how to become a millionaire with cryptocurrency

How To Become A Millionaire With Cryptocurrency?

How to become a millionaire through cryptocurrency? In short, you cannot. Of course not unless you are willing to bet big on it. And by saying 'bet', I mean yes, nobody can predict the prices of Bitcoin (BTC) tomorrow much less the day after. A lot of the 'gurus' out there will convince you otherwise, claiming that they have the best system, trading system, AI trading so on and so forth. In this article, I just want to share with you my humble opinion and little journey dabbling in cryptocurrency for the past 1 year.

1. Never put in more than you can afford to lose

Someone once told me before, the first rule of money, is never to lose any money. I started off with USD $2,500. Just to try it out you know. Because I have heard so many rags to riches stories, people going from broke to millionaires by trading BTC. Get the drift? Like I said previously, not unless you are willing to wager big time on it. Even if the BTC price was USD $20,000 (I am not talking about the early traders), how can an average person on the street own 10 BTCs without selling off his house and car?

And like I said, I dare say even Elon Musk himself does not know what will happen next (though he has a massive influence over it, you can click here). The next thing you know, if the Chinese government decides to come out with new restrictions, prices will crash again.

As of today, my portfolio is worth a grand total of USD $4,899.71 if I liquidate everything as of this instance. Fantastic? Probably. But another wise friend once told me, all the self-proclaimed gurus (investments of any kind), never told you about their losses. They only show you their wins. So be wise.

2. Money is the root of all evil

NO. Greed is. Since I started fiddling around with cryptocurrency, mainly BTC and Ethereum (ETH). Right before the crash in May 2021, I sold some, made a profit and I bought in at an all-time high price once more thinking that it will go higher. And you know the story. So refer back to point number 1. Making lesser profits is better than losses. Yes, you can always say that just hold on to it and wait for the rebound. But there is always something called opportunity costs, especially if your stakes on it is much higher than mine.

3. Keep track of what you do

On the advice of a close friend of mine, you should always keep a spreadsheet of your gains and losses. Buy price, sell price, for easy reference. Most people will say it is common sense to do so, but most don't. So if you are serious about it and want to make money out of it, I suggest you do so.

4. Other people's opinion

Well along the journey you will hear tons of advice, albeit some are well-meaning, some are just plain silly (I am being nice here). Some will tell you why trade? Just buy and leave it there and never look at them again and let your descendants discover that they are actually billionaires 20 years later.

What I wish to tell you is that it is all up to you. I cannot emphasise this enough. Why should you let others tell you what you should do with the money or profits? Even though you read this, you will still let other people's opinions influence you. I am not saying be stubborn and unreasonable or irresponsible and treat it as a gamble, but I am just saying whether you choose to take their advice or not, whether they turn out to be correct or wrong, you should not blame anyone except yourself.

You call the shots yourself. It is your account. Your own money. Blaming someone else for a decision you make with your own money is anything but foolish.

Conclusion

To further prove my point in number 4, compare the headlines of this article and the other one. Yes, there is a lot of driving factors behind every bull or bear run. But ultimately it is just market sentiments overall. When the market is feeling optimistic, cryptocurrency, in general, will experience a bull run.

No doubt pushing towards the adoption of digital coins can mean a huge deal for cryptocurrency in future but until then, I dare say that most retail investors are just putting in some money and hoping to make some money out of it that fund our next vacation. So be careful of what the media is always saying. Their business is to get more subscribers, the typical doomsday 'newsflash' tactics. They can tell you about cryptocurrency as much as I can tell you about the number of white hair on Joe Biden's head.

One thing is for sure, if it is really not something worth looking at, the Singapore government would not want to be running it themselves, you can read more here.

Contact us if you have any questions related to bringing your blockchain companies to Singapore. 

 

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how to start a singapore company

How To Start A Singapore Company

Forming a Singapore company

A company is a separate, distinct legal entity from its shareholders and directors, in layman definition, it is like a child is considered a different 'thing' from his or her parents. There are mainly two forms of companies, public and private. In this article, we will explain to you how to start a Singapore company.

Public companies normally have a minimum of 50 shareholders and they are listed with the Singapore Stock Exchange (SGX). Conversely, private companies (Pte Ltd) cannot have more than 50 shareholders and are not listed.

Beneficial owners of the companies are called shareholders. The shareholders are to appoint directors to help them run the company. In accordance with the Singapore Companies Act (CA), any individual (regardless of local or a foreigner) older than the age of 18 is allowed to start a company in Singapore.

Why start a company?

Different from sole proprietors and partnerships, the shareholders of companies have limited liabilities. Because as mentioned above, companies are considered separate legal 'bodies' from the owners. So owners/shareholders are never liable personally for the debts of the company or any legal action being taken against the company.

Companies definitely have more legal requirements to comply with in comparison. For example, annual returns (AR) filing and the holding of annual general meetings (AGMs), failing to do so, the Accounting and Corporate Regulatory Authority (ACRA) will be taking action against your company. There is more work involved in winding up a company too. For a company to be removed from the register, it can take up to 5 months.

A company structure is the most suitable if you have the intention to grow your company. Compared to other models, registering a company also have other benefits, for example, raising capital is easier and ease of transfer of ownership. You can find out more about the various business models in Singapore here.

Things to note before registration

Directors

A minimum of 1 director is living in Singapore (can be someone who holds an EntrePass, Employment Pass [EP], Dependant’s Pass [DP]), Singapore citizen [SC] or Singapore Permanent Resident [PR], have to be appointed as director.

A Singapore company can appoint as many local or foreign directors as it likes. They must be minimally 18 years old and not bankrupt or have been convicted of any malpractice previously.

A director need not be a shareholder and vice versa.

Shareholders or members

For Singapore private limited (Pte Ltd) companies, they must have at least 1 shareholder and not more than 50 shareholders. A natural person (human being) or another legal entity (company or a trust) can be a shareholder.

Singapore companies can be either 100% local or foreign-owned. Existing shares are transferrable or you can issue new shares to another person after the company has been incorporated.

Corporate secretary

In accordance with the CA, within 6 months after incorporation, all companies must appoint a qualified corporate secretary. Like the directors, a corporate secretary has to be a natural person (human being) who is living in Singapore.

An important thing to note is where there is only one shareholder/director, that person is not allowed to be the corporate secretary. The position of corporate secretary must not be vacant for more than a period of six months.

Paid-up capital

The minimum paid-up capital is SGD $1. Paid-up share capital can be increased anytime after incorporation.

A registered address

A Singapore address must be used as the registered address of the new company. It can be either a commercial or residential address so long it's a physical address and not a P.O. box. People can use their home address as their company's registered address under the Housing Development Board’s (HDB) Home Office Scheme. This scheme is applicable to private properties as well.

