Starting a company in Singapore can be a complex process or it can be simpler than you may think.
As stated by The World Bank ranks Singapore, Singapore is one of the most business-friendly regulatory environments in the world.
And one reason for this is that it is very straightforward to set up a company in Singapore.
In this post, we will look at the 9 basic requirements that you need to get familiar with to incorporate a company in Singapore the right way.
1. Choose a Company Name
All company names must be registered with and approved by the Accounting and Corporate Regulatory Authority (ACRA) through their online portal. The proposed name cannot be identical to any existing company name, nor may it contain various prohibited or undesirable words.
At the same time as submitting the company name, the applicant must specify the activities that the business intends to engage in using the relevant Singapore Standard Industrial Classification Code.
Once the name has been approved, the applicant can proceed to incorporate the company. This must occur within 120 days from the date of name approval.
Note, in specific industries your naming application may be referred to other Singapore Government agencies: For example, when incorporating a real estate agency, applications will be forwarded to the Council for Estate Agencies.
Once approved, the company name and registration number must be provided on all business correspondence in accordance with the Companies Act.
Bear in mind that the mere act of registering a name does not confer a trademark/exclusive intellectual property rights for the use of that name.
2. Choose Your Directors
Company directors are responsible for managing the affairs of the company. All directors of companies must be a natural person, and at least 18 years of age and of full legal capacity, and not have been disqualified from being a director (e.g., being bankrupt or convicted of fraud or dishonesty offences).
This means, unlike some other jurisdictions, foreign companies cannot themselves be directors of Singapore companies.
In addition, every Singapore company must have at least one director who:
- Is a local resident of Singapore
- Is a natural person
- Is of full legal capacity and 18 years or older
- A citizen of Singapore, a permanent resident, or an EntrePass or Employment Pass (EP) holder).
What can businesses do if they wish to set up in Singapore, but don’t know any local partners that they wish to incorporate with? One option is to appoint a ‘nominee director’: This professional director, with a permanent address in Singapore, is contracted by you (or sub-contracted by a firm you engage), to act on your advice when involved in managing the affairs of the company.
Note, however, that under the Singapore Companies Act, the nominee director is a full legal director like anyone else. They have full compliance responsibilities and liabilities, irrespective of their contracts with you. This risk, of course, is factored into their price.
3. Choose Shareholders and Share Capital
All Singapore companies must have at least one share, S$1 of paid-up share capital, and one shareholder. Private limited companies can have a maximum of 50 shareholders.
Shareholders can be 100 per cent foreign. They have the right to attend and call general meetings and pass resolutions (e.g., altering the company constitution or replacing directors, or winding up the company).
Shares can be of different classes, including:
- Ordinary shares. There must be at least one of these. Ordinary shares entitle the holder to one vote per share at general meetings of shareholders.
- Non-voting shares. Like ordinary shares, but with no right to vote
- Preference shares. These shares receive priority with respect to dividend payments over ordinary shareholders. They may have priority in the case of insolvency. Generally speaking, they are non-voting shares.
Shares can be issued at any time, by lodging the necessary documents with the Singapore authorities. In most cases, they may also be freely transferred to others.
4. Appoint a Company Secretary
Within 6 months of incorporation, a Singapore company must appoint a ‘company secretary’. The company secretary must be a local resident and a natural person. They must also have the “requisite knowledge and experience to discharge the functions of secretary of the company” (see section 171 of the Companies Act 1967)
The company secretary has administrative responsibilities for the company, ensuring that they comply with relevant legislation and advising directors, and files essential documentation on behalf of the company. There are many firms in Singapore which can provide professional company secretary services.
5. Set up the Company Address
When you set up a company in Singapore, it's important to have a proof of address.
The registered address of the company must be a physical Singapore address and cannot be a PO box.
6. Prepare Registration Documents and File for Company Incorporation
Once the company name is approved, the business should prepare the essential documents for incorporation, this includes:
- A Company Constitution. Previously known as ‘Articles of Association’, this document sets out the fundamental rules for the company and the relationships between key actors. There is a standard form of company constitution available from ACRA if companies wish to use it.
- ‘Consent to act’ forms, from each director, signed by those directors
- A ‘consent to act’ form for the company secretary
- Identification details for all shareholders, officers and beneficial owners of the company
- Corporate shareholders must provide their certificate of registration from their home jurisdiction, and information about ownership structure so the authorities can identify the ultimate beneficial owners.
7. Obtain a Business Licence (Where Necessary)
Once the company has received its certificate of incorporation, it needs to ensure that it has the right licences or registrations that apply to certain industries. For example, financial services companies in Singapore cannot operate without a licence.
8. Register for GST (Where Necessary)
Goods and Services Tax (GST) is an indirect tax on those offering goods or services, similar to ‘valued-added tax’ (VAT) in Europe. Where projected revenue exceeds S$1 million, the company must register for GST with the Inland Revenue Authority of Singapore to remit these taxes.
9. Ensure Ongoing Compliance
Once registered, it is the responsibility of the directors to ensure that the company is compliant with Singapore law.
This includes:
- Filing annual tax returns
- Filing GST returns where necessary
- Filing compliance returns.
Wrapping up
Singapore is one of the easiest locations in the world to set up a company from overseas. However, any business doing so needs to pay attention to distinct Singapore compliance requirements (such as the requirement to have a local director, and the requirement to register for GST in certain scenarios).
