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There are a number of questions that arise frequently while starting a company in Singapore.

The most frequently asked questions about forming a private limited company in Singapore are addressed here.

1. What are the most common types of business in Singapore?

Individuals or multinational companies interested in doing business in Singapore can choose from a variety of business structures.

We’ll look at each one separately: 

• Sole trader/sole proprietorship. In Singapore, this is the standard business form. It is normally only available to citizens of Singapore. Because the business and the individual are not separated, they are taxed at personal income tax rates, and the individual bears full legal and tax duty.
• Partnership. Individuals form a general partnership to operate a business in Singapore. There must be at least two partners, and they are all jointly and severally liable for the business’s operations.
• Limited partnership. There must be at least one ‘general partner’ with full liability in a limited partnership, but there can also be one or more limited liability partners.
• Limited liability partnership. All partners in a limited liability partnership (LLP) have limited liability.
• Private Limited company. The liability of a private limited corporation is limited, and it is taxed at corporate income tax rates. This is the most popular corporate structure for overseas companies establishing themselves in Singapore. In Singapore, there are various different sorts of private companies, which we will cover further below.

2. What are the various kinds of Singapore private companies?

Private companies in Singapore include the following:

• An exempt private company. In Singapore, this is the most common company structure. It only allows for a maximum of 20 shareholders and excludes corporate shareholders.
• Private company limited by shares. A private company with a maximum of 50 shareholders and the ability to have corporate shareholders.
• Private company limited by guarantee. It is usually set up for charitable reasons and has no share capital or shareholders. 

3. Do Singapore company directors have to be Singapore residents?

All Singapore private limited company directors must meet specific requirements.

They have to be:

• a natural person;
• who is at least 18 years old; and 
• has never been disqualified from serving on a board of directors (for example, they cannot be bankrupt or have convictions for dishonesty).

Additionally, every private limited company must have at least one director who is a Singaporean citizen, permanent resident, or holder of an EntrePass.

4. Can foreign companies serve on a Singapore board of directors?

No. Natural persons, not corporations, must serve as directors of Singapore firms.

Foreign companies, on the other hand, can appoint a nominee (“nominee director”) to act on their behalf.

A nominee director is a full legal director with the same powers and obligations as any other director under Singapore Companies Law.

When a nominee director is appointed, the company and the nominee director will sign a contract outlining the nominee director’s responsibilities to the company. 

5. Is a company secretary necessary for a company in Singapore?

Yes. Within six months of incorporation, all Singapore companies must appoint a company secretary.

The company secretary is in charge of dealing with Singapore regulatory authorities, filing necessary documentation, and advising directors on their legal and compliance obligations.

In Singapore, a professional company secretary firm is frequently used for this.

6. What is the minimum number of shareholders a Singapore company must have?

There must be at least one shareholder and a maximum of 20 in a Singapore-exempt private limited company.

A private company limited by shares can have up to 50 shareholders.

At least one ordinary share with full voting rights must be held by this shareholder.

7. Is it possible to form a Singapore company with more than 50 shareholders?

Yes. However, it must be a public company, not a private company with limited liability.

8. What is the minimum share capital in Singapore?

In Singapore, a private limited company’s minimum share capital is one dollar, however it can be paid in any currency.

9. Is it legal to own non-voting shares in Singapore?

Yes, but at least one of the shares must have full voting rights.

10. Can foreigners become shareholders in a Singapore company?

Yes. Foreigners are allowed to own 100% of a Singapore company.

11. Can foreign companies own shares in a Singapore company?

Yes, foreign companies can be shareholders in Singapore private companies limited by shares, including corporate trustees of overseas trusts (but not exempt private companies).

However, full details of beneficial ownership must be supplied to the Accounting and Corporate Regulatory Authority on the application for Singapore incorporation.

12. Is my company name subject to approval by Singapore regulatory authorities?

Yes. Those who want to form a Singapore company should apply for approval of their company name through the online portal before filing for incorporation.

The company name cannot be the same as that of another Singapore company.

13. Is it true that the approval of my Singapore company name grants me a trademark in that name?

No. Under Singapore law, approval of a name confers no intellectual property rights on the holder.

14. Which companies in Singapore have to pay Singapore corporate income tax?

Singapore law requires all companies incorporated in Singapore to pay the corporate income tax.

