Incorporating a New Company in Singapore: A Comprehensive Guide

Mar 24

10 min read

Incorporating a New Company in Singapore

Singapore is a beacon of economic stability and growth in Southeast Asia, making it an attractive destination for entrepreneurs and businesses worldwide. Establishing a company in Singapore offers numerous advantages, including a strategic location, robust legal framework, and a business-friendly environment. This guide provides an in-depth overview of the processes, requirements, and considerations involved in incorporating a business entity in Singapore, particularly for foreign entrepreneurs.

Doing Business in Singapore: Pros and Cons

Pros:

Singapore is known for its strategic location at the crossroads of major global shipping routes, making it a gateway to Asia. This provides businesses with unparalleled access to regional markets. The country is also celebrated for its business-friendly environment. The World Bank ranks Singapore highly for its ease of doing business, primarily due to its efficient regulatory framework and transparent processes. In fact, company registration in Singapore is highly streamlined.

Additionally, Singapore boasts a robust legal system that ensures a stable environment for companies to operate. The country’s favorable tax policies and skilled workforce make it an ideal place for businesses to thrive. Corporate taxes are competitive, and the country offers a variety of tax incentives and grants that benefit foreign entrepreneurs.

Cons:

Despite its many advantages, Singapore does have some drawbacks. The cost of living and operating a business is relatively high, particularly for businesses dealing with real estate and wages. Furthermore, the competitive market means firms must constantly innovate and adapt to maintain their edge.

Setting Up a Company in Singapore

Who Can Incorporate a Company in Singapore?

In Singapore, both local and foreign individuals and entities can incorporate companies. For foreigners, it is possible to fully own a company, as long as certain requirements are met, such as appointing a local resident director and having a local registered office address.

For foreigners, the company must have at least one local resident director who is a Singapore citizen, permanent resident, or a holder of an Employment Pass, EntrePass, or Dependant Pass. The company must also have a local registered address, which cannot be a P.O. Box. Additionally, a company secretary must be appointed within six months of incorporation. Foreign entrepreneurs should also be aware that while the minimum paid-up capital is just S$1, they can choose to increase it according to their business needs.

Required Documents for Foreign Entrepreneurs:

Company Name Reservation: Approval from ACRA.
Identification Documents: Passport copy and proof of residential address for individuals; Certificate of Incorporation and Memorandum & Articles of Association for corporate shareholders.
Director and Secretary Consent Forms: Consent to act as director and statement of non-disqualification.
Additional documents: Other documents may be required for compliance and verification purposes.

Requirements for Incorporating a Company in Singapore

To incorporate a company in Singapore, the following criteria must be met:

Shareholders: A minimum of one and a maximum of fifty shareholders. The company can be 100% foreign-owned.
Directors: At least one local resident director is required.
Company Secretary: A qualified company secretary must be appointed within six months of incorporation.
Paid-Up Share Capital: The minimum paid-up capital is S$1, which can be increased.
Registered Office Address: A physical local address in Singapore is required for registration.

4. Steps for Registering a Company

Selecting a Company Name

The first step in incorporating a company is selecting a company name. This name must be unique and should not conflict with existing company names. It also must comply with the regulations set by ACRA, avoiding names that are obscene or prohibited by law. Once you’ve selected a name, it must be approved by ACRA, which generally takes just a few hours depending on the name selected.

Selecting an Entity Type

In Singapore, businesses have several options regarding legal entity structures. Each type of entity has its own characteristics, advantages, and considerations. Below are the five primary legal structures for businesses in Singapore:

1. Exempt Private Company (EPC)

Ownership: Limited to 20 shareholders, and no corporate shareholders are allowed.
Liability: Shareholders' liability is limited to the unpaid amount on their shares.
Taxation: Eligible for various tax exemptions, such as the tax exemption scheme for new startups.
Regulation: Must file annual returns and appoint a company secretary. It is exempt from holding an annual general meeting (AGM).
Common Use: Typically used by small businesses, family-owned businesses, or startups that meet the criteria of having fewer than 20 shareholders and no corporate shareholders.

2. Private Company Limited by Shares

Ownership: Can have up to 50 shareholders. Shareholders can be individuals or corporations, and the company can be 100% foreign-owned.
Liability: Shareholders’ liability is limited to the unpaid amount on their shares.
Taxation: Eligible for various tax exemptions and corporate tax incentives, such as the startup tax exemption scheme and partial tax exemptions on profits.
Regulation: Requires the appointment of a company secretary, a registered office, and the filing of annual returns. AGM and filing of financial statements are required.
Common Use: This is the most common entity structure for businesses, especially foreign-owned companies, due to its flexibility and limited liability protection.

