This is a Do-It-Yourself Guide on incorporating a Company in Singapore
Singapore law allows Incorporation of a Singapore Private Limited Company by Singapore Citizens, Permanent Residents and Employment Passholders.
Steps to follow:
- Go to http://www.acra.gov.sg
- Go to “New to Doing Business” – Guidelines for Singapore Citizens and Permanent Residents
- Go to “Before starting a business in Singapore”
- You must be at least 18 years of age
- You must not be an un-discharged bankrupt or you must have obtained the permission of the High Court or the Official Assignee.
- If you do not have a SingPass, then you need to go to the SingPass website
- After you obtained your SingPass you can proceed to acra.gov.sg and on the left side of the screen select “E services – Online Transactions bizFile” option.
- Go to “Local Company (Public / Private Ltd)
What is a Local Company?
- A Local company can be a private or public company. Click “Apply for a New Company Name”
Apply for a New Company Name
- SingPass web site displays and you enter your SingPass ID and SingPass password to access to BizFile web site to beginning Apply for approval of reservation of company name and after the company name is approved You can proceed to incorporate the company.
Common type of business Is Private Limited Companies
Most common type of business in Singapore is companies registered as private limited liability companies. A private limited company in Singapore is an independent legal entity from its owners. It can be sued and be sued in its own name. The shareholders are liable for the company’s debts limited to the amount of share capital they have paid.
Information you need to know before Registration of a Company.
1. Company Name:
Your proposed company name must be approved by ACRA (Accounting and Corporate Regulatory Authority), before commencing incorporation process.
- A minimum of one ordinarily resident in Singapore director is mandatory.
- A person must be at least 18 years of age and who are otherwise of full legal capacity.
- A person is not an undischarged bankrupts (unless they get permission from the High Court or the Official Assignee);
- A person who is not under disqualification orders made by the Court;
- A person who is not convicted of specified offences or offences involving fraud or dishonesty punishable with imprisonment for three months or more. (The disqualification is for five years from the date of conviction of the relevant offence, or, where the person has been sent to prison, from the date of release).
- There is no maximum limit on the number of local or foreign directors in a Singapore Company.
- There is no requirement for the director to own shares in the company.
What is a resident ?
- a Singapore Citizen,
- a Singaporean Permanent Resident, or
- a person who has been issued an Entrepreneur Pass, Employment Pass, or Dependent Pass).
- A minimum of 1 and maximum of 50 shareholders.
- A director and shareholder can be the same person.
- The shareholder can be a person or legal corporate entity or trust.
- 100% local or foreign shareholding is allowed.
- New shares can be issued or existing shares can be transferred to another person anytime after the Singapore has been incorporated.
4. Appointment of a Company Secretary:
- Company Secretary must be appointed within 6 of its incorporation whose main responsibility is to ensure regulatory compliance.
- In the case of a sole director/shareholder, another person must be a company secretary.
- Company Secretary must be a resident in Singapore.
5. Share Capital:
- Minimum share capital for registration of a Singapore company is S$1.
- Paid-up or Share capital can be increased anytime after incorporation.
- Authorized Capital for Singapore companies is abolished.
6. Registered Office Address:
- It must be a local Singapore address which does not need to be the usual business address.
- The company’s lawyers, corporate secretary or accountants’ office address may be used instead
- It must be a physical residential or commercial address but cannot be a P.O. Box.
- All official letters and documentation from ACRA & IRAS and other government departments will be sent to this address.
- It must be shown on all official company documentation.
Singapore registered companies enjoy very attractive tax exemptions and incentives. Your company pays less than 6% for the first S$300,000 annual profits and 17% flat after that. There are no capital gains or dividend taxes on Singapore companies.
Incorporation Procedure and Timeline of a Company
Company incorporation procedure in Singapore is fully computerized by the ACRA (Accounting and Corporate Regulatory Authority of Singapore). The result is Singapore incorporation process is quick and efficient. Under normal circumstances, the company can be incorporated in 2 hours.
There are two distinct steps involved in the Singapore company setup procedure: a) Name Reservation and; b) Register the Company. Both steps can be accomplished on the same day assuming there are no delays caused by ACRA.
Step 1: Name Reservation
The proposed company name must be approved first. Company name approval is obtained by filing the application with ACRA.
Generally the name approval/rejection notification comes through in less than an hour.
If the proposed name has some restricted words (such as bank, finance, law, media, etc.) then it might require the review and approval of a corresponding external government authority. The name approval may be delayed by few days or weeks if the name is referred to another external authority.
To obtain quick name approval, make sure the name:
- is not identical or too similar to any existing local company names
- does not infringe with any trademarks
- is not obscene or vulgar
- is not already reserved
An approved name will be reserved for 60 days from the date of application. You can extend the approved name for another 60 days by filing an extension request just before the expiry date.
Step 2: Register the Company
Once the name has been approved, the filing of the registration information and the approval from the ACRA can be completed in a few hours proved all incorporation documents are ready and have been signed by the directors and shareholders of the new company.
There are rare cases when the incorporation procedure can get delayed if the shareholders or directors are of certain nationalities, the authorities might ask for additional information.
A registration fee of S$300 is payable to the ACRA (Accounting and Corporate Regulatory Authority of Singapore) at the time of incorporating a private limited liability company.
A. Certificate of Incorporation
The Private Limited Company is governed by the Singapore Companies Act, and has to also comply with the laws, rules and regulations under ACRA and the Inland Revenue Authority of Singapore, among others.
