Business entities in Singapore
There are several types of companies our Clients can set up, the most common being the private limited company (LLC), branch office and representative office.
The private limited company (Pte. Ltd.)
- The most commonly set-up company in Singapore is the private limited company, which is abbreviated to “Pte. Ltd.”. This company type is functionally equivalent to the LLC in other jurisdictions, with shareholders’ liability being limited to the amount unpaid on their shares;
- Thanks to the relaxed rules on opening a private limited company, requiring only one shareholder, one director, a company secretary, a registered address and no minimum share capital, foreign investors overwhelmingly favour the Pte. Ltd. when entering the Singaporean market. This entity can engage in any commercial or industrial activity, and there are no restrictions on foreign investment;
- Singaporean private limited companies may have up to 50 shareholders. If there are likely to be either i) more than 50 shareholders or ii) regular share transfers, then an unlisted public limited company is a better option;
- This entity can be incorporated within one week without the need for our Clients to visit Singapore or contribute any share capital. However, at least one of the company’s directors must be resident in Singapore.
General purpose – A private limited company fulfils the needs of almost every application for doing business either within or outside of Singapore. These entities have low administrative requirements and can be turned to almost any use as long as share liquidity is not required. These attributes of the Singapore LLC make it ideally suited for use as a subsidiary or as an entrepreneurial vehicle.
The private limited company’s flexibility also means that it can be used in the following ways:
Special Purpose Vehicle (SPV)
- SPVs can be used to i) hold designated assets on behalf of its investors while insulating the shareholders from liability and ii) raise funds from the market;
- This vehicle is used to hold and manage long-term investments including debt, real estate, and shares in other businesses. Holding companies derive their income primarily from dividends, interest payments and rental fees, depending on the types of assets held;
- In Singapore, a holding company can be incorporated as a paper company (offshore company) to manage international investments in a tax-efficient manner.
- Singaporean companies can be used as private wealth vehicles to manage family assets. Visit Healy Consultants’ page on family wealth vehicles to learn more and compare different structures that can be used to run a family office.
- Foreign companies may do business in Singapore without setting up a separate legal entity, although they must register with the Accounting and Corporate Regulatory Authority (ACRA) to do so. Doing business in this manner is known as establishing a branch office in Singapore;
- A branch office can conduct business only within the scope set by the parent company. A Singapore-based branch can invoice local customers, sign sales contracts and receive income from customers;
- As an extension of the foreign company without its own legal personality, a branch does not have limited liability. Any liabilities incurred by the branch are therefore attributed to the parent company. Consequently, using a branch introduces greater risk to your business;
- Branch offices may only be registered by foreign corporations, as stipulated by Singapore’s Companies Act;
- Branches are treated as non-resident for tax purposes. This means that they do not benefit from Singapore’s double taxation avoidance treaties, nor the tax incentives for new companies.
Not recommended – Although there are some limited advantages to using branches in other jurisdictions, Healy Consultants recommends incorporating a local company rather than establishing a branch in Singapore. Since the company has no minimum capital requirement, limited liability, a lower number of mandatory resident agents and allows 100% foreign ownership in all fields, the traditional benefits of a branch do not apply. No time is saved in registering a branch either, as Singaporean companies can be set up in under a week.
- A representative office can be used if a foreign company does not intend to carry on revenue-generating business activities in Singapore. Annual filings are simplified since the lack of revenue means that taxes do not need to be filed or assessed;
- These entities cannot make direct sales. Instead, they may only carry out “auxiliary activities”, for example i) promoting the business of the parent company ii) market research iii) after-sales support or iv) research & development;
- The scale of representative offices’ operations is limited by a rule requiring fewer than five members of staff;
- Representative offices’ limited scope brings with them a limited lifetime, as they may only operate for up to three years before being required to convert to a branch;
- New foreign businesses may not set up representative offices in Singapore, as the law requires that the foreign entity i) has annual sales of more than US$250,000 and ii) has existed for at least three years;
Market research – If your business wishes to send a small delegation of staff to investigate the Singaporean market, a representative office is a good short-term solution with simpler financial reporting than for a company. For other activities or long-term establishments in Singapore, a company is usually preferred due to greater flexibility in the activities it can carry out and more freedom to generate value for the business.
