In today’s rapidly changing world, technological advancements have simplified the process of setting up businesses. If you’re considering starting a business in Singapore, take a look at this comprehensive guide that provides key tips and actionable steps for a smooth company formation process. With its stable political environment, favorable tax policies, government-supported grants, and abundant talent pool, Singapore is increasingly attractive to international business owners.
Within this guide, we will navigate through the step-by-step process of forming a company in Singapore. Whether you’re an experienced entrepreneur ready to spread your wings or a budding newcomer eager to establish your own company, understanding the intricacies of company formation in Singapore is crucial for success.
Here are few key considerations for company formation in Singapore,
Private Limited (Pte Ltd) companies in Singapore enjoy a corporate income tax rate of 17%, one of the lowest in the world. Additionally, they are eligible for tax exemptions and incentives, including partial tax exemptions for new start-ups.
In contrast, other entity structures like sole proprietorships and limited liability partnerships (LLPs) do not offer the same level of liability protection and tax benefits as Pte Ltd companies. For example, sole proprietors are personally liable for business debts and liabilities, while LLP partners are liable for LLP debats and liabilities up to their capital contributions. Therefore, if you are considering starting a business in Singapore, it is advisable to opt for a Pte Ltd company structure.
Having a clear understanding of the Singapore Standard Industrial Code (SSIC) assigned to your business is crucial. The primary function of the SSIC is to help the Accounting and Corporate Regulatory Authority (ACRA) identify whether specific licenses are required for your business operations. By accurately determining your SSIC code, you can ensure regulatory compliance and avoid potential legal complications in the future.
To find your SSIC code, you can use the SSIC Search tool on the BizFile website. Simply enter keywords that best describe your business activities, and the search tool will provide you with a list of relevant SSIC codes. From there, you can select the code that closely aligns with your business activities.
Once you have determined your SSIC code, you can visit the ACRA website to check if any specific licenses are required for businesses with your SSIC code. It is important to note that certain SSIC codes may require multiple licenses, so thorough research is necessary.
Appointing a Resident Director:
One of the essential requirements for company formation in Singapore is the mandatory appointment of at least one Singaporean citizen as a director.
Why is a Resident Director Required?
A resident director is necessary for several reasons, including: Ensuring the company has a local representative well-versed in Singaporean laws and regulations.
Who Can Be a Resident Director?
A resident director must be an individual who is permanently living in Singapore. This means they must have a permanent address in Singapore and spend at least 183 days there in any 12-month period.
Foreign entrepreneurs have several options when appointing a resident director:
Partner with a local resident: Collaborating with a Singaporean is a common choice for foreign entrepreneurs who have a local friend or business associate willing to serve as a director of their company.
Hire a professional director service: Numerous companies in Singapore offer professional director services. This can be a suitable option for foreign entrepreneurs without a local contact available to serve as a director.
Appoint a nominee director: A Singapore nominee director is a third party appointed to act as a director of the company on behalf of the beneficiaries. This is often a viable solution for foreign entrepreneurs without a resident local director available for their company.
Hiring a Qualified Company Secretary:
A qualified company secretary in Singapore can be an individual or a corporate entity possessing the necessary knowledge and experience to fulfill the duties and responsibilities of a company secretary. This entails a comprehensive understanding of Singapore company laws, regulations, and practical aspects of company management.
According to the Companies Act, the company secretary must be a resident of Singapore, meaning they must have a permanent address in Singapore and spend at least 183 days in the country within any 12-month period.
Furthermore, the company secretary must be a member of a professional body recognized by the Accounting and Corporate Regulatory Authority (ACRA). Recognized professional bodies include the Chartered Secretaries and Administrators (ICSA) and the Society of Company Secretaries (SCS).
If the company secretary is a corporate entity, it must be a registered company in Singapore, and the company should have at least one individual who is a member of a professional body recognized by ACRA.
Below are some key duties and responsibilities of a company secretary:
Providing advice to directors on the company’s legal and regulatory obligations.
Assisting in the preparation and filing of incorporation documents. Maintaining the company’s statutory registers and records.
Organizing and coordinating board meetings and general meetings. Submitting annual returns and other required filings to ACRA.
Ensuring compliance with government agencies’ requirements. It is crucial to hire a qualified company secretary when establishing a business in Singapore.
Registered Address & Constitution:
Your registered address serves as the official communication point. While it is not mandatory to operate your business from this address, it must be accessible to the public.
A typical constitution encompasses provisions related to share capital, share classes, voting rights, board meetings, appointment and removal of directors, dividend distribution, and other essential corporate matters. If a company does not adopt its own constitution, the default rules and regulations specified by the relevant company law will apply.