Singapore has always been recognised as one of the best countries for building a business as it has a such a business-friendly environment. That is why so many companies locate their offices here. But starting a company, especially a private limited company in Singapore can be a complicated process and is not so straightforward.
There are so many factors to take into consideration, such as filing of the necessary paperwork, ensure compliance with the statutory requirement and legislation, securing enough capital and ensuring proper accounts and bookkeeping.
Without the help and guidance from company incorporation experts like us, it can indeed be very difficult for most budding entrepreneurs to set up a company in Singapore. To help you start your entrepreneur journey, we have simplified the most important information needed on how to register a company in Singapore in this article.
What is a Singapore company?
A company is considered a legal entity that is distinct and separate from its directors and shareholders. There are two main types of incorporated companies in Singapore: Private Limited Companies and Public Companies
Private Limited Companies are the most common types of companies in Singapore. The shares of such companies are not available to the public as it is not listed in Singapore Exchange (SGX). The shareholders of Private Limited Companies cannot be more than 50.
Public Companies are listed in Singapore Exchange (SGX). There can be more than 50 shareholders for public companies. Such companies may also raise capital by offering shares and debentures to the public.
Why should you register a private limited company in Singapore?
The first step to registering a company in Singapore would be to determine the structure of the business and under which sector the business owners wish to register under, be it a Sole proprietorship, a Partnership or a Limited Liability Partnership.
Most serious entrepreneurs in Singapore prefer to register a private limited company compared to other business types such as limited liability partnership or sole proprietorship. A private limited company is one of the most flexible and scalable types of business one can register in Singapore.
Here is a list of reasons why so many entrepreneurs are registering a private limited company in Singapore:
1) Limited liability
The company debt is limited to the amount that each member agreed to contribute as capital to the company.
2) Separate legal entity
Companies are considered distinct and separate legal entities from their owners. So, owners of companies are not liable for any legal action taken against or debts of the company, unlike partnerships and sole-proprietors.
3) Raising capital
Capital can be easily raised by issuing more shares to existing shareholders or adding new shareholders. There is preference for banks to lend money to limited companies.
4) Perpetual succession
The company can continue to exist despite the resignation, insanity, death, bankruptcy of the directors or shareholders since there is ease of change in shareholders and ease of transfer of shares.
5) Better Image
A private limited company conveys a more credible, professional and better image than a sole proprietorship or a partnership firm.
6) Transfer of ownership
Company ownership may be transferred either partially or in whole through selling of part of or all its total shares, or through the issuance of additional shares to new investors.
7) Tax incentive
The income derived by Singapore companies is taxed at a flat rate of 17%, which is on par with the global trend of falling corporate tax rates. To encourage entrepreneurship in Singapore, the start-up tax exemption scheme was introduced by the Singapore government to provide newly-incorporated companies with some exemptions on their taxable profits during their first three years of operations.
What information do you need registering a company?
1) Company Information
At least 3 company names are to be provided for approval. Your company name must be approved by Accounting and Corporate Regulatory Authority (ACRA) before processing for your company registration can start.
You will be notified instantly by ACRA of the approval. Certain words such as “law”, “bank”, “finance”, “media”, “education” and “university” may delay the company name approval process. These keywords will lead the proposed name to be referred to another government body for approval of the use the specific keyword. Therefore, there will be an increase in time needed when incorporating a company.
To expedite the company registration process, choose a company name which:
• is a unique name which should not have any resemblance to other company name in Singapore
• does not infringe with any other trademarks
• is not obscene, rude or dirty
• has not been already reserved
You may sit on your name for up to 60 days. You may also file an extension for another 60 days if needed.
Company Registered Address
A company need to register an office address that is a physical office address located in Singapore. This address cannot be a P.O. box. As all mails and correspondence from the government entities are send to the registered address. It is important that the incoming mails that are send to this registered office address are checked regularly. It is good business practice to engage a registered virtual office address service.
Description of Business Activities
You can use the free SSIC Search service that is being offered on the ACRA website to search for the Singapore Standard Industrial Classification (SSIC) 2015 code that corresponds to the business activity that your company is going to be engaging in.
2) Management and Operational Information
A director is someone who is responsible to manage the company affairs. He also provides the directions for the company. Hence, a director must be diligent and honest, and be able to make objective decisions and act in the best interest of the company. According to the Companies Act, a company must have a minimum of one company director who is ordinarily resident in Singapore. This person can be a citizen, a Singapore permanent resident, or someone with a valid Employment pass, subject to the compliance with the prevailing laws and regulations on the employment of foreign manpower in Singapore. The company director must be at least 18 years old, has not been convicted of criminal offences, and must not be under bankruptcy.
