Singapore’s business environment is quite diverse. If you are searching to explore opportunities and evaluate the market to position your products or services, you might want to hear about the Representative Office. Singapore has a very attractive and mature market and has great access to the Asia Pacific region, it is the perfect platform to impulse your business. Furthermore, the regulations in Singapore allow foreign companies to have a presence in the country to carry out specific tasks, and one of them can operate without actually going through the incorporation process of a company.
Singapore's government recognises three types of foreign entities in Singapore, the Subsidiary which can be wholly or partially foreign-owned and follows the same regulations as local companies, the branch office, which is an extension of a parent foreign entity and the Representative Office, which will be the focus of this article.
In this article, we will discuss what it is, the requisites for foreign companies to register a Representative Office in Singapore, and the steps to establish one with the corresponding local authority. More details will be illustrated in the following sections.
What is a Representative Office in Singapore?
The term Representative Office might seem simple at first glance. However, the actual purpose of this type of representation of a foreign company is often unknown or misused. Let’s begin first by defining what a Representative Office is.
According to the Accounting and Corporate Regulatory Authority (ACRA), a Representative Office is a vehicle that foreign companies can use to explore and evaluate the potential for their business in Singapore without the need of going through the process of registering a business entity, reducing the risks and allowing foreign companies a firmer grasp and understanding of their potential operations in Singapore. Furthermore, as the ultimate goal is to help to establish a registered company in Singapore, a Representative Office is designed to be only used for a short period, which is up to 3 years.
As it is only a vehicle to represent the presence of a foreign company in Singapore, a Representative Office should not engage in certain activities, especially those that can generate a monetary gain. The authorities of Singapore have very defined activities that can be conducted through this representation. These activities are the research of the market to define the potential clients and activities to promote a brand or awareness to the public. Moreover, a Representative Office can look for contacts of suppliers and service providers for the specific activities of its foreign company. Nonetheless, it should not be used to celebrate contracts as it doesn't possess an independent legal status, only the foreign company is allowed to get business contracts.
After we have gone through the basic aspects of the Singapore Representative Offices, we must discuss the regulatory authority overseeing matters related to this type of foreign company presence in the country, Enterprise Singapore. More details will be shown in the next subsection.
What is Enterprise Singapore?
Being formed in 2018 by the Ministry of Trade and Industry through the merger of two other government agencies, International Enterprise Singapore and SPRING Singapore, Enterprise Singapore is a government agency to make Small and Medium Enterprises reach their potential and develop by helping them to be up-to-date, innovate and internationalise.
For the registration process, the foreign companies must go through the application process with this government agency instead of the Accounting and Corporate Regulatory Authority (ACRA), since it is not a business structure that can generate profit or have sales turnover in Singapore. Additionally, a Representative Office registered with Enterprise Singapore must belong to a foreign commercial entity that engages in one of the following activities: manufacturing, trading either internationally or locally, wholesale, retail or anything related to trading. If a foreign company has a different business activity, it might need to consult with another related government authority.
What documents do foreign companies need to set up a representative office?
Although it might seem that a Representative Office has a simple nature due to the limited activities that are allowed to conduct, a foreign company interested in registering one in Singapore must comply with a series of conditions to successfully obtain the green light from Enterprise Singapore. Here we will enlist the requisites:
- Sales turnover: a foreign company must provide supporting evidence of their total sales over their last fiscal period that is greater than $250,000 US dollars.
- Time of operations: there must be proof that the foreign company has at least 3 years of operations.
- Foreign entity corporate documents: a copy of the parent company’s certificate of incorporation or a document similar to the registration certificate, must be prepared. Any documents in a foreign language, different from English, will need to be translated.
- Financial statements: if a foreign company plans to establish a Representative Office in Singapore, they should provide their most recent audited financial statements, to prove their good business.
Other important considerations
- Permit renewal: permits for Representative Offices are limited to a period of one year. However, the limitation period is 3 years.
- Getting your team ready: since the number of staff that is allowed per Singapore Representative Office, key personnel should be considered in advance by the foreign company. There is a limitation of 5 staff to be hired.
How to set up a representative office in Singapore
A Representative Office registration process needs to be done through the website of Enterprise Singapore. Here we will enlist the steps in a general way:
- Fill in the application form according to the requirements and guidelines.
- Attach the supporting documents from the foreign parent company.
- There is an administrative fee that needs to be covered for the registration process. This fee is not refundable.
- After the application has been submitted, a Representative Office can be registered in 5 working days.
As we have seen in this article, the Representative Office has a very specific purpose in Singapore. With its limited activity scope and limited lifespan, it can only serve as the first step to help foreign companies to design a long-term plan to enter Singapore's market and make their permanent establishment through the setup of a company in Singapore or through one of the many wide ranges of business structures that might better serve their needs.
Nevertheless, as this type of vehicle requires the preparation and recollection of very specific documents from the parent company, it is advisable to seek guidance from a professional firm dedicated to providing setting up services in Singapore to avoid any troubles during the application process, which could be limited for foreign nationals.
Can a Representative Office hire foreigners?
Can a Representative Office sign any agreements for the parent company?