The current rate of corporate income tax is 17%.

Furthermore, any multinational company with a “permanent establishment” in Singapore must pay all corporate income taxes there.

In general, a permanent establishment exists when an overseas company maintains a fixed place of business in Singapore where it conducts its core activity.

15. Is GST payable in Singapore by my company?

If your Singapore company is expected to generate S$ 1,000,000 in revenue, you must register for GST.

GST, on goods and services Tax, is an indirect tax on goods and services in Singapore, similar to VAT in Europe.

The GST rate is now 7%.

16. What do I need to do to incorporate my company in Singapore?

After receiving approval for the company name, the company must:

• Prepare a company constitution that outlines the company’s fundamental regulations.
• Prepare ‘consent to act’ forms for directors, and get each director to sign them
• Prepare a ‘consent to act’ form for the company secretary, and get the company secretary to sign it
• Gather information about the directors, shareholders, and beneficial owners of the company.
• Corporate shareholders must also give proof of registration in their home country, as well as specific information on their ownership structure.

After it has been founded, the new private company can open a bank or business account in its name and begin trading.

17. Do I need any other government approvals in Singapore other than company registration?

It all depends on the type of business the company will be doing. Some businesses need special permits or registrations.

For example, all real estate firms must employ someone who hold a real estate agent license.

18. Do I need an accountant in Singapore?

A Singapore-registered private company must have complete financial records that are audited annually by an external firm unless it is exempted.

Exempt private companies in Singapore are exempted if they meet two out of three of the following criteria:

• total annual revenue of a maximum of S$10 million
• total assets of a maximum of S$10 million
• a total number of employees of 50 or fewer.

19. How often am I required to file my corporate income taxes?

Tax returns must be filed on a yearly basis.

Companies that are obliged to register for GST must also file GST returns on a regular basis as desired by Singapore authorities.

20. Do I have to submit annual compliance returns?

Yes. Every company registered in Singapore is required to file an annual return in order for authorities and stakeholders to have the up-to-date information.

The company secretary usually prepares and submits this.

It contains identification information for directors and shareholders, information about shares, and attached financial statements: A declaration must be submitted if the company is exempt from preparing audited financial statements.

Wrapping Up

We can’t answer every question that exists regarding company incorporation in Singpaore…in this article.

We can however, answer every one of your concerns if you reach out to the experts at Air Corporate, and get started by registering your business with us.

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International enterprises and entrepreneurs may choose to establish a company in Singapore for a variety of reasons:

It is Asia’s leading innovation hub, the second-easiest place to do business in the world, and enterprises may be established in as little as 15 minutes (fastest in Southeast Asia).

We’ve outlined the three basic processes for launching a business in Singapore for anyone considering taking the plunge. 

Step 1.  Choose the Correct Business Structure

While a limited liability company is the most common business structure in Singapore, there are a variety of alternative possibilities.

Before you start a business in Singapore, you should think about all of these possibilities.

The following are the most common forms of business structures in Singapore:

Sole Proprietorship

A sole proprietorship, also known as a sole trader, is a business owned and controlled by a single individual.

In Singapore, as well as most other nations with legal systems derived from the British legal system, the sole proprietorship is the default business structure.

Under the legislation, there is no distinction between the entrepreneur and the firm as a sole proprietor: this means that the entrepreneur bears unlimited personal obligation for the company’s operations and is taxed at personal income tax rates. 

General Partnership

A general partnership is formed when two or more people join forces to run a business.

Profits are divided among the partners according on the level of their partnership stake, and partners are jointly and severally liable for the business’ activities.

Limited partnerships & limited liability partnerships

Limited partnerships and limited liability partnerships are two types of limited partnerships (LLPs).

In a limited partnership, one or more partners have unlimited liability while the others have limited liability.

All partners in an LLP are limited in their liabilities.

Limited companies

Limited companies in Singapore come in a number of different forms.

1. Between 1 and 20 shareholders make up an exempt private company, which is exempt from many of the regulatory and tax restrictions that apply to bigger corporations.
2. Between 20 and 50 shareholders make up a private company limited by shares.
3. A public limited company must be formed if there are 50 or more shareholders.

