Ten facts you should know before you decide to incorporate a company

Perhaps you are exploring the launch of a new business. Most likely you have done some research, come up with the pros and cons and now you are pondering where to incorporate your new company Perhaps you have vaguely heard about Singapore but are not quite sure if a far-away place like that works for you. Read along...

Singapore continues to lure a vast number of international entrepreneurs and investors to the country through its business-friendly policies and attractive tax system. With the recent turmoil in Hong Kong, it has become the pre-eminent gateway to Asia for most western firms. If you are wavering about selecting Singapore for your new venture, here we summarize the core factors you should consider before you make your final decision.

Singapore companies allow 100% foreign shareholding: There are no restrictions on foreign ownership when starting your company in Singapore. This is true for both corporate and individual shareholders. Essentially, it means that all the profits and assets of a Singapore company can belong to a foreign individual or corporate. 

A Singapore company must have at least one local resident director: You are required to have at least one local (i.e. a Singapore resident) director for your company.  The local director can be a citizen of Singapore, a permanent resident, an Employment Pass, or an EntrePass holder. Your corporate services firm will easily provide such a local director for a small fee. It is important to understand the motivation for this requirement: the government of Singapore wants to be able to contact someone on behalf of the company to ensure compliance with statutory requirements, which includes filing of annual returns and management of accounting records, amongst other things. That is the role the local director fulfills.

CorporateServices.com offers a Nominee Director service that will satisfy this requirement both for newly incorporated aw well as existing companies. 

A company must hire a local company secretary as well: The Companies Act requires that a company secretary must be a natural person and a resident of Singapore. A company secretary acts as a liaison between shareholders and directors, the company’s main compliance officer, and an advisor to the board of directors. Read this article to learn more about the duties of a company secretary in Singapore. Our sister firm provides such secretarial services.

Share capital requirement : The minimum paid-up capital to start a business is S$1 only! Of course, the actual amount will depend on the nature of the business and its future capital needs but the laws of Singapore do not impose any minimum. 

No need to obtain any special visa to open a company: You can come to Singapore as a regular visitor and deal with all the formalities of opening a company. In some situations, you may be able to start the company without a need to visit Singapore. 

No requirement to have a physical office space for your company: Even though the law requires you to have a local registered address for your company, it is not necessary to acquire a physical office and companies can use a virtual address. It makes things much more convenient. Please note that PO box is not accepted for this purpose.

If you don’t plan to have an office in Singapore, you can use our sister firm’s  registered address service to satisfy this requirement.

A foreign company can operate from overseas without hiring staff: Since there is no legal regulations regarding a minimum number of employees in a Singaporean company, it can be fully operated and administered from abroad by its sole owner. 

Reporting requirements are simple and straightforward: All companies incorporated in Singapore must file annual returns with the Registrar of companies, ACRA, to ensure that the company’s information on the ACRA register is up to date. Once a year, the company must also file its financial statements report and the date of its annual general meeting (AGM). 

Singapore is free of red-tape and corruption: Singapore is a fair, transparent, and efficient country. It is ranked as the third least-corrupt country in the world! Equal justice for all, as well as governmental institutions that are well-run and abide by the law make it an ideal location for dispute resolution. The country offers one of the world’s most business-oriented regulatory frameworks for entrepreneurs.The requirements to set up and operate a business are simple and easy to follow.

You are expected to follow the law: The rule of law is vital in Singapore. While the rules are simple and fair, they must be followed. You should be aware of the regulations and meet all obligations. If you disregard or do not meet any of the rules set by the government, penalties and fines will be applied and other legal actions will be taken against the company. You can easily ensure this compliance by hiring a competent Corporate Services firm as your local partner.