A Singapore Company is governed by the Singapore Companies Act. which is administered by the Accounting & Corporate Regulatory Authority (ACRA). There are 5 essentials that need to be covered when starting a company in Singapore. These five essentials include having a resident Director, a shareholder, a Secretary, a Singapore business address and at least $1 in capital.
To be a tax resident Singapore Company your company must be managed and controlled in Singapore. This generally means that meetings of the Board of Directors of the company must be undertaken in Singapore.
Getting these company registration requirements right will assist in ensuring that your company is appropriately set up in Singapore.
1: The Requirement to have a Resident Director
Under the Singapore Company Act all Singapore companies are required to have at least one resident director. Without a resident director, a company will be contravening the Companies Act and risks being deregistered.
An individual is an ordinary resident of Singapore if they are a Singapore Citizen, a Singapore Permanent Resident, or an Employment Pass or EntrePass holder. This means that the individual is legally able to live and work in Singapore and have a residence in Singapore.
It is important to note that individuals on working visas can only be appointed to the company which is sponsoring their permit.
If you are planning to incorporate a company in Singapore but you do not have any resident individuals to be a director then you do have the option of nominating a resident director (usually a professional who is paid to fulfil the requirement).
2: The Requirement to have a Shareholder
All Singapore companies are required to have at least one shareholder. Shareholdings designate who owns the company, as well as who has the various rights, privileges, and responsibilities within the company.
Shareholders are required to participate in the Annual General Meeting and any Extraordinary General Meetings of the company, where the management decisions for the company are made.
There is no specific requirement that shareholders be Singapore residents. However, where a shareholder is not a Singapore resident, such shareholders will be subject to their local taxation laws on the receipt of income distributed to them from the Singapore company.
3: The Requirement for a Secretary
The Singapore Companies Act requires every company to appoint a Company Secretary. This Secretary is the individual who is responsible for ensuring that the company complies with the relevant legislations and regulations, as well as keeping Board Members informed of their legal responsibilities.
Your Secretary must be an individual who is a resident living in Singapore. As a position regulated by ACRA, they must also have the experience, academic, and professional qualifications necessary to fulfill their role. These individuals are usually lawyers, accountants or chartered secretaries.
If you are a sole director of a company, you are not able to act as company secretary – you will need to appoint another person to act as Company Secretary.
While not a legal requirement, it is recommended that you engage a corporate service provider to act as your Company Secretary. Such professionals are known as Registered Filing Agents and are regulated and approved by ACRA to act in such a position.
4: The Requirement for a Singapore Address
It is mandatory for all Singapore companies to have a local registered office in Singapore. This address is required from the point of incorporation.
The address must be a physical address (not a PO Box) and must be the address where all communications and notifications are sent. The address must also follow certain requirements regarding being an address that is open and accessible to the public for a least 3 hours during each business day.
If your business is run from a home base or you have yet to set up a public office, then you have the option of using a corporate service provider as your company’s registered address.
5: The Requirement for at Least $1 SGD in Shareholder Capital
Share capital is the money that the shareholders have invested into the company. This share capital must be maintained for the life of the company. At the time of incorporation, a minimum of $1 in capital must be paid.
While shares can technically be issued in any currency, for convenience Singapore dollars are preferred.
A key consideration in determining the level of share capital for a company is understanding that it is customary in commercial practice to expect a company to have a high level of share capital. For example, when applying for a commercial lease, the prospective landlord is likely to request that the capital in the company be sufficient to cover the annual rental commitment.
Similarly, if your company is sponsoring an individual for a working visa, the Ministry of Manpower is likely to request that the share capital of the company is equal to the annual salary of the employee applying for a working visa.
Corporate Tax Residency for Singapore Companies
It is important to note that the mere fact that a company is incorporated in Singapore does not mean that the company is automatically a tax resident. In Singapore the tax residency of a company is determined by where the business of the company is controlled and managed.
The concept of control and management for a company does not mean where the day-to-day operations of the company are carried on – thus the location of the trading activities and physical operations are not considered. Rather, the concept of control and management is considered from a corporate governance perspective.
In Singapore, it is generally accepted that if a company holds its board of directors meetings in Singapore, it will be considered that control and management is being undertaken in Singapore – making the company a tax resident for the Year of Assessment.
It is important to note that Singapore corporate residence for tax purposes is determined by examining the facts as they stand in the Year of Assessment. Corporate residency in Singapore can change each year.
Notwithstanding the definition in the Act, the Inland Revenue Authority of Singapore (“IRAS”) in practice shall examine the preceding Year of Assessment to determine corporate residency.
Corporate residency is important as only Singapore resident companies will be able to obtain a Certificate of Residency from IRAS and therefore, apply any provisions of double tax agreements between Singapore and another jurisdiction.
Starting a Company In Singapore
While there are a number of requirements involved in the establishment and running of a company in Singapore, the above five requirements cover the basic essentials needed to incorporate the company.
A trusted advisor like CST, will ensure that you have all your bases covered when you set up your Singapore company. We can act as your registered company address, provide Corporate Secretarial services, provide a nominee Director, and even assist with setting up a Singapore bank account.
With our company incorporation services provided free when you sign up to one of our tax and accounting service packages, now is the time to contact us to discuss your company needs.