Tips to select right business structure before doing company registration in Singapore

[David White]

They say it is easy to set up a business in Singapore. However, 'they' do not tell the intricacies and twists involved in setting up a business in Singapore. Incorporating a company in Singapore, the choice of an appropriate business structure is the first hurdle you encounter. To a large extent, the generally acceptable option is outsourcing the company registration in Singapore to an external firm. However, it becomes necessary to understand the different business structures in Singapore before hiring a firm that offers registration services in Singapore.

The different business structures to take up a business in Singapore

Foreigners usually do not need any form of government approval to start a new business in Singapore. Singapore allows about 100% foreign ownership, making it the best and preferred location for foreign entrepreneurs to do business.

Incorporating a bank or financial institution is a must for Singapore Monetary Authority approval. Let's look at the different business structure options entrepreneurs have for setting up a business in Singapore.

Representative office: A foreign company that is prepared to have its presence in Singapore but does not intend to carry out any business activities herein must incorporate their business as a representative office. The corporate environment in Singapore views a representative office as an administrative arrangement, designed primarily for the non-commercial activities. Therefore, a registered office does not have a separate legal status of its parent company. Note that Singapore does not allow a registered office to conduct business activities for the purpose of generating revenue and making profits.

Branch: Foreign companies that are not interested in establishing a separate company in Singapore with a different name should preferably include a branch office. After the establishment of a branch office, it is possible to carry out business activities under the name or under the trademark of the foreign corporation. A branch office in Singapore is legally considered an extension of its parent company. Please note that a branch office is in no way considered a subsidiary company owned by a foreign parent company. The Singapore Company Act does not prescribe any special or separate act of incorporation (MAA) for the branch offices. It is a branch office free to carry out the shareholder structure and business operations as indicated by the original foreign company MAA.

Subsidiary: A private limited company with a foreign company as the largest shareholder must take up its business as a subsidiary company. A subsidiary company is a resident of Singapore and is regulated by the laws of Singapore. A subsidiary company has a legal status in Singapore, and is therefore considered to be another company than its foreign counterpart. In this option, the foreign company's liability is limited to the share capital it has invested. In addition, the offshore company is terminated from the liabilities and liabilities of the subsidiary company. Note that a subsidiary company is more frequently registered than a limited liability company.

Incorporated companies: Singapore offers two main options for incorporated companies; Private limited and public enterprises. A private limited company may have as many as fifty shareholders and also have restrictions on the transfer of shares. On the contrary, a public limited company has no such restriction and can have as many shareholders as they want. The public limited company may also raise capital by offering shares and debentures to the public. Incorporated companies can be registered with a minimum capital of S $ 1, followed by at least one shareholder, one director and one company secretary. This is fine if the chosen shareholder is either an individual or a corporation. One of the shareholders is not expected to be a permanent resident of Singapore. Note that the shareholders' liability is limited to the amount, if any, unpaid on the shares issued to them. Apart from this, S $ 1 is the fixed par value of shares for each share, and no par value and bearer shares are not allowed.

Limited Liability Partnership: If two or more partners wish to take up a business in Singapore, registering a business as a limited liability company is the best option. Under this partnership, ACRA identifies both partners as different personalities that can be sued or sued.

For more information on the procedure for registering a company, see How to Register a Singapore Company.

If you are willing to be a Singapore based company, then you can take the help of A1 Business (Singapore) for Company registration