Singapore Company Registration Guide
Singapore is known for its business-friendly regulatory environment, ease of doing business (consistently ranked first in the World Bank’s Doing Business report year-after-year), robust IP protection, attractive corporate tax framework, excellent connectivity, strategic geographical location with proximity to world’s largest emerging markets, and comprehensive trade agreements with over 100 regions of the world. It is also a top-notch financial centre with availability of affordable funding to incorporate a company in Singapore.
While there are five different types to choose from, the most common and flexible business entity that can be set up in Singapore is the private limited company (henceforth referred to as “Company” in this article).
The Accounting & Corporate Regulatory Authority of Singapore (ACRA), Singapore’s national regulator of business entities and public accountants, mandates that all companies operating in the country must be registered under the Singapore Companies Act and abide by its rules and regulations.
Asiabiz, Singapore’s leading business formation consultancy, presents the following 9-step guide on how to incorporate a company in Singapore for both local and foreign individuals.
Fast-track your Singapore Company Incorporation process
A 9-Step Guide for Singapore Company Registration: How to Register a Company in Singapore
1. Business Structure
Choosing a Business Structure in Singapore
From among the five options to choose namely sole-proprietorship, partnership, limited partnership, limited liability partnership (LLP) and a company; the last one remains the most popular option as it is the most advanced and flexible business entity.
A company (registered under the Singapore Companies Act) is a separate legal entity with members having limited liability. It can own properties, enter contracts, sue and be sued. For those looking for a quick and easy set-up, and even easier to administer, LLP is another option.
For anyone, either local or foreigner, individual or corporate, key requirements to register a company in Singapore are:
- at least 1 shareholder (individual or corporate entity)
- 1 resident director (may be a citizen, permanent resident, EP holder or Dependent Pass holder)
- 1 company secretary
- initial paid-up share capital of at least S$1
- a physical Singapore office address
If the number of shareholders is 20 or less, with no corporation holding any beneficial interest in the company’s shares, it is known as an Exempt Private Company (EPC). If the shareholders are more than 20 but less than 50, it’s called a private company. If the number of shareholders exceeds 50, it becomes a public company.
2. Business Name
Choosing a Business Name in Singapore
If you want to build a widely-recognised brand name for your company, try to include your business activities in the company name itself. Also check whether your chosen company name matches an available domain name. This is important because a suitable web address is must for business growth these days. Whether to go for .sg, .com, .org or any other extensions will depend on your target market region.
Once you have selected your company’s name, check with ACRA via its online registration portal Bizfile whether the selected name is available. If yes, get it approved by the Authority.
Avoid choosing identical or similar names of any existing company as it might lead to legal troubles in future.
Also, keep an eye for the Business Names Registration Act to be implemented by the end of 2014. “It is aimed at simplifying the process for the registration of persons and their business names, and reduce regulatory burden on business owners,” ACRA has noted in a recent press release.
3. Business Activities
Choosing Company’s Business Activities in Singapore
Use the Singapore Standard Industrial Classification Code (SSIC) 2015 to select the business activities your company will be engaging in. The primary and secondary business activities must all be clearly stated at the time of company incorporation in Singapore.
4. Company Registration
Set up a New Company in Singapore
A Singapore company, at the time of its incorporation, must issue one or more subscriber shares to its initial members. The issued share capital of the company is the total number of shares existing in the company multiplied by the nominal value of each share. It may increase capitalisation by issue of further shares. Thus it is important to put in place a proper shareholders agreement so as to avoid future disputes. However, do note that a company can be registered with a minimum paid up capital of S$1 (or its equivalent in any currency). Paid-up capital is essentially the portion of share that the company has issued and received payment for in full.
Details of shareholders and Company Directors
Under the Companies Act, at least one corporate or individual shareholding is required while forming a Singapore company. One hundred percent (100%) local or foreign shareholding is also allowed.
Appoint a Singapore Resident Company Director
Moreover, the company must have at least one director who is “ordinarily” resident in Singapore. ACRA defines this as a Singapore citizen, a Singapore permanent resident or a person who holds an employment pass/entrepreneur pass or a dependant’s pass with a residential address in Singapore. Do note that a company director and shareholder can be the same or different person.
Getting a Local Registered Address
This is a mandatory requirement for incorporating a business in Singapore as all official correspondences are send to this address. The registered address must be a physical address and cannot be a PO Box. Use of residential address, however, is permitted in certain types of business activities.
Appoint a Singapore Resident Company Secretary
The law mandates that all companies in Singapore must appoint a company secretary within six months of incorporation. He or she must have the prerequisite domain knowledge and is responsible for ensuring all regulatory compliances. Most companies outsource the mandatory company secretary requirement to company incorporation specialists in Singapore such as Asiabiz.