Owners/occupiers should check their eligibility and obtain HDB's approval. For private residential property owners, they have to get approval from Urban Redevelopment Authority (URA).

The registered office in Singapore has to be accessible and operational during office hours to the public.

Company tax

The tax rate in Singapore for companies is 17%. Singapore companies get extremely attractive tax incentives and exemptions. A newly incorporated company can get tax exemptions on its first SGD $200,000 of the normal chargeable income (CI).

There are no capital gains nor dividend taxes for Singapore registered companies. Click here for our guide to corporate tax in Singapore.

Documents needed

The following information is needed by ACRA for company incorporation:

  • Choose an ACRA approved company name
  • Description of company's activities
  • All shareholders’ personal particulars (i.e. coloured copy of passport for foreigners, proof of residential address)
  • All directors’ personal particulars (i.e. coloured copy of passport for foreigners, proof of residential address)
  • Company registered address
  • Company secretary’s personal particulars
  • Company constitution (normally you can use the model constitution provided by ACRA)
  • The company’s proposed fiscal year-end date

Incorporation

Company registration is now done online entirely in Singapore. Usually, the incorporation takes 1 to 2 days. And as a foreigner, you need not physically be in Singapore to register a company. You should engage the services of a registered filing agent such as us to do so for you if you are unsure.

1. Choosing an approved name and address

To incorporate a company in Singapore, you must first choose an approved name by ACRA. To know how to do so, read our other article here.

Normally you will know whether it is approved or rejected in an hour or so. If the proposed company name has certain sensitive words, the name approval may take up to a few days.

Ensure that the proposed company name:

60 days from the date of application, the name will be reserved. You can apply for an extension before the expiration date for another 60 days.

2. Adopting company’s constitution

Every company must have a constitution. It is a legal document that defines the rules and regulations on how the company is governed, its structure, shareholder rights and all other rules for the management of the company.

If you wish to avoid hefty legal costs to hire lawyers to draft your constitution from scratch, you can adopt the model constitution found here.

3. Completion of registration

Once you have completed the above steps, you can finalise the registration. You need to fill in other key information such as company shareholders details, and the personal particulars of all directors and officers.

In the case whereby the company's purpose is to set up a school, the incorporation process will take from 14 days to 2 months.

Shareholder agreement

Besides the company constitution, a shareholder agreement is also an important legal document for the incorporation.

This document sets out the rules and regulations on how the company will be managed. And also the relationship between all parties such as the shareholders and directors. A shareholder agreement is meant to supplement the company constitution by covering specific situations. It is meant to resolve any form of disputes should they arise.

Documents issued after registration

ACRA will give you a few documents upon successful incorporation of the company:

1. Certificate of Incorporation

ACRA will give an official email notification confirming the successful registration. This email includes the unique entity number (UEN) and is deemed as the official certificate of incorporation.

ACRA no longer issues a hard copy of the certificate as its no longer required. If you prefer a hard copy, you submit a request online. Do note that it is chargeable.

2. Business profile

Generally, the document is ready to download within an hour after successful registration, it contains:

  • Company name and UEN
  • Previous known names for the company (if applicable)
  • Date of incorporation
  • Principal business activities
  • The paid-up share capital
  • Registered address
  • Shareholders’ personal particulars
  • Directors’ personal particulars
  • Company secretary’s personal particulars

These two documents are sufficient in Singapore for all contractual and legal purposes. Including the opening of corporate bank accounts, signing of a rental lease, subscription to internet providers and so on.

Maintenance fees of a company

After registering your company, you will incur certain fees on an annual basis in order to ensure compliance with the authorities.

Contact Us

If you have any questions at all regarding the setting up of a company in Singapore, contact us today!

 

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directors duties in singapore

Directors’ Duties in Singapore

Most of the time, a company's operations are managed by the board of directors, which the Chief Executive Officer (CEO) is a part of. This is in accordance with the Companies Act (CA) section 157A. In this article, we will discuss what the directors' duties in Singapore are.

Of course, the day-to-day tasks of the company can be assigned to and executed by company executives. As prescribed by the CA, there are important company decisions that directors must make in line with their obligations. Failure to do so, the directors potentially face civil lawsuits, criminal penalties (such as jail terms) and can be subjected to being removed or terminated from the company.

Duties prescribed by the law

These are duties under the legislation of Singapore, an example will be the Companies Act.

Disclosure of interests in transactions

As prescribed in section 156 of the CA, if a director has any form of interest in a particular transaction or potential transaction, he or she needs to disclosure it during a directors’ meeting. Disclosure will not be needed where 'the director's interest consists only of being a shareholder or creditor of a company which is interested in the transaction' and also 'if the director's interest can be properly defined as not of a material interest'.

In section 156(3) of the CA, you can find other exceptions for when will a director be considered as having an interest.

Other than declaring the nature and extent of his interest in the other company that is dealing with his own, the director must also declare the extent of any potential conflicts with regards to him executing his director’s duties. This could be due to the fact that he is also holding an office in the other company for example.

Failure to do so will potentially cost you a fine of not more than SGD $5000, or a jail term not more than 12 months.

Duty to be reasonably diligent and act honestly 

As prescribed in CA section 157, all directors have a 'duty in acting honestly and to use reasonable diligence during the execution of his duties while holding office'.

A director shall not use any information obtained as a result of his position in the company to gain an unfair advantage for himself or for other people or to cause harm or damage to the company.

If the director is found guilty of a breach, he or she will be liable to the company, for all profits gained and any damages incurred by the company. There will also be potential criminal liabilities and penalties.

Duties under the common law

They consist of duties that were recognised in previous court cases. The duties under common law will definitely overlap with the statutory duties prescribed by law, as statutes are considered codification of the duties under common law. However, such codification doesn't mean it excludes the common law duties.

Acting in good faith for the interest of the company

Directors have a fiduciary duty to always act in good faith towards the company, for the interest of the company.

Avoiding conflicts of interest

AS discussed above, the director must declare any conflicts of interest (whether it has happened or not) he or she has in any company dealings with the board. For example, he or she holds an office in a rival company.

Duties of care, diligence and skill

If the directors fail in these duties, they can be sued for negligence.

The above form some of the main responsibilities and duties with regards to being directors in a company. Of course, as more cases surfaced in the commercial world, there will be new rulings pertaining to what constitutes a director's duties.

Other types of duties

Besides such general definitions, there are actually many more specific restrictions on what the directors can or cannot do or even acts of omission.

An example will be in section 162 of the CA, which talks about loans to directors. By default, subjected to some exceptions, a company is not allowed to give a loan to a director. If such loans are made, contravening any of the provisions, the directors who authorised such loans will be liable for indemnifying the company against any potential losses. Whoever is involved will be personally liable for criminal proceedings against them.