Free Zone Company
- Our Clients also have the option of setting up a free zone company. For this purpose, our Clients will need to incorporate a simple LLC and then obtain an operating permit from the free zone authority;
- For more information about this business entity, refer to our Singapore free zones page;
International Trade – A free zone company is generally used by trading companies which need to import products into Singapore for further processing and then export the finished goods to other countries.
Singapore fast solution
- This solution is recommended for Clients who need an immediate company setup in Singapore. For such Clients, Healy Consultants presents our fast turnkey solution which includes i) a company registration number ii) an already approved multicurrency corporate bank account number and iii) a business address;
- For more information, refer to our Singapore shelf company/turnkey solutions page;
The Singapore fast solution is recommended for Clients who immediately need a local company to close deals or sign contracts in Singapore.
Limited Liability Partnership
- An alternative to the limited liability company is the limited liability partnership (LLP). Like the LLC, this entity offers limited liability benefit to its partners. Furthermore, this entity can issue contracts, lease property and sign legal documents in its own name;
- An LLP can be setup by 2 partners with minimum capital of US$1. However, the LLP will be required to appoint at least 1 manager who is ordinarily resident in Singapore;
- An LLP will not be subject to annual corporate income tax. However, the income will be taxed in the hands of the partners. Consequently, if the partners are individuals, personal income tax will be payable or if they are corporate entities, corporate income tax will be payable;
Professional services – An LLP is generally recommended for firms providing professional services including accounting & tax services, consulting services and legal services.
- Some of our Clients may wish to form a general partnership (GP) in Singapore. Unlike in an LLP, partners of a GP will be personally liable for all losses and debts of the partnership;
- An alternative option to the GP and LLP will be the limited partnership (LP). An LP comprises of at least 1 general partner (who is personally liable for all losses and debts) and 1 limited partner (whose liability is limited to the extent of his capital contribution);
Not recommended – GPs and LPs are not recommended to our Clients as they expose the partners to personal liability for all damages and losses. Instead, our Clients should either choose an LLC or an LLP.
Table of comparison for Singapore entities
Summary at a Glance LLC Branch Rep office Offshore LLP Free zone company Fast solution Operations and logistics Do you visit Singapore for company setup? No No No No No No No Bank signatory must travel No No No No No No No Is doing business in Singapore permitted? Yes Yes No No Yes Yes Yes Allowed to sign sales contracts with local Clients Yes Yes No No Yes Yes Yes Allowed to invoice local Clients Yes Yes No No Yes Yes Yes Can rent office in Singapore Yes Yes Yes No Yes Yes Yes Tenancy agreement required before incorporation? No No Yes No No No No Allowed to import raw materials? Yes Yes No No Yes Yes Yes Allowed to export goods? Yes Yes No No Yes Yes Yes Corporate bank account HSBC Citibank SCB Singapore HSBC Hong Kong HSBC Hong Kong Citibank SCB Singapore Accounting and tax Corporate tax payable 17% 17% 0% 0% 17% 17% 17% Statutory audit required No No No No No No No Annual tax return to be submitted Yes Yes Yes Yes Yes Yes Yes Access to double tax treaties Yes Yes No No Yes Yes Yes Company law Issued share capital required US$1 0 0 US$1 US$1 US$1 US$1 Resident director/manager required? Yes Yes Yes Yes Yes Yes Yes Resident shareholder required? No No No No No No No Minimum number of directors 1 1 1 1 1 1 1 Minimum number of shareholders 1 Parent company Parent company 1 2 1 1 Resident company secretary Yes Yes No Yes Yes Yes Yes Individual shareholders allowed Yes No No Yes Yes Yes Yes Corporate director(s) allowed? No No No No No No No Corporate shareholders allowed? Yes No No Yes Yes Yes Yes Public register of shareholders and directors Yes Yes Yes Yes Yes Yes Yes Immigration Singapore employment visa fees US$2,950 US$2,950 US$2,950 US$2,950 US$2,950 US$2,950 US$2,950 Can the entity hire expatriate staff? Yes Yes Yes No Yes Yes Yes How long to get work permit approved 3 weeks 3 weeks 3 weeks 3 weeks 3 weeks 3 weeks 3 weeks Fees and timelines How long to set the company up? 1 week 1 week 1 week 1 week 1 week 2 weeks No How long to open company bank account? 4 weeks 4 weeks 4 weeks 4 weeks 4 weeks 4 weeks No Estimate of engagement costs US$6,980 US$8,750 US$6,800 US$7,940 US$6,980 US$8,790 US$11,560 Draft Invoice
An investment company will allow our Clients to pool their investors’ capital and invest this money on their behalf. However, this business activity will require the owners of the company to file an application with the Monetary Authority of Singapore (MAS). For fund management, the application will take one of two forms: either i) an application for a registered fund management company or ii) an application for a Capital Markets Services license.
