Guide to Choosing Business Structures in Singapore
Starting a business in Singapore is simple and well-organized. The country is often praised for being one of the easiest places in the world to start a business.
Before you begin operating a business in Singapore, you need to register it. The type of business structure you choose depends on what you need. Different structures also come with different tax rules, so it’s a good idea to get advice before you decide.
Some businesses also need special licenses. For example, if you’re running a bank or financial business, you’ll need a license from the Monetary Authority of Singapore (MAS). If your business involves making or selling restricted items, you’ll need specific permits.
Knowing all the rules and permits is important. Make sure to check with the right authorities to see if you need anything extra.
How Foreign Businesses Can Start in Singapore
For businesses outside of Singapore, understanding the rules and types of business structures is important. Here are some common ways to start a business in Singapore.
Setting Up a Representative Office
If a foreign company wants to test the waters in Singapore, it can open a representative office. This is a temporary setup to study the market and explore business opportunities.
A representative office isn’t a legal business and can’t earn money. It’s only for things like market research and checking if a business idea will work.
To open a representative office, you’ll need approval from Enterprise Singapore. However, if your business is in banking, finance, or law, other agencies like MAS or the Ministry of Law will handle it. Approvals last for one year but can be extended up to three years. After that, you’ll need to register as a proper business with the Accounting and Corporate Regulatory Authority (ACRA).
Creating a Subsidiary (Local Company)
Foreign businesses that want to make money in Singapore can set up a subsidiary. This is a separate legal entity, which means it can own property, sue, or be sued in its own name.
Subsidiaries must follow the rules of Singapore’s Companies Act. This includes keeping financial records, holding meetings, and filing annual reports. At least one director and one company secretary must live in Singapore.
If a company has at least SGD 500,000 in share capital, it automatically joins the Singapore Business Federation (SBF). More details are available at: SBF Membership Information.
Registering a Branch Office
Foreign businesses can also set up a branch office in Singapore. This is not a separate entity but part of the foreign company. The foreign company is responsible for the branch’s debts.
To register a branch, you need:
- The branch name to match the foreign company’s name.
- At least one representative living in Singapore.
- A registered office in Singapore.
- Certified copies of the foreign company’s registration and financial records.
Branches must follow Singapore’s Companies Act and file annual financial statements, including those of the parent company.
Moving a Company to Singapore (Re-domiciliation)
Some foreign companies want to move their headquarters to Singapore. They can do this through a process called re-domiciliation, which allows them to keep their history and branding.
After re-domiciliation, the company becomes a Singapore entity and must follow Singapore’s Companies Act. Its obligations, debts, and assets remain unchanged.
To qualify for re-domiciliation:
- The company must be able to restructure as a limited company under Singapore law.
- It must meet certain size and financial requirements.
- The original country must allow re-domiciliation.
Once re-domiciled, a company cannot move out of Singapore, as the country doesn’t allow reverse re-domiciliation.
