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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.
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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