Registered fund management companies are limited to 30 accredited or institutional investors, up to 15 of whom may be other funds invested in by accredited individuals. Investors qualify as “accredited” under Singapore’s Securities and Futures Act if they have either i) net assets of more than S$2,000,000 or ii) annual income greater than S$300,000. There is a cap of S$250,000,000 on assets under management for this kind of fund manager.
Capital markets services (CMS) licences, on the other hand, are much more flexible. Although further accreditation is required from the MAS to offer services to retail investors, CMS-licensed fund managers have no limits on the assets under management or number of investors.
CMS-licensed fund managers must maintain core capital levels of at least S$250,000, of which at least S$100,000 must be deposited with the MAS. Annual audits are required to ensure that this and other compliance requirements are met.
All registered and licensed fund management companies must have two directors resident in Singapore with at least 5 years’ experience in financial services to establish a track record. They also require two local employees, one of whom must be the CEO and the other an Executive Director, with each of these staff having at least 5 years’ experience. If the CMS-licensed manager has authorization to work with retail investors, a third staff member is needed and the CEO requires 10 years of experience.
How to incorporate a company in Singapore
- Consultation phase: Prior to starting the Singapore company incorporation process, we discuss our Client’s aims and requirements for the new company and plan the optimal structure for the business. Healy Consultants also sets out i) potential licensing requirements and ii) desirable amendments to the model articles and memorandum of association at this stage.
- Name reservation: Choose three unique names for the company, listed in your order of preference. The name must be sufficiently dissimilar from other companies already registered in Singapore. As Singaporean law only allows residents to file company names, Healy Consultants makes the name submission on behalf of our Clients. Check the availability of your ideal Singapore company name now;
- Ownership structure and share allotment: Name up to 50 shareholders for the company. Companies and individuals may be shareholders, but companies with corporate shareholders require an annual audit. Determine the number of shares to be issued to each shareholder and the price to be paid for each share. There are no restrictions on your choice of share price;
- Director selection: Name your company’s directors, at least one of whom must be resident in Singapore. Corporate directors are not permitted in Singapore. Healy Consultants will prepare Form 45 for our Clients preferred directors to sign;
- Company secretary: Appoint a company secretary to manage your company’s statutory administration and annual returns. The company secretary must be located in Singapore and may be an individual or a company. Before the appointment is formalised, the preferred company secretary will sign Form 45B in compliance with Section 173(4A) of the Companies Act. Healy Consultants includes company secretarial services in our standard Singapore incorporation package;
- Registered office: All companies in Singapore must file an address with the companies registry to which official correspondence can be kept and statutory records can be inspected. Either use the address your team will occupy in Singapore or make use of Healy Consultants’ registered address service, which we include as standard in our service offering;
- Company constitution: The shareholders sign the company’s constitution, which governs the management of the business. The company constitution replaced the memorandum and articles of association in January 2016 following changes to the Companies Act. Singaporean company law provides a standard document that will suit most of our Clients’ needs, and Healy Consultants’ legal team can draft changes to fit your specific requirements. This document must make reference to the company’s i) share capital ii) registered address iii) directors and iv) limited liability. You can find Singapore’s model constitution for private companies online;
- Planning phase: At this point, we take all of the information provided to plan the process in detail from start to finish, including i) company incorporation ii) tax registration iii) corporate bank account opening and iv) obtaining applicable licences. Engagement planning is a key part of Healy Consultants’ service, increasing transparency, setting Client expectations and minimising disruption to project completion;
- Document preparation: Next, Healy Consultants gathers all of the documents required to complete the incorporation, assisting our Clients to complete and authenticate all necessary documents.