ACRA will send an official email notification confirming the incorporation of the company. The email notification includes the company registration number and date or incorporation. It is treated as the official certificate of incorporation in Singapore. A hard copy of the certification of incorporation is can be made to ACRA after the incorporation of the Singapore Company. A fee of S$50 is applicable and the hard copy can be collected the next day from the office of the registrar.
B. Company Business Profile
A business profile containing the particulars of the company can be obtained from the Company Registrar by making a request online and paying S$ 5 application fee. The document (a PDF file) is available for download within an hour of the request and contains the following key details:
- Company name and registration number
- Previous names for the company, if any
- Incorporation date
- Principal activities
- Paid-up share capital
- Registered address
- Shareholders details
- Directors details
- Company Secretary details
The above two soft documents (i.e. email notification of incorporation and company business profile) are sufficient in Singapore for all legal and contractual purposes including opening of corporate bank accounts, signing office lease, subscribing to telephone/internet services, etc.
Some of the other items you will almost certainly need upon registration of your Singapore Company include:
- Share certificates for each of the shareholders
- Share register indicating shares allotted to each of the shareholders
- Company seal for the company
- A rubber stamp for the company
Opening a Corporate Bank Account
After successful registration of your Singapore Company, you can open a corporate bank account in any of the major banks in Singapore such as DBS, OCBC, UOB, HSBC, Standard Chartered, Citibank. Most of the banks in Singapore require physical presence of the company directors and company secretary when opening bank account procedure. You should consider the following:
- If you are unable to visit Singapore, you should choose a bank that allows opening of the corporate bank account without your physical presence in Singapore.
- If you are able to visit Singapore, then you can choose the bank which can grant you banking facilities.
Applying for Business Licenses and Permits
Depending on your company’s activities, you may need to obtain business licenses before you can commence your business operations. These are the few business activities require such a license. Examples of business activities that require a business license(s) include restaurants, educational institutes, travel agencies, financial services, import/export of goods, etc.
Appointment of Auditors
All Non Exempt Private Company Singapore incorporated companies must appoint an auditor within 3 months from the date of incorporation.
|Exempt private company||Non-exempt private company|
|Number of Shareholders||Less than 20 members||More that 20 but less than 50 members|
|Type of Shareholders||Individuals||Individuals and/or corporations|
|Audit requirement||Not necessary unless its revenue in that financial year exceeds the prescribed amount||Yes, unless it is dormant|
|Company’s loan to director||Possible||Restricted|
Singapore Corporate Tax Rates for newly setup Private Limited Companies
- First $100,000 – ZERO Tax
- Next $200,000 – Effective Tax Exemption of 50%
- Above $300,000 – Tax Rate of 17%
- No more than 20 individual shareholders
- Where there are corporate shareholders, at least 1 shareholder should be an individual with minimum 10% shareholding
Advantages of incorporating a Private Limited company:
- the entrepreneur’s liability of the debts and losses of the company, is limited by his paid up capital of the company
- newly Private Limited company enjoys full tax exemptions and incentives— the first S$100, 000 of taxable income is 100% exempt from taxes and the next $200,000 effective tax rates is 8.5%. Therefore the first $300,000 taxable income is at 5.6%.
- Company’s profit is taxed at corporate tax rates. There is no tax on dividends in the hands of shareholders
- Company is a separate legal entity. It is perpetual and business operations are not affected by changes in shareholders. It ceases when it is strike off from the Registry of ACRA.
- Shareholders’ personal assets are protected since they are not personally liable for debts and losses of company.
Disadvantages of incorporating a Private Limited company:
- Declaration by directors about interests in the company’s shares, contracts and debentures
- Restriction imposed by company’s Memorandum and Articles of Associations on shareholders’ right to transfer their shares. Any transfer of shares has to be approved by board of directors and/or that the shares to be transferred be first offered to existing shareholders.
- Governed by laws stated in the Singapore Companies Act. Penalties will be imposed if laws are violated.
- Company must have one director and one company secretary.
- Company must prepare Annual Directors’ Report and to file Annual Return to ACRA
- Directors must disclose to the company information about their interests in the company’s shares, contracts and debentures.
- Companies can be more expensive to set up.
- Companies must maintain on-going compliance with ACRA/IRAS
Winding Up of Singapore Private Limited Company
A company continue to exist until it is strike off from the Registry of Companies. De-registration takes place after a process called ‘winding-up’ has been completed.
For small and medium sized companies winding-up can take place voluntarily after the members approved the resolution to strike off the company.
On the other hand, an order of Court petition by a creditor is a costly procedure. A liquidator will be appointed and his role is to collect and dispose of all the assets of the company. The money collected from the sale of assets will be used to first pay off all the creditors of the company including employees. Shareholders will only receive the balance of any amounts after pay off all debts and liquidator’s fee.
Once the winding-up is finished, company can apply to strike off to ACRA. After a period of 5 months from date of application of strike off, the company will be de-registered from ACRA’s register.
Goods and Service Tax (GST) registration
The company needs to estimate the current year turnover. If the annual turnover is less than S$1 million, then the company need not register for GST status.
However if the estimatedrevenue of your company exceeds SGD 1 million for the year, the company must apply to register for GST. GST tax is also known as Goods and Service Tax which is similar to Value Added Tax (VAT) or Sales Tax in many other countries.
If your company is GST registered, you will need to charge this tax (currently 7%) to your local clients on the goods and services provided. The total amount of output tax collected during the period of past 3 months minus total amount of input tax paid for supplied purchased. The net amount of GST collected is to be paid to tax authorities, IRAS.
Annual Filing Requirements
Once your Singapore Company has been incorporated, the Companies Act requires the company to file annual return to ACRA and financial statements to IRAS.