How to set up a Company in Singapore?
In Singapore, the two main types of incorporated companies are:
- Private Limited (‘Pte Ltd’) Companies: the number of shareholders is limited to fifty or less and has restrictions on the right to transfer its shares
- Public Companies: the number of shareholders can be more than fifty members and the company may raise capital by offering shares and debentures to the public
A Private Company limited by shares – Private Limited Company (‘Pte Ltd’) is the most common type of company.
A Singapore Company may be registered with only one shareholder who can be an individual or a corporation. There is no requirement for shareholder(s) to be resident in Singapore.
The liability of the shareholders is limited to the amount, if any, unpaid on the shares issued to them. However, there is no minimum capital requirement. The company can be formed with an issued capital of S$ 1 that can subsequently be increased to the required amount. The par value of shares is usually fixed at S$ 1 per share. No-par value and bearer shares are not permitted.
Application by a foreign company/individual is mandatory through a professional business registration firm.
A foreigner, who wants to relocate to Singapore to be the director of his own company needs to apply for an Employment Pass under the EntrePass Scheme at the Ministry of Manpower (MOM). Only upon approval of his EntrePass application, he may then proceed to himself incorporate the company with ACRA. He may also apply for an EntrePass if he owns a company registered with ACRA for not more than 6 months at the point of his EntrePass application.
A Company must have a registered office situated within Singapore. Your company registration agent can provide this service if required. You may alternatively register a residential flat or property under the Home Office Scheme (HO).
The first step in incorporating a company to obtain approval for the proposed name. Names for all companies in Singapore must conform to certain guidelines laid down in the Companies Act.
After the company name has been approved, the following incorporation documents must be prepared and filed:
- Memorandum & Articles of Association setting out the objects and bye-laws of the proposed company.
- Statutory Declaration of Compliance (Form 6)
- Certificate of Identity (Form 7)
- Notice of Situation of Registered Office and of Office Hours at time of Incorporation (Form 44)
- Consent to Act as Director & Statement of Non Disqualification to Act as Director (Form 45).
Alternatively to the above registration process, acquiring the shares of a shelf company allows an investor to almost immediately start a business in Singapore. Readily incorporated shelf companies with no prior business operations are easily available, usually with an authorized share capital of S$100,000 and a paid-up capital of S$ 2. The share transfer will normally take only one or two days.
‘One man’ companies with a single (individual or corporate) shareholder are admissible and a company can only have one director. However, at least one director must be “ordinarily resident in Singapore”, i.e. a Singapore Citizen, a Singapore Permanent Resident, or a person who has been issued an Employment Pass/Approval-In-Principle letter/Dependant’s Pass. Any person at least 18years old may be appointed as a director.
Every foreign company registered under the Companies Act must have two agents acting on its behalf in Singapore. These agents must be Singaporeans, Singapore Permanent Residents or Singapore Employment Pass Holders.
Directors of a Singapore company bear a host of duties and responsibilities. The Companies Act requires directors to act honestly at all times and exercise reasonable diligence in discharging their duties. Directors’ duties fall under three main categories:
- Fiduciary Duties: Directors have to act in what they honestly believe to be the company’s interests, and not in the interests of any other party.
- Duty of Skill, Care and Diligence: A duty of care means, for example, that a director needs to find out what his powers and responsibilities are under the company’s articles and under the law.
- Statutory Duties: Statutory duties are imposed on directors by statute, principally the Companies Act.
A Company Secretary, responsible for maintaining the company records and other administrative duties as prescribed by law, must be appointed within six months. The secretary shall be a natural person who has his principal or only place of residence in Singapore. The Companies Act prescribes minimum qualifications as regards who can be a company secretary. Private companies may also appoint their qualified employees or directors to perform these duties.
An Auditor must be appointed within three months from the date of incorporation unless it is exempted from audit requirements under Section 205B, or 205C, of the Companies Act. In practice, appointment is arranged upon incorporation of the company.
The following are the major requirements and filings an incorporated company must comply with:
- Have a registered office as from the date of incorporation. This office has to be open and accessible to the public for not less than five hours during ordinary business hours on each day (except Sundays, weekends and public holidays).
- The full name of the company and the Company Registration Number must appear on all letterheads, prospectuses and other official documents used by the company.
- Keep and maintain certain statutory books and registers such as a register of members, a register of directors, managers, secretaries and auditors and a register of directors’ shareholdings
- The Companies Act requires the financial statements of every company to be audited once every year. This comprises a statement of profit and loss, balance sheet, director’s report, statement by directors and an auditors’ report to be prepared; and other disclosures required by Statements of Accounting Standards in Singapore. The audited accounts and reports have to be filed with the Registrar within one month after the AGM.
- The first annual general meeting (AGM) must be held within 18 months of the date of incorporation. After that there must be at least one annual general meeting not more than 15 months from the date of the last AGM. No physical meeting must take place if all shareholders consent. At the AGM, the directors are required to present to the shareholders the audited accounts for the immediately preceding financial year, and those accounts must be prepared up to a date not more than six months before the date of the AGM. The fiscal year end is normally determined at the first directors’ meeting.
- Changes to registered particulars have to be notified to the Registrar, including a change of name, the alteration of the company’s Articles of Association, the allotment of new shares and an increase of the authorized capital.