2.5 days – this is the total time required to start a business in Singapore, according to the Doing Business 2018 Report by the World Bank Group. It also ranked Singapore second globally on its Ease of Doing Business index.
How does this compare regionally or with other developed economies? In the rest of the Asia Pacific region, it takes an average of 22.7 days to start a business; and in Germany it takes about 4 times as long. It is indeed a remarkable demonstration of business friendliness and efficiencies which the island nation is known very well for.
|Country / Region||Average Days Required to Start a Business|
|OECD High Income||8.5|
|East & Asia Pacific||22.7|
It goes without saying that while the actual steps to start a business may be few and pretty straightforward in Singapore, a foreign company should consider the various options carefully to select the most appropriate business form in Singapore before incorporating, based on individual circumstances and goals.
For most foreign companies, the first thing to consider when setting up a company in Singapore is the legal structure of the company. This has a direct implication to the running of the new company itself: How should the new company operate, in relation to the foreign parent company? Would it be completely independent from the headquarters? Or would the parent company prefer to maintain full control over the new entity?
Subsidiary is the most common choice for foreign companies looking to set up shop in Singapore. From a legal perspective, it is considered to be a separate, local entity. The necessary paid-up capital is a mere S$1 at the minimum, although a substantial capital investment would certainly help in boosting the confidence of future clients and vendors. A subsidiary has limited liability, i.e. the foreign parent company is not liable for actions of subsidiary. It is also worth mentioning that being a subsidiary has a very attractive benefit – it is considered a local company and is hence eligible to apply for various financial grants and tax incentives offered by the Singapore government.
Branch is an extension of the parent company. Legally, it means that a branch is not treated as a resident entity and therefore not qualified for incentives intended for local companies. The foreign parent company would be fully liable for the actions of the entity, e.g. signing contracts, taking loans etc.
Representative Office is a temporary setup, usually to explore the market or carry out non-commercial activities. As it is not a legal persona per se, it is not authorized to sign contracts or raise invoices. The temporary arrangement is for up to 3 years only, after which it must be converted to a subsidiary or branch.
Subsidiary incorporation: straightforward but preparations needed
To incorporate a subsidiary, five basic requirements need to be fulfilled:
|Director||Singapore resident (Citizen, Permanent Resident, Workpass holder)|
|Secretary||Qualified Singapore resident (Citizen, Permanent Resident, Workpass holder) for legal compliance purpose|
|Shareholder||At least one individual or corporate entity|
|Paid-up Capital>||At least S$1|
|Physical Address||A physical office address in Singapore|
There are in principle two ways of incorporating a subsidiary in Singapore: engaging a filing agent for incorporation or incorporate on your own. Assuming you have no local contact in Singapore and you are not a resident in Singapore, engaging the service of a filing agent (accounting, law firm etc.) is the usual way to go about. For a fee, many companies offer an incorporation package service where all incorporation formalities will be carried out on behalf of the parent company. Nominee director and nominee secretary from the filing agent can be named for the incorporation.
If you want to move to Singapore to become the director of the new company right from the beginning, the Entrepass is an option to be explored. It is a dedicated work pass for aspiring entrepreneurs / innovators / investors (with track records) who wish to relocate to Singapore and start a business. Criteria to be fulfilled and other application details can be obtained from the Ministry of Manpower (MOM) Singapore’s website.
Regardless, whether you choose to incorporate on your own or with the help of a filing agent, the incorporation process can be completed fully online via the Business Filing Portal of the Accounting and Corporate Regulatory Authority (ACRA) in two steps: Name Application & Registration.
Name Application: You need to apply for the approval of the company name. Usually, as long as the desired name is not taken or of any controversial nature, the approval will be given within hour(s). Do note that certain names such as “bank”, “finance”, “law” may require further review and approval. The cost for Name Application is S$15.
Registration: Once the company name is approved, the actual registration for incorporation can be submitted with the required details as mentioned previously. The approval of the incorporation will be known within hours, latest by the next working day. The cost for Registration is S$300.
With the approval, the incorporation is then complete. More information about the whole incorporation process is available on ACRA’s official website. If you need any further help, German Accelerator Southeast Asia would be happy to guide your company on the options as well as make the necessary introductions.