Negative duties are normally specific with regards to the transaction types (for example registration of charges) and they are too many to list them all down. They can be usually found by looking up the corresponding section in the Companies Act.

Contact us

This article only serves as a brief guide to the director's duties in Singapore. In reality, it entails a larger and wider scope of duties whether it is prescribed by the CA or not.

If you have any questions, please do not hesitate to contact us!

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how to appoint company directors

How To Appoint Company Directors?

In Singapore, all companies are required to have a minimum of 1 director who is a Singapore resident. Hence, it is crucial for you to know the requirements on how to appoint company directors in your Singapore company.

Who is qualified to be a director

In order to qualify as a director, the person must be:

  • A natural person (i.e. a human being, you cannot appoint another company as a director);
  • Must be 18 years old and above; and
  • Has full legal capacity (must be of a sound mind)

The person cannot be undischarged bankrupt and is not subjected to automatic disqualification. You can read in detail about how a director can be automatically disqualified here.

Different types of directors

  • An Executive Director is normally an employee under the company. This is typically a full-time position that involves managing the daily affairs of the company. Directors have different functions from the Chief Executive Officer (CEO) of the company, inclusive of managing directors.
  • Non-Executive Director is not considered as an employee under the company. He or she does not get involved in the daily operations. He or she normally sits on the board of directors to offer neutral opinions, stature, external experiences or an objective opinion of the company's standing.
  • Independent Director is someone who has absolutely zero relations with the company, affiliated companies, shareholders or officers that will interfere with the independent director’s opinion. Executive directors are not considered as independent directors because the employment relationship will potentially impair their independent judgements and give rise to a potential conflict of interest.
  • A Nominee Director (ND) is a person that is being nominated by a major shareholder to be the company's director on their behalf. An ND will have the exact obligations mandated in the Companies Act (CA), just like a regular director.
  • De Facto Director are individuals who are fully responsible for directors’ duties. They openly act like they are formally appointed directors without formal appointment. De facto directors need to comply with all provisions under the CA pertaining to a director who is formally appointed.
  • Finally, a Shadow Director is a person who constantly gives instructions to the formally appointed directors, on company matters decided by the board of directors, for example, a business strategy. These are individuals who are not formally appointed and don't openly act in the capacity of directors. A shadow director has to fulfil all directors’ duties under the CA as well.

How to appoint directors

The company's constitution normally states the process for appointing directors. This can be done through an ordinary resolution passed by the shareholders in an extraordinary general meeting (EGM).

It is a formal decision passed by a minimum of 50% majority of the votes in the EGM. The resolution will usually state the exact appointment (e.g. Independent Director) and the date on which this new director is to begin his duties.

The constitution may also state other ways for appointing directors. For example, it may state that only specific shareholders or the board of directors have vested powers for the appointment of directors. The individual needs to provide a written (signed) agreement and a non-disqualification statement in order to act as a director.

After the director is appointed in accordance with the constitution, ACRA must be notified not more than 14 days from the appointment date of the director.

The personal information of the new director must be provided to Accounting and Corporate Regulatory Authority (ACRA):

  • Name
  • Identification number (i.e. passport number for foreigners)
  • The office he or she is holding (in this case is a director)
  • Nationality
  • Residential address (the corporate secretary will need to have a copy of the proof of residential address such as utility or credit card bill)
  • Primary contact number and email address
  • Date of appointment

Once it is successfully filed with ACRA, the appointment would usually take effect immediately. You can verify this through the register of directors.

What authority a director has

The normal functions of a board of directors are to manage the company by coming up with different policies and company objectives, approval of budgets annually, select and appoint key company executive officers like the CEO and the Chief Financial Officer (CFO).

The CA provides that the board of directors can exercise all the powers unless the company's constitution or CA states that such a particular act is not legitimate or legal, without the approval of the shareholders.

As stated below, the CA sets out that these tasks are allowed only with the approval of the shareholders:

  • Disposing business assets of the company
  • Issuing of new shares
  • Payments being issued to any director(s) as a form of compensation (for example the director has been terminated)
  • Giving of payment or increment of salaries (for example, fees and allowances for expenses) to any director(s)

Duties of a director

Many business decisions are decided by directors and they have to exercise their powers with a duty of care under the law. Failure to do so may potentially face liability in a civil and/or criminal lawsuit. He or she may potentially be removed from the company as well. In the case of a criminal lawsuit, penalties such as fines and/or jail terms can apply too.

For more information on the duties of a director in a Singapore company, click here.

How much is a director's remuneration 

Under normal circumstances, the company ought to pay a form of fees to the directors for the services and tasks they perform. The CA doesn't put a limit on the amount of fees paid to a director. But as discussed previously, regarding directors’ remuneration, approval must be obtained from the company's shareholders.

In the case of executive directors, who are considered employees of the company, they will be paid a salary in accordance with their contract terms (normally an employment contract) between them and the company.

Removing directors

Directors can be removed from the company by means of an ordinary resolution of the shareholders.

For public companies, approval from shareholders is needed before removing the directors. In the case of private companies (Pte Ltd), the company's constitution can state other methods for the removal of directors. In some cases, the company's constitution may even set out that the shareholders have no right to remove any of the directors.

The company's constitution is to be followed under all circumstances. It is the so-called 'rulebook' of the company.

Contact us

If you are unsure of how you can do so, it is advisable that you get in touch with a lawyer or a corporate secretarial firm like us today!

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How To Remove A Director For Singapore Companies

How To: Removing A Director For Singapore Companies

Company directors have an important role in the company's business operations. There are a few ways an individual can stop being a director either through resignation, termination or disqualification. In this article, we will discuss the necessary steps and procedures to removing companies directors in Singapore.

1. Removing directors

Reasons why a company will remove a director

A company may want to remove the director before the end date of his or her appointment for a few reasons such as:

  • Personal conduct is poor;
  • Breaching of the director’s duties; or
  • Unsatisfactory management of company leading to dismal performance;

Who has the authority to remove directors?

Only shareholders can remove directors. For public companies, take note that directors are unable to remove other directors, in accordance with section 152(8) of the Companies Act (CA).

Removal of a director in private limited (Pte Ltd) companies

Keep in mind that removing directors must be in compliance with the company’s constitution. Section 152(9) of the CA clearly mention that the shareholders of a company can remove the director(s) by means of an ordinary resolution (more than 50% of shareholders voted in favour of the removal) unless there is a contrary provision in the company's constitution.

Shareholders must issue a written notice of a minimum of 14 days, but this requirement can be dispensed of in the event total shareholders with more than 95% of the voting rights agree.

If the Model Constitution has been adopted in full by your company, the director can be removed by means of an ordinary resolution with no lesser than 14 days notice.

A company’s constitution can always have some other additional requirements. An example will be requiring the shareholders to pass a special resolution for the removal of the director (more than 75% of votes are in favour of removing the director).