- Document submission: Once the required documentation is complete, including signed Form 45, Form 45B and Form 29, Healy Consultants submits the incorporation package to the Accounting and Corporate Regulatory Authority (ACRA) via the online portal Bizfile;
- Incorporation approval: Within 3 days of submission, the company will be incorporated. Following Singapore company incorporation, Healy Consultants immediately emails our Client with the certificate of incorporation and company extract (view sample of a business profile).
- Bank account opening: Once incorporated, the company can apply for a corporate bank account. With Healy Consultants’ help, this can be achieved without you needing to travel;
- Additional registrations: The company can now register for GST, apply for employee visas and obtain government grants and incentives;
- Licensing: Good governance requires that certain business activities require licences in Singapore. Healy Consultants regularly assists Clients with navigating the Singaporean regulatory environment and obtaining the necessary licences;
- Engagement completion: Following the receipt of all necessary approvals and documents, Healy Consultants couriers a full company kit to our Client, including original corporate documents, unopened bank correspondence and a Client feedback survey.
- Appointing a resident company secretary within 6 months (if not already provided by Healy Consultants);
- Fixing the company’s financial year end (FYE);
- Appointment of auditors – companies requiring compulsory audit are those with annual revenue above S$10m, assets above S$10m or over the number of employees is 50 and above;
- Providing the company secretary with up to date accounting records to enable filing of the Annual Return with ACRA within 6 months of the FYE and the Annual Tax Return by November of the next year;
- Notifying the company secretary of any changes in the corporate structure (directors, shareholders) and beneficial ownership;
Refer to the Singapore accounting & tax, legal and compliance considerations page for more informtion.
Business setup in Singapore for foreigners
Almost all industries in Singapore are fully open to foreign investors, without them being subject to higher paid-up capital amounts, licensing obligations or other extra requirement compared to locals. Foreign businessmen can also manage their Singapore company from overseas: while Singapore authorities require all locally incorporated companies to have a resident director, they allow foreigners to appoint a professional passive nominee to comply with this requirement. Other directors can live overseas and Board meetings do not need to take place in Singapore.
However, foreigners starting a company or a corporate bank account in Singapore are required by the Government to abide by slightly different requirements than Singapore residents. Refer to the table below for additional details:
|Item required for||Singapore citizens and residents?||Foreigners living outside of Singapore?||Why is it requested for foreigners?|
|ID documents of corporate/individual shareholders and directors||Copy can be certified by Healy Consultants and other corporate service providers||Must be certified by a Notary or alternatively legalized||To confirm the ID proof is a valid one and prevent identity theft|
|Appointment of a company secretary||Not required||Always required||To ensure that foreigners benefit from the assistance of a Singapore Company Law expert|
|Resident director||Not required||Always required until at least one of the foreign directors has Singapore a work permit||Ensure that somebody in Singapore is always accountable to prevent company misuse|
Frequently asked questions
I want to set up a small business in Singapore. Should I use a sole proprietorship or private limited company?We recommend that our Clients set up a company rather than a sole proprietorship, as all qualifying start-up LLCs enjoy tax rebates on profits in the first three years. A 100% tax exemption is possible on the first SG$100,000 and 50% tax exemption on the next SG$200,000. The LLC also limits the owner’s losses in the event that the business fails, since the company’s debts are not attributable to the shareholders. Incorporating a company also simplifies international growth in the event that the business succeeds.
How can a foreigner set up a company in Singapore?Foreigners can set up Singaporean companies by using a company formation consultant like Healy Consultants, as Singaporean company law does not allow for non-residents to register companies themselves. However, foreigners may own and control Singaporean businesses without restriction. Our business setup services also give our Clients access to our knowledge and experience of Singaporean company administration and tax rules, helping you to run your business in an efficient and compliant way.
Why incorporate a company in Singapore?Singapore is a low-tax jurisdiction with government incentives to benefit foreign entrepreneurs.
Furthermore, it is possible to engage in offshore company incorporation in Singapore, which can be legally 100% tax-exempt.
Am I required to travel to incorporate a Singapore company?No. Our Clients will not be required to travel to complete the incorporation process.