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It makes sense that businesses would choose Singapore as their base of operations since it has one of the most competitive economies and is regarded as an Asian Tiger nation.
Singapore has one of the most business-friendly regulatory frameworks in the world, according to the World Bank. And one reason for this is because establishing a Singapore business is relatively simple.
Here, we outline the fundamental conditions for forming a Singapore private limited company.
1. Choose a Company Name
The Accounting and Corporate Regulatory Authority (ACRA) requires that all company names be submitted through their online portal for registration and approval. The proposed name cannot contain any words that are forbidden or unfavorable, nor can it be identical to any company name that already exists.
The applicant must list the activities the firm plans to undertake using the appropriate Singapore Standard Industrial Classification Code at the same time as submitting the company name.
The applicant may continue with incorporating the business when the name has been approved. After the name approval date, this must take effect within 120 days.
Please take note that in some industries, other Singapore Government departments may be notified about your naming request: for instance, applications will be sent to the Council for Estate Agencies, when incorporating a real estate agency.
Following approval, every business correspondence must include the company name and registration number in compliance with the Companies Act.
Remember that merely registering a name does not grant the right to use it as a trademark or other form of exclusive intellectual property.
2. Choose Your Directors
Directors of the company are in charge of running its affairs. All company directors must be natural persons who are at least 18 years old, have full legal ability, and have not previously been barred from serving as directors (e.g., being bankrupt or convicted of fraud or dishonesty offences).
As a result, unlike in several other countries, foreign companies cannot serve as directors of Singaporean companies.
Every Singaporean firm must also have one director who meets the following criteria:
- Is a local resident of Singapore
- Is a natural person
- Is of full legal capacity and 18 years or older
- A citizen of Singapore, a permanent resident, an EntrePass or Employment Pass (EP) holder).
What can companies do if they want to establish themselves in Singapore but don’t have any local partners with whom to incorporate? Choosing a “nominee director” is one possibility. This professional director, who has a permanent address in Singapore, is employed by you (or a firm you engage as a subcontractor) to manage the company’s affairs in accordance with your recommendations.
The nominee director is a full legal director like any other under the Singapore Companies Act. Regardless of their contracts with you, they have full compliance obligations and duties. Of course, their cost includes this risk.
A minimum of one share, S$1 in paid-up share capital, and one shareholder are required for all Singapore companies. The maximum number of shareholders for private limited companies is fifty.
Shareholders may include only foreigners. They are permitted to convene general meetings, call them, and adopt resolutions (e.g., altering the company constitution or replacing directors, or winding up the company).
Shares can be of different classes, including:
Ordinary shares. At least one of these is required. At shareholder general meetings, holders of ordinary shares are entitled to one vote per share.
Non-voting shares. Like ordinary shares, but with no right to vote
Preference shares. When it comes to dividend payments, these shares take precedence over ordinary shareholders. In the event of insolvency, they might be given priority. They are, in general, non-voting shares.
By submitting the required paperwork to the Singapore authorities, shares may be granted at any time. They may typically be readily transmitted to other people as well.
4. Appoint a Company Secretary
A Singapore company must appoint a “company secretary” within six months after its incorporation. The company secretary must be a natural person who is a Singapore resident. Additionally, they must possess the “requisite knowledge and experience to discharge the functions of secretary of the company” (see section 171 of the Companies Act 1967).
The company secretary is responsible for filing necessary documentation on behalf of a company, serving as the company’s administrative officer, counseling directors, and ensuring that the business complies with applicable laws. There are numerous firms in Singapore that can offer professional company secretary services.
5. Set up the Company Address
A physical Singapore address, not a PO box, must be used as the company’s registered address.
6. Prepare Registration Documents and File for Company Incorporation
Following approval of the company name, the company should prepare the necessary documents for formation, such as:
A Company Constitution. Formerly known as the “Articles of Association,” lays out the essential guidelines for the business and the interactions between important parties. If businesses choose to utilize one, they can get a standard form company constitution from ACRA.
‘Consent to act’ forms, from each director, signed by those directors
A ‘consent to act’ form for the company secretary
Identification details for all shareholders, officers and beneficial owners of the company
For the authorities to be able to identify the ultimate beneficial owners, corporate shareholders must present their certificate of registration from their home jurisdiction.
7. Obtain Business Licence (Where Necessary)
Once the company gets its certificate of incorporation, it must make sure it has the appropriate licenses or registrations that are necessary for a particular industry. For instance, Singapore prohibits businesses providing financial services from operating without a license.
8. Register for GST (Where Necessary)
Similar to the “value-added tax” (VAT) in Europe, the Goods and Services Tax (GST) is an indirect tax on businesses that provide goods and services. The business must register for GST with the Inland Revenue Authority of Singapore if anticipated revenue exceeds S$1 million in order to pay these taxes.
9. Ensure Ongoing Compliance
Directors must make sure that the company is in compliance with Singapore law once it has been registered.
- Filing annual tax returns
- Filing GST returns where necessary
- Filing compliance returns.
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