Foreign businesses and investors don't need to look any further, Singapore is your answer for your business needs in Asia! It doesn't matter if you have very specific needs for your business, or even if your business is small or medium. The regulations in Singapore can give your business enough room to mature and expand. Foreign companies, there are a few ways to enter this market. For example, a (Singapore) Subsidiary company, a Representative Office, or a Branch Office (in Singapore).
In this article, we will be talking about the (Singapore) Branch offices. Some of the topics that we will discuss will be what a branch office is, what are its limitations, some of the requirements to establish one in Singapore, the steps to register a branch office, and the corresponding authority to carry out the process. More details will be explained in the sections to come of this article.
What is a Branch Office?
According to the ACRA (Accounting and Corporate Regulatory Authority) of Singapore, a foreign parent company can choose to set up an extension of itself to operate in Singapore. In this sense, a Branch office virtually works as any other company in Singapore, with some minor limitations.
For example, it is not considered to be a separate legal entity, meaning that the foreign company will become fully liable for all the obligations and debts that the branch office contracts, exposing directly their assets to risk.
Additionally, a branch office cannot deviate outside or perform other business activities different from the main activity of the parent company registered outside Singapore. For example, if a foreign company's main line of business is trading and logistics, its branch in Singapore cannot provide banking services. The business activity from the parent and the branch must be in line.
It is important to mention that branch offices can generate profit from their operations rendered in Singapore, and as so, they will be taxed as corporations or as any other Singapore companies by the Inland Revenue Authority of Singapore (IRAS). This should also be considered by the parent foreign company and get acquainted with the taxation regulations in Singapore, as well as how it could affect their global operations and if there is a Double Taxation Agreement between Singapore and its home country.
Now with a better idea of what a Branch Office is and can do in Singapore, we can move into the next section, we will be discussing the requirements for a foreign company to set up a branch in this country.
Why do foreign companies need to register a Branch Office?
According to the Singapore Companies Act, which is the legislation that regulates the conduct and registration of companies in Singapore, any entity that will generate profit needs to be registered with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore.
As a Branch office is considered to be a profit-making entity, the registration process is similar to registering a subsidiary of a foreign company, with the exceptions and limitations that a branch office has compared to a subsidiary.
Even though there are no previous requisites or restrictions to register a branch office in Singapore, there are a few documents to prepare, as well as arrange the nomination for some roles. Here we will enlist them:
- Name of the branch office: as it is an extension of a foreign registered company, the branch needs to have a similar name as its parent entity, mentioning that it is a branch of that company.
- Registered office address: a physical office needs to be registered as the official address of the branch in Singapore. Additionally, information about the parent company needs to be displayed as well.
- Internal structure: as it is only an extension of another entity, the internal structure will remain the same, such as directors and shareholders.
- Authorized representative: the authorized representative will be similar to the director of a subsidiary in Singapore. However, this person needs to be of the majority of age and be eligible to reside legally in Singapore. It is important to also prepare a document that states the power of the authorized representative in Singapore on behalf of the parent company.
- Corporate documents: some documents belonging to the foreign company need to be prepared in advance before the registration process, for example:
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Other considerations
As one of the official languages in Singapore is English, all the documents belonging to a parent foreign company need to be translated into English and certified by an official translator. Otherwise, the documents would be deemed as not admissible by the local authorities.
On the other hand, the registration process for a Branch Office in Singapore must be done through an agent that can provide the service. For example, an accounting firm, legal firm, or even a company secretary company can help you to register a company in Singapore since you will need someone to act as your authorized person that needs to be a Singapore permanent resident or a Singapore citizen. Furthermore, since this authorized representative will be in Singapore, there is no need for any of the directors of the foreign parent company to come to Singapore for the registration process.
How to register a Branch Office in Singapore
As a prelude to this section, we have previously mentioned that the registration process needs to be carried out by a professional firm that has the capacity of registering companies in Singapore, therefore this section will be quite simple. Here we enlist the standard process:
- Choosing a professional firm or service provider to register your branch office in Singapore.
- Gather all the information required from the parent foreign company, including document translation to English, if needed.
- Choose an Authorised Representative for your branch office.
- Define a registered office address for your business.
- Apply to the online government platform Bizfile+.
- Pay the fee for the application process.
Once the application fee has been paid, the approval process for the branch office can take from 1 to 2 days. Nevertheless, if the application is unsuccessful, the paid fee amount is not refundable.
Other recommendations
These additional steps can help to improve the operations of your business in the country. Here we will mention some of our observations:
- Company Secretary: it is not mandatory to nominate someone as your Company Secretary, but it is advisable to have guidance from someone who knows how to keep the compliance of a company in Singapore. Normally, the professional firm that can help you with the registration process can act as your Company Secretary.
- Opening a business account: having a business account for the branch will help run the operations in Singapore. There are many options such as having a corporate bank account or using an alternative to traditional banking, such as a digital bank or digital platform, to manage the payments.
- Talent relocation: a branch office in Singapore will allow you to grant working visas to any key employees from the parent company that can enhance the operations in Singapore. Nevertheless, this is only possible to do after the registration process is completed.
Conclusion
As an option for foreign companies to operate in Singapore, a Branch Office can be beneficial by leveraging the name of their brand into the Singaporean market and in the Southeast Asia region. However, foreign companies must be well aware of the liability that a branch office exposes them to while conducting their operations in Singapore.
Compared to opening a subsidiary, branch offices might seem to require fewer steps for the registration process, nevertheless, the fact that is not a separate legal entity translates to a higher exposure risk to the company that can track back to the country where it is registered, and the individuals involved in their internal structure.
FAQs
Who can register a Branch Office?
Foreign companies can choose to register a Branch Office in Singapore, which will be considered an extension of themselves. Nevertheless, the process by itself needs to be carried out by a professional firm that can register companies in Singapore.
Can a Branch Office expand its business Scope?