To begin the procedure of the removal of a director, the shareholders must convene a general meeting and come together to vote if they should remove the director or not, and then pass the resolution.

The constitution of the company can also have a special clause or condition on the matter of removing directors in some situations. Such as in the event of immoral or questionable conduct.

If there is such a case, voting to the director's removal by the shareholders can be waived off, unless of course this requirement is stated in the company’s constitution.

Removing a public company's director(s)

For the removal of a public company's director, as stated in section 152 of the CA the following requirements are needed:

  • Unless it is set out in the company’s constitution or there is an existing agreement between the company and director, a public company's shareholders can remove any director by means of an ordinary resolution (there are more than 50% of the votes in favour of removal);
  • After the shareholders have called a general meeting to start the director's removal process, special notice must be given with regards to the resolution of the removal of the director, to all shareholders and also that director involved. Such notice has to be given no lesser than 28 days before the actual general meeting. In the event it is impracticable, such notice can be given no lesser than 14 days before the meeting.

When is the director considered as removed?

In accordance with section 152(1) of the CA, a director's removal shall not be in effect up to the point his or her successor is appointed.

The director is considered officially removed when the company has updated the details of the new director in the records with the Accounting and Corporate Regulatory Authority (ACRA).

2. A disqualified director

If a director is disqualified, he or she is not allowed to continue to act as the director or participate in the running of a local or foreign company. He or she can continue doing so only if he or she seeks clearance from the Official Assignee or the General Division of the High Court.

How will a director become disqualified?

A director will become disqualified under the below circumstances:

  • When a director is declared bankrupt;
  • When the Singapore court makes a disqualification order. In the case of an unfit director of companies which end up insolvent, the company is being winded up for national security reasons, or when the director is guilty of offences relating to the running or incorporation of companies in Singapore;
  • When the director has been charged for fraud or dishonesty, punishable with a jail term of three months or more;
  • When the director has committed three or more filing-related wrongdoings under the CA in a time frame of 5 years;
  • When the General Division of the High Court has given the director 3 or more orders against him. Enforcing the instantaneous checking of the company’s registers, minutes or other documents under section 399 of the CA, or the requirement for filing returns under section 13 of the CA, within a time frame of 5 years; or
  • When 3 or more of the director's companies were struck off from the register by ACRA within 5 years (counting from the 3rd company's strike off date).

Disqualification notice

Once the director received the disqualification notice, he or she must present it to the company instantly. The company needs to report his or her disqualification to ACRA not more than 14 days from the date of disqualification.

What will happen if a disqualified director continues to act as the company's director?

You can lodge a complaint with ACRA if you believe that the director is still acting in the capacity as one, even though he or she falls into one of the categories for disqualification stated above. Anyone who has ample details of the company or the director can lodge the complaint.

You can send the complaint together with supporting documents (for example, court or bankruptcy orders) by post to ACRA. If the complaint is found valid after investigation, the director will be removed.

How long is the disqualification period?

The period of the disqualification depends on the reason(s) but in general, it is 5 years. An example is when a director is being disqualified for being director of at least three companies that have been struck off within five years, he or she is disqualified for five years. Starting from the date of the latest company that was struck off.

For companies that are being wound up on grounds of national security, the directors will be disqualified for 3 years starting from the date of the winding-up order.

Whereas for conviction of offences, the start date of the disqualification is dependent on whether the director is sentenced to imprisonment:

  • If imprisoned, the disqualification will start on the date he or she is convicted. It will continue for the next 5 years after the end of the jail term.
  • If there is no imprisonment, he or she is disqualified for five years (can be a shorter period if the court decides so). Such disqualification will start from the conviction date.

What happens when the disqualification ends?

A person can be reappointed as the previous company's director or incorporate a new business entity instead. After being reappointed or the incorporation of a new company, the company shall notify ACRA of such appointment not more than 14 days from the appointment date.

3. Resignation

A director can voluntarily resign from directorship. For Singapore context, the resignation is only considered valid provided that:

  1. The procedure for resignation is in compliance with the company’s constitution; and
  2. The company must have 1 remaining resident director in Singapore at the minimum.

Should I inform ACRA of the cessation of directorship?

Upon resigning from the directorship, companies need to file a cessation notice to ACRA. It must not be more than 14 days from the date of the change in directors, for example, the date of resignation or disqualification.

While informing ACRA, you need to prepare and submit certain documents like:

  • For disqualification, the court order;
  • For resignation, the notice of resignation by the director and also acknowledgement from the board.

There can be circumstances when the former director has to inform ACRA by himself or herself:

  • If the former director believes that the particular company is unwilling or unable to do so; or
  • If the former director found out that the current officers of the company failed to inform ACRA. This can happen when the corporate secretary had resigned as well and all other directors are debarred too.

What happens if I fail to inform ACRA?

If no notice of cessation is given, it will constitute an offence of non-disclosure under section 165 of the CA. Chief executive officers (CEOs) or directors can suffer liability personally and incur a fine of up to SGD $15,000 or a jail term of not more than three years.

Until such notice has been submitted, the cessation is considered ineffective. This means that the director must continue to manage the company responsibly. If the offence is found to be ongoing (i.e. cessation notice is not given to ACRA), the director can be fined SGD $1,000 daily, for as long as the offence is perpetuating.

What will happen to the shares that the director is holding?

In this case, if the constitution of the company sets out a clause that the director has to sell the shares when the directorship has ended, he or she must comply. Normally, it will be stated that the director needs to sell his shares to the company's existing shareholders.

If there isn't such a clause, the director can keep the shares that he or she is holding. But the director can also decide to transfer or sell off the shares.

Know-hows

Knowing the various essentials to the process of the removal of a director will ensure that the entire procedure is legitimate. Whereas for the incorporation of a new entity, owning the knowledge of such potential issues arising from the removal of a director, will give you an insight into how you should draw up your constitution to prevent future complications.

Contact us

If you have further questions on how you can remove a director from your company, do get in touch with us!

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What Creditors Do When Company Is Insolvent

When The Company Goes Insolvent, What Can You Do As A Creditor?

As a creditor of a company that cannot pay its debt on time, or it probably has already become insolvent, the biggest question is 'what can I do to recover my money'? This article helps to answer the question of when the company goes insolvent, what can you do as a creditor?

The company is still solvent

As a creditor, you can try to petition to wind the company up to realise the debts owed to you. You can do this through the submission of a winding-up petition in 2 ways:

  • Creditor’s winding up: a company can decide to go for a voluntary creditors’ winding up if the company's director(s) have reasons to believe that the company cannot, by virtue of the liabilities, carry on its operations. When the company's management has initiated the wind-up process, all the creditors will have the right to go through with the resolution for the process of winding-up and take over control of the process for liquidation.
  • Compulsory winding up: the company's creditors has decided to apply for the business to wind up because the company is insolvent and its management is not willing to wind up the business or the risk of the company dissipating its assets is high.