Step 2.  Prepare and Submit the Necessary Documentation

Once you’ve decided to start a business in Singapore, you’ll need to figure out a few things.

This involves determining your initial share capital, stockholders, and the name and address of your business.

Here’s some areas you might need to back up with documentation:

Shareholders

Shareholders contribute capital to the start-up of a company in exchange for a share of the company’s ownership.

A single ownership stake is known as a ‘share,’ and the group is known as ‘shares’ or ‘stock.’

At general meetings, each ordinary shareholder has a vote, and together, shareholders can appoint and change directors, as well as wind up the company.

Share Capital

A minimum share capital of S$1 is required, and at least one share must be issued.

The contribution of share capital can result in a payout for shareholders if the firm is wound up (though they stand in line behind all creditors)

Directors

The board of directors is in charge of the company’s overall operations.

You can appoint anyone to your Singapore company’s board of directors as long as they meet the following requirements:

• A natural person who is at least 18 years old and has full legal ability.
• A minimum of one director must be a Singapore resident with the appropriate citizenship or visa status.

Note that in Singapore, bodies corporate/companies cannot appoint themselves as directors.

Company Address

Within Singapore, you must establish a permanent address for your firm.

Company address must be a physical address; a PO Box will not suffice. 

Company Name

You must submit an application for your company’s name to be approved.

It will not be able to pay for the name of any existing Singapore corporation.

It’s important to note that approval of your company’s name does not entitle you to a trademark in that name.

Submit documentation to ACRA

The Accounting and Corporate Regulatory Authority (ACRA) must receive all required papers, including a company constitution (outlining the company’s main regulations), director consent to act forms, and shareholder information.

When there are corporate shareholders involved, information on the company’s original registration and ownership structure is essential.

All of information should be included with the incorporation application form.

Step 3. Organize Ongoing Compliance

Following the incorporation of a company in Singapore, you can take the following steps:

1. You can establish a bank or business account, as well as appoint a ‘company secretary’ (within six months of the company’s formation, a secretary must be appointed). In Singapore, company secretaries are in charge of the company’s main administrative and governance functions, as well as serving as the company’s primary point of contact with regulators. They must be based in Singapore and possess the required qualifications.
2. Every year, companies must file audited financial accounts and annual returns (unless explicitly exempted from the requirement to do so under the Companies Act 1967).
3. The company should also check for any other registrations that may be required for a business of that nature. Financial services businesses, for example, require a financial services license to operate in Singapore.
4. The business should also determine whether it is required to register for the goods and services tax (GST), which is a 7% indirect tax. Companies with a projected or actual yearly income of above $1,000,000 must generally register for GST. 

Conclusion

Singapore is a reasonably simple country to establish a local business.

We’ve outlined the important steps you’ll need to do in order to do so: One, consider the proper business structure; Two, gather documentation and submit an application for incorporation. Three, set up a system for ongoing compliance.

If this feels like it’s still a little tough to deal with, register your company with Air Corporate, and our experts will simply the whole process for you as well as give you access to the resources you need to register your company quickly.

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Singapore is a popular incorporation destination for first-time entrepreneurs due to its simple incorporation process and distinctive business climate.

We will go over the essential characteristics of a Singapore limited company, including the roles of shareholders, directors, and company secretaries, the incorporation process, and ongoing compliance duties.

This guide is aimed towards Singapore’s first-time entrepreneurs.

What is a limited company?

A limited company is a commercial form that gives a company its own legal personality.

When a business is first established in Singapore, it is incorporated as a limited company.

The corporation is ‘limited’ because the financial obligation of the company’s shareholders is limited by their shareholdings.

The key features of limited companies include that: 

• They have one or more shareholders. Once registered, these individuals are known as the ‘members’ of the company
• They are owned by one or more shareholders. These individuals are known as the company’s ‘members’ once they have been registered.
• They have at least one director. The board of directors is in charge of the company’s overall operations.
• They can engage into contracts in their own name and exist indefinitely, regardless of whether specific directors quit or shareholders sell their shares. 
• The company constitution (more on this below) and applicable law, such as the Singapore Companies Act, control the operation of a Singapore company.
• Private companies limited by shares (20-50 shareholders), exempt private companies (for those with less than 20 shareholders), and public limited companies are all available in Singapore (with more than 50 shareholders).