Appoint an Auditor
Similar to the company secretary statutory compliance, Companies Act says that all companies must appoint an auditor within three months of incorporation, unless the company is exempted from audit requirements. To be exempted, the number of individual shareholders in the company must be less than 20 with no corporate shareholders, and its annual turnover must be less than S$5 million. So, basically an EPC with yearly revenue less than S$5 million doesn’t need to fulfil the audit compliance.
Memorandum and Articles of Association (MAA)
The Articles of Association specifies the rules governing the internal management of the company, while the Memorandum specifies the activities in which the company may engage in. The Registrar of Companies in Singapore provides a standard MAA document which is suitable for most companies. Take a look at it when you incorporate a business or incorporate a company in Singapore.
Documents Received after Company Registration
If the company incorporation is successful, the Singapore Company Registrar issues an email confirming the incorporation of the company. It includes the company’s Unique Entity Number (UEM), which is the standard identification number, issued by the Singapore Government to any business entity registered in Singapore. Additionally, it is the job of the company secretary to issue the company’s Share Certificate, which constitutes proof of share ownership and indicates shares allotted to each of the shareholders. The Secretary must also issue the First Board Resolution and the Bank Account Opening Resolution. Another document that you may obtain (on payment) is the company’s Incorporation Certificate.
Additional Requirements of Company Registration
The company seal and company stamp (if provided for in the company’s constitution) are other requirements. In Singapore, all official company documents, apart from having the Unique Entity Number (UEN) / company registration number and registered address of the company, must also have an official company stamp.
5. Licenses & Permits
Getting the Licenses and Permits for a New Company in Singapore
Goods & Services Tax (GST)
Currently pegged at 7 percent, GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. Some items, however, are specifically exempt from the tex. This includes financial services and the sale or lease of residential properties. In Singapore, a company must be registered to collect GST if its annual turnover exceeds or is likely to exceed S$1 million from the sale of taxable goods and services. This requirement may be waived if most of the goods or services are exported or supplied internationally (“zero-rated supplies”).
A Singapore company must register for its trademark if it wants to protect its ideas and develop a brand-name. Trademarks are signs used by a business or trade to distinguish their goods or services from those of other players in the market, both locally and internationally. While ® refers to a registered and protected trade mark pursuant to trade mark laws; ™ merely identifies that the mark is being used as a trademark by the owner but is not necessarily registered or protected under trademark laws. Notably, Singapore companies can use the Productivity and Innovation Credit (PIC) scheme and the corresponding PIC bonus to offset costs incurred in their trademark registration.
If the newly-incorporated company has its business activities in export, import or trans-shipment activities in Singapore, you are required to register the company with the Singapore Customs as an importer, exporter, common carrier and others.
Copyrights & Patents Registration
If the newly incorporated Singapore company is launching a game-changing product or service, securing a patent before the invention becomes public is a good idea.
Other Business Licenses and Permits
Some business activities such as private schools, travel agencies, liquor distributors, moneylenders, banks, childcare centres, importers/exporters, wholesalers and retailers of liquors, are regulated by the government authorities in Singapore. Thus, if the new company deals with any such business activities, additional licenses and permits will be required for successful incorporation.
6. Post-incorporation Statutory Compliance
How to Fulfil All the Statutory Compliance Requirements in Singapore
Annual Filings Requirements with ACRA
All companies in Singapore must file their annual returns with ACRA within one month of its Annual General Meeting.
Annual Filing Requirements with IRAS
Similar to the returns filing with ACRA, a company in Singapore must fulfil its tax obligation with the Inland Revenue Authority of Singapore (IRAS) every year. Our Singapore tax specialists can assist you in statutory tax filings, identifying tax efficient strategies, and personal and corporate tax compliance.
When your company embarks on a growth trajectory, managing your payroll in-house can be quite daunting. Proper care should be taken while calculating, processing and reporting such payroll components as government remittances, benefits, allowances and deductions, to avoid penalties. This is especially true when fulfilling the two statutory requirements for employers in Singapore with regards to their contribution per employee. First is the Central Provident Fund (CPF), a compulsory comprehensive social security saving plan for Singapore Citizens and Permanent Residents. Second is the Skills Development Levy (SDL), which is used to fund the Skills Development Fund which supports workforce upgrading programmes and provides training grants to employers. Employers in Singapore are required to make CPF contributions for PRs and citizens, whereas SDL contributions are for all their employees.