3. Public Company Limited by Shares

Ownership: Can have unlimited shareholders, and the shares can be publicly traded on the stock exchange.
Liability: Shareholders' liability is limited to the unpaid amount on their shares.
Taxation: Subject to standard corporate tax rates, but can also benefit from tax incentives.
Regulation: Must adhere to stringent regulatory standards, including mandatory annual audits, filing of financial statements, and disclosure requirements to the public.
Common Use: Typically used by larger companies that wish to raise capital from the public by offering shares on the stock market. This structure is highly regulated and is only suitable for large-scale operations.

4. Public Company Limited by Guarantee

Ownership: Can have unlimited members (but no shareholders), typically used by non-profit organizations or charitable institutions.
Liability: Members’ liability is limited to the amount they guarantee in the company’s constitution, usually a nominal amount such as S$1.
Taxation: Generally exempt from paying taxes if recognized as a charity or public institution.
Regulation: Must adhere to specific regulatory requirements related to charitable or public interest purposes, including filing annual reports and accounts.
Common Use: This structure is typically used by non-profit organizations, charities, or clubs that require a formal structure but do not intend to make a profit.

5. Limited Liability Partnership (LLP)

Ownership: Requires at least two partners, who can be individuals or corporations. There is no maximum number of partners.
Liability: Partners have limited liability for the business’s debts, as their personal assets are protected unless they are personally liable for their actions.
Taxation: Profits are passed through to partners and taxed at their individual income tax rates.
Regulation: Registration with ACRA is required, but there are no requirements for an AGM. It is simpler and more flexible than a private limited company.
Common Use: Popular with professionals (e.g., lawyers, accountants, consultants) who wish to enjoy the benefits of limited liability while maintaining a simple structure.

Most Common Entity Setups

Private Company Limited by Shares:

Characteristics: This is by far the most common and recommended business structure for entrepreneurs, especially those with foreign ownership. It offers limited liability, meaning personal assets are protected, and it provides flexibility to raise capital by issuing shares.

Pros: Limited liability, ability to raise capital, eligibility for tax incentives, ability to attract investors.

Cons: Higher regulatory compliance (including annual general meeting requirements, filing returns, and appointing a company secretary).

Exempt Private Company (EPC):

Characteristics: Small businesses or startups typically use This type of company. It is limited to 20 shareholders, all of whom must be individuals (i.e., no corporate shareholders). It’s a form of Private Limited Company but with some relaxed regulatory requirements, particularly with respect to holding an annual general meeting (AGM).

Pros: Limited liability protection for shareholders, eligibility for tax exemptions (such as the Startup Tax Exemption), and simplified governance (no AGM required).

Cons: Limited to 20 shareholders, and no corporate shareholders are allowed. The company cannot easily raise large amounts of capital as compared to other company types.

By understanding the differences between these structures, you can decide which one best suits your business needs. For most foreign entrepreneurs, the Private Company Limited by Shares is the most common and practical option, offering the flexibility to expand and protect personal assets. However, an Exempt Private Company (EPC) may be a good choice if you are a small business or a startup due to its simplicity and tax advantages.

Cost of Setting Up a Company

Cost of Setting up a new company in Singapore

The cost of setting up a company in Singapore varies depending on factors such as the type of company, service providers, and any additional services required. Generally, incorporating a company with essential services like a company secretary and a registered office address will cost around S$1,500 to S$3,000 for the first year.

Breakdown of Typical Costs:

Incorporation Fees: Around S$300 - S$500 for registration with ACRA.
Company Secretary Fees: Typically S$300 to S$600 per year.
Nominee Director Fees (if needed): Around S$1,000 to S$3,000 annually.
Registered Office Address Fees: Between S$200 to S$500 per year.
Miscellaneous Costs: Depending on the business, you may incur costs for licenses or permits.

The cost may vary depending on the service provider. Selecting the same service provider may also be cheaper as most would offer a comprehensive incorporation package as a discounted bundled service.

Subsequent Compliance

Once your company is successfully incorporated, ongoing compliance with Singapore's regulatory requirements is critical to maintaining your business’s legal standing and operational integrity. Failing to adhere to these compliance obligations can result in penalties, legal complications, or even the striking off of your company from the ACRA registry. It’s important to remember that compliance is not a one-time effort but an ongoing commitment that requires timely action to meet various statutory and regulatory requirements.

As a business owner, you must stay on top of these requirements to avoid disruptions in your operations and ensure that your company remains in good standing with the authorities. Below, we outline the key compliance requirements that every business in Singapore must fulfill, along with the bodies involved and the deadlines for each.