Initiating a compulsory winding up

To do so, you have to be a creditor (inclusive of contingent or prospective creditors) of the company. Secondly, you need to establish that the company has no means to repay its debts.

There are normally 3 methods to prove that a company is insolvent:

  1. The company has failed to repay any sum of more than SGD $10,000 from within three weeks of a statutory demand being served to the registered address of the company;
  2. The judgement execution in favour of you is still unpaid; or
  3. The company can no longer meet its liability on short notice or its liabilities against its assets is in excess.

The company is insolvent

If the company is already insolvent, you must submit proof of debt to the company. But it is not guaranteed that you will be able to recover the full sum of debt owed to you as there may be many other creditors like yourself who are claiming against the company that is insolvent.

Proof of debt

All debts in insolvent liquidation can be proved against the company that is insolvent. If your debt or claim is not possible to prove, you won't be able to receive any form of payment.

When the company undergoes liquidation, the liquidator will inform you in writing and broadcast the liquidation in advertisements. You have no more than 3 months to file your proof of debt when the order of winding up is made. Current and future debt (debt which is definitely due in the future) or contingent debt (debt which will occur out of an existing legal obligation on an event which may or may not occur) as at the date of liquidation or any interests due up to the date of liquidation can all be proven.

After that, the liquidator will examine and decide on all the proofs of debt he or she has received and will decide to either accept or reject. The liquidator may also require more evidence regarding these proofs.

In the event your claim has been rejected, you can appeal to the court. When more evidence is needed and you have failed to produce it to the liquidator's satisfaction, your claim will be rejected or downsized.

Winding up effects

After the court has made a winding-up order, you will be unable to start or continue any form of legal action against the company without first obtaining permission from the court. The reason being in order to facilitate an equal and organised manner of distribution of the company’s assets amongst the unsecured creditors.

The court may grant permission to start legal action against the company that is insolvent if:

  1. To reclaim one’s own property (for example, equipment that is on loan); or
  2. To exercise remedy over the insolvent company’s property (For example, a landlord creditor seeking to reclaim the property cause of default in rental payment).

For secured creditors, they are unaffected by this and are allowed to claim any assets that are secured to the debts owing to them.

Recovering debts from a company

A lawyer can advise you on the steps you need to take in order to secure your position as a secured creditor through proper advice, as well as the steps to do as an unsecured creditor.

When the company is insolvent, there is a huge difference between whether an unsecured or secured creditor. As a secured creditor, you need not be worried about being unable to reclaim the debt owed to you, as it is encumbered to the assets of the company, even in insolvency, your interest in the asset will not be deprived.

Prior to getting into a high-risk investment, you can mitigate some insolvency risks involved by talking with a consultant or a lawyer.

If you have any further questions, get in touch with us today!

 

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How to Change A Foreign Company into A Company Registered in Singapore through Re-domiciliation?

How to Change A Foreign Company into A Company Registered in Singapore through Re-domiciliation?

Owners of a foreign company who are seeking to take good advantage of the stable political scene, pro-business environment, competitive tax regime and strong economic ties to Asia and the rest of the world, should consider redomiciling to Singapore. It has potentially more advantages than the other methods of setting up, like setting up a Singapore branch of your foreign parent company or setting up a Singapore subsidiary. In this article, we will discuss the advantages as well as how to change a foreign company into a company registered in Singapore through re-domiciliation.

What is re-domiciliation?

When a company transfers its origin of incorporation from one country (jurisdiction) to another country, it is known as re-domiciliation. The format is very different from the foreign company starting a branch office overseas or setting up a subsidiary in Singapore.

As explained in an earlier article, if the foreign company is planning to set up a branch in Singapore, it is considered as the same foreign company carrying out business here. The foreign parent company is fundamentally considered to be regulated by the jurisdiction of its home (original) country.

If the foreign entity incorporates a subsidiary in Singapore, they are considered as two separate legal entities: the foreign parent company and the subsidiary in Singapore. The subsidiary in Singapore has a different (unique) legal existence from the foreign parent company and it can conclude contracts on its own. The entire corporate group will have to comply with the law of its home country (foreign company) and Singapore law (the subsidiary).

When you choose to redomicile your foreign entity, you are basically converting the foreign country registered company into a company registered in Singapore. This effectively means that all rights and liabilities of the foreign country registered company will be transferred over to Singapore company, and there remains only one single company at the end. The redomiciled company in Singapore will be regulated by Singapore law from that effective date.

With effect from 11 October 2017, the Singapore government has allowed foreign companies to re-register as companies in Singapore under Part XA of the Companies Act (CA). The criteria to redomicile as a Singapore legal entity are detailed out further in the Companies (Transfer of Registration) Regulations 2017. Both will be discussed in detail below.

Reasons for re-domiciliation

Companies may redomicile for a variety of reasons – be it practical, business or legal.

Business continuity

Redomiciling can make sense from a business angle or decision. If a company changes its country of jurisdiction to Singapore, the company is effectively the same entity, only its country of incorporation changes to Singapore from a foreign country.

This will allow for complete continuity of the existing business, which means that track record, goodwill and credit ratings and remain untouched. This is especially useful when the re-domiciled Singapore company is seeking credit from Singapore banks or it is asked to reveal its track record in the company's area of expertise in order to get a licence for their business.

To a certain extent, these are not insurmountable obstacles since the foreign parent company can act as a guarantor for the loans that are undertaken by its Singapore subsidiary, or it undertakes to share its expertise and control all operations of the Singapore subsidiary. Regardless, this can be an advantage of redomiciling.

Tax advantages

Singapore taxes corporations at a much lower rate than most developed countries. Foreign companies at the present can take advantage of this by shifting a part of their operations to a subsidiary in Singapore, it will become more difficult to do this in the future.

This is due to the fact that many countries have begun to tighten their laws on the taxation of cross-border corporate groups in order to reduce base erosion and profit shifting. These measures are when a company tries to make it look as if the profits earned by the foreign company are in fact profits generated by its subsidiary company in Singapore, as a result, those profits will be taxed at the (cheaper) rate of the second country i.e. Singapore.

Let us look at an example. Australia introduced a Diverted Profits Tax (DPT) of 40% for Significant Global Entities (SGEs) recently. An SGE is usually a corporate group with some Australian business operations, with an annual income of over AUD $1 billion globally. Under this new DPT legislation, if the Taxation Office in Australia has reason to believe that profits earned in Australia have been sent out of the jurisdiction to another foreign-related company as a form of avoiding of taxes arrangement, it can cause the Australian entity's profits to be liable for taxes twice (both in the destination country where such profits were diverted to and in Australia too).

