annually after evaluation by Singapore. The foreign company’s sales turnover must exceed US$250,000 and must have been established for at least 3 years. The activities of a representative office are strictly limited to “market research and feasibility studies”. A RO should not act on behalf of other companies in the same group.
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.