Annual Filing: Companies must file their Annual Return with ACRA within 30 days of their Annual General Meeting (AGM). For non-listed companies, an AGM must be held within 6 months after the end of the financial year. Hence, the annual filing is usually 7 months from the end of the financial year for non-listed companies. Listed companies are required to hold their AGM within 4 months of their financial year-end and file their annual return within the next month.
Company Secretary: The company secretary must remain appointed to fulfill legal and regulatory obligations. A company secretary needs to be appointed within 6 months of incorporation. If a resignation occurs, the company is required to ensure that this position remains vacant for no more than 6 months.
Tax Filing: All companies must submit their Income Tax Return (Form C) to IRAS annually, typically by November 30th each year. ECI filing will be required 3 months after the financial year-end. Do note that the Form C deadline is fixed and does not consider a company’s financial year-end.
GST Registration: Companies with an annual turnover exceeding S$1 million must register for Goods and Services Tax (GST) and file GST returns.
Annual General Meeting (AGM): An AGM must be held each year, no later than 6 months after the end of the company’s financial year. (Mentioned in point 1)

Most Common Problems During Incorporation and Setting up of a New Company

While incorporating a company in Singapore is relatively straightforward, both local and foreign entrepreneurs often face several challenges, such as:

Understanding Legal Entity Structures: Selecting the proper legal structure can be overwhelming. Understanding the differences between the various entity types and their implications is crucial.
Nominee Director and Company Secretary Appointment: Many foreign entrepreneurs struggle with the requirement for a resident director. Additionally, finding a qualified company secretary can be a challenge.
Compliance with Deadlines: Local and foreign business owners often fail to know compliance requirements and deadlines. Failing to meet deadlines for tax filings, annual returns, or AGMs can result in fines or penalties.
Administrative Hassles: Navigating the administrative paperwork and ensuring compliance with local regulations can be time-consuming, especially for foreigners unfamiliar with Singapore’s processes. There could also be communication and time difference issues.

How Our Company Can Help You Achieve a Seamless Process

At OakTree Accounting and Corporate Solution, we specialize in helping local and foreign entrepreneurs seamlessly incorporate their businesses in Singapore. We guide you through each step, from selecting the best legal structure to ensuring full compliance with Singapore’s business regulations.

Our Services Include:

Advising on the Best Legal Entity Structure: We first seek to understand your business, communicate, and then assist/recommend the most appropriate company structure to ensure it aligns with your business needs.
Nominee Director Services: We provide local nominee directors to meet the legal requirements for foreign-owned companies.
Company Secretary Appointment: We offer corporate secretary solutions. We ensure that your company complies with appointing a company secretary within six months. The company secretary will also be required to maintain company documents such as resolutions and submitting annual returns. We ensure our clients remain compliant with all regulatory requirements.
Registered Office Address: We can provide your company with a local registered office address, eliminating the need for physical office space.
Accounting and Tax Services: Maintaining accurate financial records and adhering to tax regulations are vital to keeping your company in good standing. At OakTree, we offer comprehensive accounting and tax services that ensure your business meets all its financial obligations while maximizing potential tax savings. Our services include:
Financial record-keeping: Preparation of accounting records and financial statements.
GST registration and filing: If your business meets the criteria, we assist with GST registration and ensure proper filing.

Hassle-free Incorporation and Ongoing Support

The incorporation process can be overwhelming, especially when dealing with administrative tasks and compliance requirements. Our team at OakTree takes care of all the paperwork and registration processes on your behalf. From submitting incorporation documents to liaising with regulatory bodies, we handle everything from start to finish, ensuring a smooth and hassle-free experience.

Furthermore, our support doesn’t stop after incorporation. We provide ongoing advisory services to guide you through the initial stages of your business operation and assist with continuing compliance and growth. Whether you need help with annual filings, strategic planning, or business expansion, we support your business every step of the way.

Conclusion: Simplifying Your Business Journey

At OakTree Accounting and Corporate Solutions, we specialise in making incorporating a new company in Singapore simple, efficient, and hassle-free. Whether you’re a foreign entrepreneur or a local business owner, our comprehensive range of services will ensure your company is set up for success, fully compliant with Singapore’s laws, and positioned for growth. With our expertise in legal entity structures, nominee director services, company secretarial services, and tax compliance, we are committed to providing you with a smooth and professional experience from the start.

Let us take care of the complexities of incorporation and compliance so you can focus on what matters most—growing and scaling your business in Singapore.

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DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of any individuals or organizations with which the author may be affiliated, either in a professional or personal capacity, unless explicitly stated.