In the case of re-domiciliation, the company will no longer be registered overseas, it will be subjected to Singapore law, inclusive of taxation, instead of its original country of registration. The foreign company can avoid the liability risk of being taxed twice under tightened taxation legislation mentioned above.

In the event that your company’s original country of registration imposes some tedious regulatory requirements on your foreign company, for example, relatively high corporate tax, then redomiciling to Singapore can be one of the options to avoid such a situation.

Leveraging on Singapore’s numerous Free Trade Agreement (FTA) memberships

Redomiciling your operations to Singapore will make it easier for your company to take great advantage of the multiple FTAs with other countries, to which the Singapore government has signed with. This can greatly boost your profits for the company by saving costs.

Committing to conducting business in the Asia-Pacific region

The irreversible process to redomicile here in Singapore (take note that no provisions are given for Singapore registered companies to redomicile to a foreign country), will send a critical signal to major clients and potential clients of yours, that your foreign company is genuine about concentrating on Singapore (or Asian) commercial activities.

All legal rights and liabilities will be transferred to the new Singapore company

From a legal point of view, redomiciling is more direct than setting up a Singapore subsidiary. Major contracts mostly have clauses for non-assignment. Although obtaining permission for assigning contracts within the same corporate group is fairly easy, re-domiciliation will simplify the entire process because all rights and liabilities will be transferred over to the Singapore entity, which is effectively the same legal entity as the overseas registered company originally.

Credit facilities from the original country of registration may be able to bring over to the redomiciled (Singapore) company but it is best to negotiate this directly with your company's bank.

Eligibility for re-domiciliation

Before your application to redomicile your foreign company to Singapore, you need to check if your company’s name is acceptable for incorporation in Singapore. Even though you will want to select the same company name as your foreign company, this could be impossible if there is an existing Singapore company name that is similar to yours.

First of all, the most important thing is to check if your foreign company is can be redomiciled to Singapore. The three criteria mainly are related to solvency, legality and size.

Solvency

Regarding the solvency requirement. your foreign company must be capable of paying its debts when they are due over the next 1 year period from the date of application for re-domiciliation. Your company cannot be in liquidation, or receivership or any other equivalent form of winding-up process.

Your company assets must be more than liabilities, which simply means your net asset value (NAV) must not be negative.

Legality

Next is legality. What this means is that you must be in compliance with all relevant company laws in the original country of your registered company, and of course, you are not looking for re-domiciliation in Singapore for some illegal purpose, for example, to defraud your creditors.

Most importantly, your country of registration must have the legal provisions in force for companies to redomicile overseas in the first place. Some countries allow two-way re-domiciliation, which means foreign companies can re-register as local companies, and vice versa again. These countries are mainly Canada, the British Virgin Islands (BVI), Australia and New Zealand.

Other countries such as Singapore, the United Kingdom and Hong Kong, only allows inward re-domiciliation. That means foreign companies can register as local companies, but once done, they cannot re-register as foreign companies.

Conversely, if your foreign company is moving from a common law judiciary system to another one, the basic company law structure will most likely be similar. Hence, concepts that you are familiar with, such as directors’ duties, will continue to be applied in some manner when your foreign company has been redomiciled as a Singapore company.

Size

Finally, your foreign company has to meet the size criteria. Your company must meet at least 2 out of the 3 following criteria:

  • 50 employees minimally
  • More than SGD $10 million in revenue per annum
  • More than SGD $10 million worth of total assets

If you wish to redomicile the entire corporate group as a whole, then the whole group is to be considered as one to meet the size criterion, for example, there is a foreign parent company and 2 foreign subsidiaries.

How can I redomicile my foreign entity to Singapore?

In order to redomicile your foreign company to Singapore, you have to submit an application form for Transfer of Registration to the Accounting and Corporate Regulatory Authority (ACRA), which is the Singapore regulatory body for companies. Under the CA, your application must be accompanied with:

(1) A certified true copy of your Memorandum of Association (also known as Company Constitution) or equivalent company constitutional documents (which is submitted originally when you incorporated your company).

(2) A copy of the company constitution you plan to use when you have successfully redomiciled as a Singapore company.

Although you probably can adopt your existing company constitutional documents almost entirely if it was incorporated in some other common law judiciary system, there might be certain parts of the Singapore law that will mean additional clauses have to be added in.

An example would be all companies in Singapore are required to have an “objects clause” in their company's constitution. This clause states the purpose of the company, meaning, all the proper areas of business. The existing foreign company's constitution may or may not have this objects clause as certain countries have a default ruling that all companies have no restrictions.

(3) The relevant documents needed are:

  • A certified true copy of your overseas certificate of incorporation or the equivalent
  • A signed written document issued by all current company directors declaring that the foreign company fulfils the solvency criteria (as explained above)
  • From each individual proposed directors:
    • A written declaration of his or her consent to continue to act as a director upon re-domiciliation
    • A written declaration that they are not disqualified or barred from carrying out duties as a director in Singapore. (Normally this relates to previously having been charged to have failed in carrying out their duties as a director of another Singapore company's director)
    • A written declaration of their intention to take up a certain number of shares in the company after re-domiciliation, if they do not currently own any company shares (If they plan to take up shares in the Singapore company)
  • A written consent from each proposed company secretary declaring:
    • Their consent to act as the redomiciled company’s secretary
    • Previously they are not barred from acting as a secretary
    • If the foreign company is planning to redomicile as a public company, they must have the required professional or qualifications to be a secretary of the redomiciled public company (usually a qualified lawyer, accountant, or a member of the Singapore Association of the Institute of Chartered Secretaries and Administrators [SAICSA])
  • A confirmation statement from the lawyer or the filing agent (if the re-domiciliation process is handled by a filing agent or lawyer) that the individual proposed director has given consent for acting as the company's director and is qualified, and that each individual proposed secretary has given consent.

(4) Fees.

Currently is SGD $1000 and also non-refundable.

What is next?

After you have submitted your application, the next step is obviously either approval or rejection by ACRA.

Although it is fairly straightforward if you meet the criteria, ACRA does have a reserve power to reject applications for re-domiciliation on certain public policy grounds. If it happens, your company can appeal to ACRA and to Singapore's Minister of Finance.

In the event whereby your application is accepted, your company is now a company registered in Singapore. It is subjected to Singapore company law like any other company which is originally registered in Singapore. You have the duty to de-register your foreign company in its original country, not more than sixty days and submit such evidence to ACRA. A deadline extension can be obtained from ACRA, but it is best to resolve this matter as soon as possible.

Besides that, you also have a duty to make sure that all pre-existing charges are to be registered not more than 30 days from the date of re-domiciliation. If a bank has a floating charge over the assets of the company, this charge must be duly registered. Your company's directors will be liable for punishments such as fines if this is not in compliance.