Accounting and Bookkeeping
Singapore Companies Act mandates that all companies must maintain the general ledger, accounts payable ledger, and fixed assets ledger; as well as have proper financial statements and monthly reports monthly, quarterly and annual reviews. Asiabiz can help you fulfil the compliance requirements stipulated by ACRA and IRAS and avoid unnecessary penalties.
Annual General Meeting (AGM)
According to the Companies Act, a Singapore company must hold its AGM every calendar year, with its financial statements tabled at the meeting for shareholders’ approval.
Fiscal Year Determination
Unlike some countries, all companies in Singapore have the freedom to determine its financial year end (FYE), which does not necessarily be December 31. Do note that it’s always advisable to keep the company’s FYE within 365 days in order to enjoy the zero tax exemption for new start-up companies (full tax exemption on the first S$100,000 of normal chargeable income for its first three consecutive years of operations).
Estimated Chargeable Income (ECI)
It is an estimate of a company’s chargeable income for a Year of Assessment, which must be submitted to IRAS within three months after the end of the financial year.
Unique Entity Number (UEN) Disclosure
Every company must have its UEN, otherwise known as a company registration number, on all business letters, statements of account, invoices, official notices, publications, etc.
7. Corporate Taxation
An Overview of the Corporate Tax Rates, Rebates, Subsidies and Schemes in Singapore
After you incorporate a business or incorporate a company in Singapore, do remember that Singapore companies are taxed on profits derived in Singapore, as well as on foreign soil, which are then remitted to Singapore. The corporate income tax rate since 2010 has been fixed at 17 percent.
As regards to the rate itself, while Singapore’s marginal rate is already the third lowest in the world, the effective tax payable comes out to even lower if one takes advantage of all the government incentives, subsidies and schemes.
Corporate income tax (CIT) rebate
Last year, the Singapore Government had announced that all companies will be granted a 30 percent corporate income tax rebate that is subject to an annual cap of S$30,000, for the years of assessment 2013, 2014 and 2015. This CIT rebate include registered business trusts, non-tax resident companies in Singapore, and companies already receiving income taxed at a concessionary tax rate.
Tax exemption for start-ups eligible for the Start-up Tax Exemption (SUTE) scheme
The eligibility conditions include:
- must have no more than 20 individual shareholders
- in case of corporate shareholders, one individual must hold at least 10% of the issued shares
- property and investment holding companies are not eligible
If the above three conditions are satisfied, tax exemption is given to start-ups on normal chargeable income of up to S$300,000 for each of the first three consecutive years of its operation.
- For first S$100,000, after 100% exemption, the exempt amount is S$100,000
- For next S$200,000, after 50% exemption, the exempt amount is S$100,000
- Thus, the total exempt amount for income up to S$300,000 is S$200,000
Partial tax exemptions to established companies
Since 2008, a company incorporated in Singapore is given partial tax exemption on normal chargeable income of up to S$300,000.
- For first S$10,000, after 75% exemption, the exempt amount is S$7,500
- For next S$290,000, after 50% exemption, the exempt amount is S$145,000
- Thus, the total exempt amount for income up to S$300,000 is S$152,500
8. Corporate Banking
A Snapshot of Corporate Banking in Singapore
A company, being a separate legal entity in Singapore, needs to have its own bank account. Normally, the following documents are needed to open the bank account:
- a resolution by company’s board of directors sanctioning the opening
- copy of the certificate of incorporation
- copy of the business profile
- copy of company’s MAA
- copies of the passports (or Singapore national identification cards), and
- proof of residential addresses of the directors and ultimate beneficial owners
Always scout for the best option before opening a corporate bank account in Singapore as the country has an array of banking options available to companies. You can either go for a local or foreign bank depending upon your business requirements.
Asiabiz can assist you with opening a corporate bank account in Singapore and make sure you get the best possible deal.
Details about Various Singapore Government Funding Schemes
Singapore being a top-notch financial hub, the usual fund-raising methods adopted by start-ups worldwide such as equity fund-raising, angel investors, private financing, and venture capitalism, are in abundance for newly-incorporated companies here.
But the real attraction is the various government financing schemes available for companies in Singapore, which is a testimony for the government’s desire to foster innovation and entrepreneurship in the country.
The following examples include these micro-loan programmes: Loan Insurance Scheme and Local Enterprise Finance Scheme (LEFS) (offered by SPRING); Development and Expansion Incentive; Pioneer Incentive Scheme; Action Community for Entrepreneurship (ACE) Start-ups Scheme; and iSTART:ACE.
Also, newly established start-ups in the social enterprise sector can consider organizations such as the ComCare Enterprise Fund and New Initiative Grant.