Once you have registered your company, you must appoint a qualified company secretary within six months from the incorporation date. This person must not be the sole director of the company and must reside locally in Singapore. The company secretary may be held liable for the failure of the company to comply with the law in some situations.
Company Constitution / Memorandum & Articles of Association (M&AA)
The company constitution is a legal document between the company and its members which outlines the procedures and rules to govern the company and regulates the company activities. It also comprises of one or more documents, sets out the basic framework stating how a company is organized. Subject to the Companies Act and relevant principles of common law, companies are generally free to decide what the regulations that governs its internal affairs are.
Some common terms that the constitution provides are:
- allotment, issue and share transfer
- organization and conduct of shareholder and board meetings
- the duties and powers of the directors
- appointment and removal of the directors
- capitalization and distribution of profits
- distribution of surplus assets in the event of winding up
Singapore Company Tax
Additional information to take note for start-ups: Singapore companies are taxed on net income earned in the preceding financial year. For example, the net income earned in the financial year 2018 is taxed in 2019. From the Year of Assessment (YA) 2010 onward, Singapore companies are taxed at a flat rate of 17% on their chargeable income, regardless of whether they are foreign or local companies.
3) Owners Information
A private limited company must appoint at least one shareholder. The shareholder, who is essentially the company owners, may be a local or foreign person who is either an individual or a corporation. The shareholder can either be appointed or not be appointed as the Company Director.
Paid-up capital is the total amount of capital that has been paid fully by company shareholders. At the time of the Singapore company registration, the minimum amount of investment mandated by the authorities is $1 paid-up capital.
Summary of information and documents needed to register your company
• Company Name
• Registered Company Address
• Description of Business Activities
• Particulars of Directors
• Particulars of Company Secretary
• Company Constitution / Memorandum & Articles of Association (M&AA)
• Particulars of Shareholders
• Paid-up Capital
To help you to register your company
If you are a Singapore resident, a copy of your Singapore identity card will need to be collected.
If you are a non-resident, a copy of your passport, proof of overseas residential address, and other information, such as personal and business profile and bank reference letter will need to be collected.
If you are a corporate entity shareholder, a copy of registration documents such as Memorandum & Articles of Association (MAA) and Certificate of Incorporation will need to be collected.
Please note that documents that are not in English will need to have translated copies that are officially endorsed.
What to take note for foreigners who want to register company in Singapore?
To open a company in Singapore, a foreigner needs to appoint at least one local director who is an ordinarily resident in Singapore. “Ordinarily resident in Singapore” means that the usual residence of this director is in Singapore.
An EntrePass holder, a Singapore citizen or a Singapore permanent resident can be considered an ordinarily resident in Singapore.
Employment Pass (EP) holders may get accepted as ordinarily resident directors, subjected to the compliance with the prevailing Singapore regulations and legislation on the employment of foreign manpower. Any EP holder who wants to become a secondary director in another company (other than the company his EP is approved for), needs to apply for and be issued a Letter of Consent (LOC) before registering their directorship with ACRA.
Foreigners who want to register a company and also wants to be present in Singapore to actively manage and run the Singapore operations are advised to seek approval from the Ministry of Manpower (MOM) before registering.
Post Company Registration
After tending to everything that is required for company incorporation, let us look at what you need to expect next for your entrepreneurship journey. Upon approval of your Singapore business registration, you will receive the following:
- A Certificate of Incorporation
Do check your email for any emails from the Company Registrar. The email should state that your business has been successfully incorporated. A company registration number should also be included in this email as well. Be sure not to delete or lose it as it is considered as your official certificate of incorporation. If you wish to get a physical copy, you will need to pay $50 fee to the Company Registrar to receive it and will take an additional 3 to 5 working day to process.
- A Corporate or Company Business Profile
A company business profile will also be created once your registration process is completed and approved. It will be available in your Biz File account. If you do not have an account yet, the service provider that you have engaged with will take it upon themselves to retrieve your business profile for you. It is usually in PDF format and you will need to download the file and check it through.
A complete company business profile should have:
- key information about the Company name with its registration number
- previous name versions of your established company (if applicable)
- date of the successful incorporation
- descriptive account on the company’s principal activities
- details of the company secretary
- details of the shareholders and directors
- full working registered business address of your company
- total amount of paid-up capital
Get both the email notification and your company business profile ready before you are able to properly proceed with all the legal or contractual tasks planned. Additionally, you might want to acquire an official company rubber stamp and common seal. You can also start to prepare the share certificates for each your shareholders so that you can update your share register with the shares that are allotted to each of these entities or individuals. After that, you might also want to consider opening up a business bank account or leasing an office space for your company.