After all these steps have been completed, you can move on to the next phase and finally benefit from the new status as a registered company in Singapore.

Other factors

Redomiciling to Singapore is an irreversible decision. Currently, there is no provision for Singapore registered companies to redomicile overseas. As more and more countries introduce re-domiciliation schemes, companies have more options over which countries will be the most suitable to their needs in terms of taxation and other regulatory requirements.

Re-domiciliation is a relatively new process, as such foreign entities considering to redomicile to Singapore ought to consider carefully before actually doing so. This involves getting advice from lawyers and tax specialists in your original country of registration, to prevent liability for your company for stamp duty if this is regarded as a share sale in your local law. Likewise, it is prudent that you get advice from lawyers and tax specialists in Singapore.

In conclusion, given the attractive Singapore business climate, re-domiciliation to Singapore can be something that many overseas companies with a significant amount of operations in Singapore or Asia should consider.

Get in touch with us today!

If you have more questions regarding the re-domiciliation of your foreign company, get in touch with us today!

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How To Set Up Singapore Representative Office As A Foreign Entity

How To Set Up Singapore Representative Office As A Foreign Entity?

A Representative Office (RO) is basically a temporary administrative office that serves as a point-of-contact to simply organise and execute non-commercial activities, for the foreign company or entity. In this article, we talking about the benefits and how to set up Singapore Representative Office (RO) as a foreign entity.

The RO does not have any legal status and is not considered a separate legal entity from the parent company in the eyes of Singapore courts.

Benefits of setting up an RO in Singapore

Whenever a foreign company plans to come into Singapore, the manner of entry is usually determined by its commercial objectives.

The RO is normally incorporated because the foreign company wishes to find out more about potential business opportunities in Singapore or the Asia-Pacific region.

The foreign company does not need to commit to any financial outlay yet and can conduct certain non-commercial activities to determine its own future business opportunities in Singapore.

How can a foreign entity decide whether to set up a branch office, subsidiary or re-domiciliation instead of an RO?

An RO is only allowed to operate in Singapore for not more than 3 years, after which should the foreign entity can decide to begin its operations by setting up a subsidiary, a branch office or re-domiciliation here in Singapore.

Below we explain the differences between the four options:

  • branch office is basically an extension of the foreign parent company. They are not considered separate legal entities. Different from an RO, branch offices are allowed to conduct business activities but can only conduct the same type of activities as the parent company. This option is considered as non-resident for the foreign parent company planning to achieve market share in the short term.
  • subsidiary is a company incorporated in Singapore that is owned or controlled by its parent company, meaning the parent company holds the majority of shares of the subsidiary. Different from an RO, subsidiaries can conduct all types of commercial activities, even if it is of a different type from their parent companies. This is the best option if foreign companies are planning to operate in Singapore for the long term.
  • Redomiciliation is basically a procedure where the foreign company will transfer its registration from its country of incorporation to Singapore. This means that effectively the foreign company would become a Singapore incorporated company. This option is for any foreign company that decides their future prospects would be for the better if it relocates here instead.

Requirements

Scope of activities an RO are approved and not approved to do

Like we mentioned earlier, an RO is just a temporary administrative office with no official legal standing, it is not allowed to engage in commercial or profit-yielding activities. So an RO cannot sign any contracts, issue Letters of Credit (LOC), negotiations and any forms of trading.

ROs are only allowed to carry out activities such as market research and feasibility studies. For example, the RO can take part in trade conventions, collect information about potential clients and target markets, research market demand and handle inquiries.

If the RO fails to work within these criteria, it can be de-registered.

Must the RO be operating under the same name?

The RO has to conduct its activities under the same company name as the foreign company, except that it must include the words or term “Representative Office”. It must be reflected on the signboard, name cards of staff and all other marketing materials.

Criteria for application

A foreign entity that plans to set up an RO in Singapore:

  • Must be incorporated for more than 3 years; and
  • Have achieved sales revenue of no lesser than USD $250,000.

Besides the above, an RO must appoint a Chief Representative Officer (CRO) who must relocate to Singapore from the foreign company’s head office and oversee all of the activities by the RO. And it can only employ a maximum of 4 employees as support staff.

How to set up a Singapore RO?

The foreign entity can engage a Singapore professional corporate secretarial firm to help with the setting up. It can be done through means of online or couriering of the documents over.

It is not necessary to send a representative to Singapore, from the foreign entity just for the setting up of the RO.

Application through the Monetary Authority of Singapore (MAS)

If the RO’s business activity is in the sector of finance, banking or insurance industry, it must be registered with MAS.

Before registering the RO, applicants are highly recommended to first contact the Banking Department at MAS to present their plans to MAS before they submit a formal application. The purpose is to ensure that the foreign company has a proper assessment of the chances of the proposed application.

The list of documents needed for the formal approval process with MAS are:

  • A completed application form (can be found on MAS’ website);
  • Original letter from the foreign country’s relevant authority showing the approval of the setting up of the office in Singapore;
  • A certified true copy of the company’s constitution also known as Memorandum and Article of Association;
  • Annual financial reports of the foreign entity for the past 2 years, balance sheet and profit and loss statements dated within 3 months before the application date; and
  • Annual reports of the holding company who is controlling the bank account or beneficial owners with controlling interests for the most recent financial year (FY).

Application through Enterprise Singapore

As for ROs in other industries, the registration can be done with Enterprise Singapore instead. The documents required for approval are:

  • A completed application form;
  • A copy of the foreign company’s Certificate of Incorporation; and
  • The parent company’s latest annual report and audited accounts (copies will be accepted)

For all non-English documents, an official English translation must be provided together with the application.

The processing fee for incorporating an RO and renewal of the RO per annum is SGD $200. This fee is non-refundable in the event of withdrawn or unsuccessful applications.

Payment can be made via:

  • Cheques (crossed and payable to Enterprise Singapore);
  • Credit cards (Visa or Master) via Enterprise Singapore online portal; or
  • Bank Drafts (payable to Enterprise Singapore in Singapore currency/SGD).

How long does it take to register?

After the application has been submitted, usually it takes about 7 days for the authorities to issue out a Letter of Approval (LOA), confirming the registration is successful.

If they need additional documents or any further questions, the process can be delayed by 7 to 14 days more.

Is it subjected to approval?

Of course, the application will be subjected to approval by the authorities.

If the foreign entity fulfils the requirements and the business activities are within the permitted scope (as mentioned above), the application will mostly be successful.

An LOA will be given to confirm the successful registration of the RO.

What happens next?

What is the duration an RO can operate?

An RO will only be to operate for a period of not more than 3 years in Singapore. As such, the RO status must apply for renewal during this 3-year period annually.

The authorities will normally send a notice 2 months prior to the expiry date via post or email. If no response is given, they will proceed to de-register the RO.

