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 Fast Solution PLC Branch Office Trust Best use of company? Close a customer
SGX listing Consolidate
Tax planning How soon can you invoice Clients/sign sales contracts? 2 days 1 week 1 week Not allowed How soon can you hire staff? 2 days 1 week 1 week No How soon can you sign a lease agreement? 2 days 1 week 1 week No How long to supply company registration numbers? 2 days 1 week 1 week 2 weeks How long to supply corporate bank account numbers? 2 days 5 weeks 5 weeks 6 weeks Corporate tax rate on annual net profits? 17% 17% 17% 0% Effective tax rate on US$500,000? 10% 10% 10% 0% Limited liability entity? Yes Yes No Yes Resident director/partner/manager required? Yes Yes Yes No Minimum paid up share capital? US$1 US$1 None None Corporate bank account location? DBS OCBC UOB OCBC Can secure trade finance? Yes Yes Yes No VAT payable on sales to local customers? 7% 7% 7% None Average total engagement costs? US$14,610 US$9,530 US$9,300 US$25,000 Average total engagement period? 14 weeks 9 weeks 9 weeks 4 weeks Accounting and tax considerations Fast Solution PLC Branch Office Trust Statutory corporate tax payable? 17% 17% 17% 0% Legally tax exempt if properly structured? No No No Yes Must file an annual company tax return? Yes Yes Yes No Must file annual financial statements? Yes Yes Yes No Access to double taxation treaties? Yes Yes Yes No Government grants available? Yes Yes Yes No Group HQ tax incentives? Yes Yes Yes No Company Registration Fast Solution PLC Branch Office Trust Minimum number of directors/managers? 1 1 1 None Minimum number of shareholders/partners? 1 1 Parent company 1 settlor Minimum statutory paid up share capital? US$1 US$1 None None Shelf companies available? Yes Yes No No Time to incorporate a new entity? 2 days 1 week 1 week None Can easily convert to a PLC? Yes Yes No No Public register of shareholders and directors? Yes Yes Yes No Can have preference shareholders? Yes Yes No No This entity will likely be regulated by? ACRA ACRA ACRA None Business Considerations Fast Solution PLC Branch Office Trust Good entity for trademark registration? Yes Yes Yes No Can secure an import and export license? Yes Yes Yes No Can bid for Government contracts? Yes Yes Yes No Can secure residence visa for business owner? Yes Yes Yes No Monthly GST reporting to the Government? No Maximum number of staff allowed? None Our Client must travel for Singapore business set up? No Can be wholly foreign owned? Yes Maximum shareholding for foreigners? None Government approval required for foreign owners? No Temporary physical office solutions available? Yes You need a local resident as bank signatory? No Withholding tax on payments to shareholders? 0% Must appoint an auditor? No Dividends received are legally tax exempt? Yes Security deposit to be kept with Government? No Must sign an office lease agreement? No Shareholders and directors documents to be attested? No Foreign non-resident director needs a work permit? No Shareholders and directors documents to be translated? No Expatriate to local staff ratio? None Other useful information What will be included in my customer sales invoice? (click link) This country has signed free trade agreements? Yes This country is a member of WIPO/TRIPS? Yes This country is a member of the ICSID? Yes Average customs duties suffered? 0.50% Average monthly office rental? (US$ per sq m) 37 Minimum statutory annual salary? None Average monthly US$ salary for local skilled employees? US$3,800 US$ deposit interest rate? (1 year average) 0.40% S$ deposit interest rate? (1 year average) 0.10% Overseas remittance currency controls? None Banking considerations Multi-currency bank accounts available? Yes Corporate visa debit cards available? No Quality of e-banking platform? Excellent Crowd funding available in this country? Yes
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.
15 steps to register a company
By requesting Healy Consultants to register their Singapore company, our Clients do not have to travel to Singapore to start their company. Our Firm will indeed complete all procedures on their behalf. Please refer to the page below for further details on the steps to setting up a company in Singapore.
- Consultation phase: Prior to starting the Singapore company incorporation process, we discuss our Client’s business goals and requirements for their new entity and plan the optimal structure for the entity to be setup. Healy Consultants also sets out the i) fees payable for the engagement, ii) potential licensing requirements and iii) desirable amendments to the model articles and memorandum of association at this stage;
- Name reservation: Thereafter, we help our Clients to choose three unique names for the company, listed in their 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, our Firm makes the name submission on behalf of our Clients. Check the availability of your ideal Singapore company name now;
- Ownership structure and share allotment: The Client provides details of up to 50 shareholders for the company. Companies and individuals may be shareholders, but companies with corporate shareholders require an annual audit. Our Client to confirm the share allocation to each shareholder, and confirm the price of each share;
- Director selection: Our Clients are required to select their company’s directors, at least one of whom must be resident in Singapore. Corporate directors are not permitted in Singapore. Our Consultants will prepare Form 45 for the signature by our Clients’ preferred directors;
- Company secretary: Our Client must appoint a company secretary to manage their company’s statutory administration and annual returns. The company secretary must be in Singapore and may be an individual or a company. Before the appointment is formalised, the preferred company secretary has to 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: In accordance to the Singapore law, our Client is required to file an address with the companies’ registry to which official correspondences can be sent and statutory records can be inspected. The Client may use their own physical space in Singapore or request Healy Consultants PLC to provide a virtual office space; this service is also included in our standard service offering;
- Company constitution: Thereafter, the shareholders sign the company’s constitution, which governs the management of the business. In January 2016, following the changes to the Companies Act the company constitution replaced the memorandum and articles of association. Our legal team helps our Client draft changes to fit their specific requirements. This document must refer 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, our Firm takes all the information provided to plan the process in detail from beginning till the end of the engagement, including i) Singapore business incorporation, ii) tax registration, iii) corporate bank account opening and iv) obtaining applicable licenses, thereby increasing transparency as well as setting Client expectations and minimizing disruption to project completion;
- Document preparation: Next, our Singapore Incorporation Team gathers all the documents required to complete the incorporation, assisting our Clients to complete and authenticate all necessary papers and submit them in a timely manner.
- Document submission: Upon completion and due receipt of the required documentations, including signed Form 45, Form 45B and Form 29, our Singapore Incorporation Team 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 business entity will be incorporated. Following Singapore company registration, our Firm immediately emails our Client with the certificate of incorporation and company extract (view sample of a business profile).
- Bank account opening: Once incorporated, the Client can apply for a corporate bank account for his business. Our Team helps our Client in doing so and this can be achieved without our Client travelling to Singapore;
- Additional registrations: The company can now register for GST, apply for employee visas and obtain government grants and incentives;
- Licensing: Good governance demands that certain business activities require licenses in Singapore. We regularly assist our Clients with navigating the Singaporean regulatory environment and obtaining the necessary licenses;
- Registration 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 lastly a Client feedback survey to make sure that all the Client expectations were met during the entire engagement period.
After our Client’s Singapore business is setup, there are annual statutory compliance requirements which must be timely completed. These compliances include:
- 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 information.
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
How to set up a company in Singapore?
To set up a company in Singapore, the process is as follows:
- After setting our fees, our Client returns us scans of the KYC documents required from each shareholder, director and beneficial owner;
- Thereafter, our Firm will email pre-filled incorporation forms to our Client for signature;
- Upon receipt of the documents, our Firm registers the company, usually within three business days or less. Our Client mails us hard copies of all KYC documents and signed forms over the following month.
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.