Why company incorporation or running a business in Singapore may be unsuccessful?
Singapore is known as the most friendly business hub in Southeast Asia. Actually, it holds the fourth position in the world’s leading financial centers. In addition, its per capita income is the third highest in the world and it is also known to be reasonably corruption free country. Moreover, it is considered the world’s easiest place to start a business with one of the lowest tax rates in the world. It is therefore not a surprise to see people from all over the globe wanting to start a business or open a branch company in this country Singapore.
However, some can fail to incorporate their businesses in Singapore or been unsuccessful in running a company due to the following reasons:
No local resident director appointed in a company
According to ACRA (Accounting and Corporate Regulatory Authority) requirements, it is mandatory for every registered company in Singapore to appoint at least one local resident director. Failure to do this, the company cannot be incorporated. For a person to qualify for the role of a local resident director, he/she must:
- Be above 18 years old
- Be a Singapore resident, permanent resident, EnterPass or employment pass holder
- Not have been declared bankrupt by any court
- Not have been convicted for dishonesty or fraud
- Not have been charged of breach of three or more of the Companies Act
Even if a local resident director was appointed at the time of incorporation but subsequently leaves the company and there is no replacement taking over, ACRA can force a company into closure.
Unable to open a business bank account
It is recommended for any company that wants to start running business in Singapore to open a Singapore bank account. The director of the company must be physically present in Singapore, during the entire bank account opening process. Failure to open a corporate bank account due to various reasons can lead to business failure since you are unable to perform any transactions of receiving money or spending money.
Did not obtain the relevant business licenses
Some types of companies in Singapore must obtain the relevant business licenses before it can start running business. For example a travel agent must acquire travel agent license from STB (Singapore Tourism Board), or if you are running Food & Beverage, you will need to obtain license from NEA (National Environment Agency). A company that fails to get one of such licenses will not be operational.
Not able to apply or renew your Work Pass or Visa
If a foreigner intends to relocate to Singapore and run their company from there, they must apply the right work pass/visa first. If the work pass had expired, then it should be renewed immediately. Such passes enable the foreigner to work in Singapore. They include the Entrepass or the Employment Pass and can be acquired from MOM (Ministry of Manpower) that is subject to review and approval.
Failure to appoint Company Secretary
Every Singapore Company must appoint a company secretary within 6 months from company incorporation. Failure to do so is a breach of the Companies’ Act and the government can take action against you and/or your company which results in hefty consequences. The company secretary takes care of all the compliance needs; he simply acts as the company’s statutory administrator to ensure that your company is in compliant and did not break any laws or regulations. He/she must be a Singaporean or Singapore PR to qualify as a corporate secretary.
Choose not to seek company registration services from a professional firm
Foreigners cannot register a business all by themselves since they do not have a SingPass account. The incorporation process is done online and in order to complete the company registration, foreigners must engage the services of a professional service provider firm such as J Accounting Pte Ltd who has a filing agent license. If you do not seek help from a professional firm, then you are unable to incorporate and start a Singapore company.
Does not meet the shareholding threshold
For a company to be incorporated in Singapore, it must have at least one shareholder. The shareholder can either be a corporate body or an individual, and they may or may not be actively involved in everyday running of your entity. If you do not have anyone or any firm to be the shareholder of your corporation, then incorporating a Singapore company is not possible since it is mandatory to have shareholders, i.e. owners in your company.
Incorporating a company with an undesirable name
If you start a company with names that are undesirable such as obscene or religious names, then this is unacceptable. ACRA will reject your company name and you are unable to incorporate that entity (whether sole proprietorship, partnership or private limited company), resulting in an unsuccessful Singapore company incorporation.
Should you have any further questions or require help on this subject, do contact J Accounting and will be able to assist you with it.
