After doing some research and evaluating multiple options and places to expand your business into the Southeast Asia region, you have considered Singapore to be the best option to explore your business potential. With an outstanding reputation of being considered a business platform for startups, entrepreneurs, and international companies in the region, Singapore's policies can protect your investment through its legal and regulatory system.
Now that the location has been chosen, you need to define what kind of business entity or business structure will suit your project better. A term that is often used and widely searched in the form of a Subsidiary. Our team of experts at Startrys has prepared this article to help foreign investors. We will be covering some topics about the Subsidiary, such as requirements and steps for registration.
What is a Subsidiary Company?
Let us try to understand this concept through an example. A Europe-based company wants to expand its operations. Singapore is the best location in Asia for them. So far they had handled everything from the headquarters. But the operations have increased, so they need to find a way to participate more efficiently. If the company in Europe establishes a Singapore-registered company, and it's the only owner, it would be considered a Subsidiary. So what form can a Subsidiary take?
A (Private) Limited Company has a separate legal entity. Using it for your Subsidiary minimizes the risk and liability. It adds a layer of protection. As well as shielding the owner(s). If a (foreign) company is the single owner, then it will be considered a Subsidiary.
A Subsidiary and other businesses - What is the difference?
Let's go from general to more specific terms. A local company? A Subsidiary? Are they the same? Correct! The moment a company is registered in Singapore, it will be considered local. The most popular form of a local company is the Private Limited Company. So at what point are they different from each other?
So where does a Subsidiary enter? In simple terms, the ownership. Individuals can own a Private Company. Other companies, or corporations, can become owners too. A Subsidiary appears when the shareholders are mainly foreign companies. For example, a company registered in Hong Kong becomes the single owner of a company in Singapore. Subsidiaries have no special treatment.
What are The Requirements for a Subsidiary Company Registration?
In the experience of our team, we have prepared a list of points. These will help people interested and search for a Subsidiary. These are:
- Internal structure: an essential step before the incorporation process is to define who is going to be who in a company. At least one director is needed. Also, one shareholder. As mentioned previously, the Subsidiary should be at least one foreign company as a major shareholder.
- Required capital: the minimum paid-up capital, for this kind of business structure, starts at 1 Singapore Dollar. An increase in the share capital, or any change happening, needs to be updated with the government.
- Other roles in the company: as it is a requirement for companies in Singapore, a Company Secretary needs to be designated to keep the compliance of the company in check. There are specialized companies that offer the service of Corporate Secretary in Singapore.
- Registered address: although a registered company in Singapore must have an address in the country, it is possible to use the address of a service provider, such as a corporate services firm, that acts as your Company Secretary as well.
- Year-end date: the date chosen as your closing period of activities is an important consideration since it will encompass your fiscal period from the date of the incorporation. It should be observed that normally this period comprises 12 months. A common practice is to choose the same year-end as the headquarters overseas.
- Issue of residence in Singapore: foreigners can occupy the role of a director of a company in Singapore if they have acquired a visa or residence permit. Otherwise, someone that fulfills this requirement needs to be assigned during the setup process.
How to Set Up a Subsidiary Company?
With the previous points in mind, the application process for registering your Subsidiary should not be complicated. Here we will enlist, in a general way, the most important steps to take:
- Verify that the name chosen for your company is ready to use.
- Use Bizfile+ to make your company application.
- Send the application and cover the fee.
Here we have simplified the steps. In a matter of 2 days, you can have your company ready to start working.
Considerations for foreign nationals
- Coming to Singapore: as it is required that one of the directors of the company is a Singapore resident, if there is no one currently in the country, someone needs to be nominated for the setup process. Nevertheless, this means that other nominated directors and shareholders do not need to be present in Singapore in this phase.
- Processing time: in one or two business days a company can be registered, but it may take more time in special cases.
- Making the application as a foreigner: there is a requirement for the registration of companies through the platform Bizfile+ that normally foreigners cannot access. It is only available to residents of Singapore. Companies that provide the services of the Company Secretary can guide you through the process, for example.
- Getting an account: don't let your business stop just because you don't have an account to receive or send money. Fixing this issue is as easy as going to a bank and asking for their corporate account services. But, are you ready to wait for some months? Also, if your director doesn't live in Singapore, will he or she be available to travel for an interview? You can be asking yourself, is there any quicker alternative? Right, a digital business account!
Do you wish to know more? Reach out to the Statrys team to know more about how to access a business account for your company in Singapore.
After reading this article, you should understand what a Subsidiary is. Are you still confused about this word? A Singapore Subsidiary company is a local company with foreign owners. They don't follow different rules from other companies, the term is only used to refer to its ownership. Now you should have it clear in your mind! But if you feel like you need more orientation, feel free to reach out to our team!