Before looking at the incorporation process, we’ll go through the important positions of a Singapore business: directors, shareholders, and the company secretary.

Directors

In Singapore, a private limited company must have at least one director.

All directors must be natural individuals with full legal capacity, over the age of 18, and not otherwise disqualified (such as having a conviction for a dishonesty offense).

Singapore does not allow companies to be directors of other Singapore companies.

Furthermore, one of the directors must be a Singapore resident with Singapore citizenship, permanent residency, an employment pass, or an EntrePass.

To meet this requirement, some companies prefer to nominate a professional director in Singapore (also known as a ‘nominee director’).

The board of directors is in charge of the company’s overall operations.

They can either manage the business themselves or hire expert managers to do so.

The law in Singapore imposes a number of requirements on directors.

These include: 

• A duty to  act in good faith, and in the interests of the company as a whole
• A duty not to delegate their powers without due authorization
• A duty to exercise care, skill, and diligence
• A duty not to improperly profit from their position as a director of the company
• A duty not to allow the company to trade while insolvent.

Directors who violate their responsibilities may face legal or criminal penalties, as well as being barred from serving as a director.

Note that if a director has personally guaranteed the company’s debts, they will be liable for those debts as well.

Shares and shareholders

In Singapore, a private limited company must have at least one ordinary shareholder.

A shareholder pays a defined sum for a share of the company’s ownership.

A ‘share’ is a type of ownership interest.

A Singapore company’s minimum share capital must be at least S$1. 

The capacity to choose directors, change directors, and convene a general meeting and vote on important corporate affairs gives shareholders ultimate control over a firm (such as whether it should be wound up).

They have a right to dividends in the event that a profit is distributed, as well as a right to proceeds in the event that the company is liquidated.

The ‘company constitution,’ which is the firm’s fundamental document, lays out the precise responsibilities of shareholders and directors in their interaction.

Company secretary

A company secretary must be a Singapore resident for all private limited companies.

Under the Companies Act and under the company’s constitution, the company secretary has important obligations.

The company secretary is in charge of the following:

• Scheduling general meetings
• Recording the minutes of general meetings
• Ensuring the company maintains communication between the directors and shareholders of the company
• Recording share transfers.  

In Singapore, the company secretary must be appointed within 6-months of incorporating the company.

The company constitution

Previously, companies in Singapore had to file two different legal documents: the ‘articles of association’ and the ‘memorandum of association.’

These documents have been superseded by the ‘company constitution’ since 2014.

The company constitution outlines the firm’s basic rules, such as the interaction between directors and shareholders.

It will specify the procedures for having general meetings as well as the process for appointing and replacing directors.

At the time of company incorporation, the proposed company constitution must be filed with the Accounting and Corporate Regulatory Authority (ACRA).

The Singapore Incorporation Process

A first-time entrepreneur should follow these steps to form a Singapore company:

Determine the following critical characteristics of the proposed company: For example, the number of shareholders and directors, the physical address, the initial share capital, and who will serve as a local director;

Select a company name and submit an application for approval.

The name must not infringe on other companies’ intellectual property in Singapore.

With the relevant forms, including ‘consent to act’ forms for directors and the company secretary, apply for company incorporation with ACRA. 

For a full break-down of the incorporation process, check out this article.

Post-incorporation requirements

An entrepreneur’s compliance requirements do not cease with the formation of his or her company.

The company must next examine the following factors:

Registration for the Goods and Services Tax (GST).

For companies in Singapore with annual turnover of more than $1 million, this is usually a necessity.

Licensing for companies

If the company operates in specific industries, such as travel or real estate, a special license tax may be required.

You must make certain that company income taxes are filed on time and that suitable records are kept.

Annual returns. Every year, ACRA must receive these compliance returns, which explain the company’s major changes.

Conclusion

For first-time entrepreneurs, the procedure of forming a Singapore company is simple and user-friendly.

When forming a Singapore company, however, it’s crucial to keep in mind the aspects that differ from those in other jurisdictions, such as the necessity that corporations have a local Singapore director or the requirement to register for GST if a particular turnover is reached.

If you’re interested in registering your business in Singapore, contact us at Air Corporate, and one of our incorporation experts will help walk you through the process.

 

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