After that, the foreign company is advised to incorporate a branch office or subsidiary if it wishes to continue its business activities in Singapore.

Application of an Employment Pass (EP) for foreign staff

In order for a foreign staff (i.e the CRO, see above) to be able to work in Singapore, the foreign company must make an application for an EP.

The EP is basically a work visa that will allow foreign staff to work and live in Singapore. It is usually valid for 1-2 years and has to be renewed afterwards.

You need to provide the documents listed below for application:

  • Copy of the approval letter by either MAS or Enterprise Singapore for the set up of an RO in Singapore; and
  • A letter from the RO’s foreign entity stating:
    • The reason and purpose of the application for EP
    • The time period of the foreign staff’s assignment
    • A guarantee for the repatriation and maintenance of the foreign staff while working and living in Singapore

For more information on the procedures of applying for an EP, please refer here.

Will the RO be liable to pay corporate tax?

The RO will not have any form of liability in corporate tax in Singapore because the RO is not allowed to even generate income.

Will the RO be able to open a corporate bank account?  

The RO can open a corporate bank account in Singapore for the purpose of running its operations. This will usually be done in about 14 working days.

But opening a corporate bank account may sometimes require a physical visit to Singapore if the particular bank requires an interview with the various stakeholders to do the bank's due diligence (a detailed appraisal of the purpose, background and finances of the foreign company’s business).

Under what situations will the RO be de-registered?

If the RO becomes dormant, meaning no permitted activity has been carried out for a certain duration, it can be de-registered.

ROs need to be de-registered once the foreign parent companies also become dormant, meaning the foreign company does not have any more revenue or income within a financial period.

Contact Us

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how to register a Singapore branch office

How to Register A Singapore Branch Office

Singapore has always been ranked as one of the most business-friendly countries in the world. The location is strategic for companies that are looking to launch their expansion into the Asia-Pacific region. In this article, we discuss how to register a Singapore branch office and its benefits.

Foreign companies planning to begin operations in Singapore can choose from a few options. They can operate through an offshore company, a Singapore representative office, a Singapore branch office or just incorporate a new subsidiary.

Why register a branch office?

Similar to a subsidiary, a branch office allows the foreign company to begin their business operations in Singapore. The foreign company is entitled to generate profits and also hold properties in Singapore.

Unlike a subsidiary, a branch office will be regarded as an extension of the foreign company, instead of a different legal entity. This will mean that the branch office must share the same name as the foreign entity, and all contracts signed will be under the foreign entity’s name. The purpose is to enable the branch office to leverage its foreign company’s brand to do contract tendering and get financing in Singapore.

The fact that a branch office is not a separate legal entity, brings about a number of disadvantages. They are:

  • The lack of limited liability: The foreign company will be liable for all debts incurred and contracts signed by the branch office.
  • Non-tax-resident: The branch office is not treated as a tax-resident in Singapore, not unless the foreign company is managed or controlled here. It means that a branch office will be ineligible for tax exemptions on its profits. You can refer to our article about the benefits of Singapore tax residency.
  • Limited activities: The branch office will not be able to carry out business activities that the foreign company is unable to undertake. For illustration, if the foreign company’s constitution or by-laws disallow it to carry out certain business activities, the branch office will also be restricted to the same business activities.

However, a branch office is still functional for a foreign company looking to establishing its business in Singapore for a start. The reason is it allows the foreign company to undertake contracts under its own brand name and to leverage its existing brand image and reputation.

Establishing a branch office in Singapore

Branch offices in Singapore are registered online through the Accounting and Corporate Regulatory Authority (ACRA).

Foreign companies will need to engage the services of a registered filing agent such as a corporate secretarial firm in Singapore to help with the registration.

The corporate secretarial firm must generally be provided with all the necessary documents for submission to ACRA:

  • The name and registered office of the foreign company in its country of jurisdiction
  • A certified true copy of the certificate of incorporation of the foreign entity
  • A certified true copy of the constitution (memorandum of articles) of the foreign company
  • A notice of its registration number, business description and legal entity type
  • Personal particulars of all the directors in the foreign company
  • Personal particulars of 1 Singapore resident at the minimum, who is appointed as the authorised representative of the Singapore branch company
  • Written consent of appointment by the authorised representative of the branch company
  • Details and operating hours of the branch office here
  • The most recent audited financial statements of the foreign company (if required under the laws of the country of incorporation)

Besides the above requirements, the corporate secretary may also request its own documentary requirements from you.

Registration is generally completed from 2 to 14 working days after submission unless it needs to be referred to the Registrar or other government agencies for approval.

An example would be if the foreign company is planning to open a branch office to offer medical services in Singapore, its application will be referred to the Singapore Ministry of Health (MOH) for approval. A list of industries where authority approval is needed can be found here.

What's next after setting up a branch office?

Once successful registration, the branch office can begin operations in Singapore. But certain licences may still be needed before it can carry out some business activities, such as the opening of a restaurant. Most licences are applied through GoBusiness, a one-stop Singapore government portal.

The branch office must apply for the relevant employment passes or permits if it plans to transfer some foreigners to work here in Singapore.

The branch office can decide to either open a new corporate bank account here in Singapore or use the same foreign bank account as the head office.

Do take note that the foreign company (head office) must comply with all ongoing and existing authority requirements of filing the financial statements with ACRA and submission of its audited financial statements of the branch office in Singapore. Hence we highly recommend that you set up a new corporate bank account for the branch office.

Closing of a branch office

A branch office can be legally closed by giving notice to ACRA if it has stopped having a place of business or carrying out business operations within seven days of such cessation in Singapore. Situations include where the foreign company has been liquidated or dissolved in its country of incorporation.

The authorised representative (nominee director) of the branch office can apply to ACRA to strike off the branch office from the register in the situations below:

  • The sole authorised representative or nominee director wishes to terminate his service but is unable to due to the foreign company's failure to either respond or appoint a new authorised representative within a period of 12 months, starting from the date of the resignation notice.
  • The only authorised representative has asked for instructions for the closing of the branch office but the foreign head office has failed to give any instructions within a period of 12 months from the date of such request.

In the absence of an authorised representative, the application for striking off can be filed by the corporate secretary.

Common questions

1. Who are allowed to hold shares in a branch office?

As stated earlier, a branch office is just a simple extension of the foreign entity, thus a separate set of shareholders is not possible. So the Singapore branch office is entirely owned by the foreign entity. No other shareholders will be allowed.

2. Am I required to be physically present in Singapore for the setting up of a branch office?

Physical presence in Singapore is not required to set up a branch office. All registration is done remotely and online. Many corporate secretarial firms such as us are capable of incorporating online.

The setting up of a corporate bank account in certain cases may require a physical presence on a case by case basis.

3. How to register for corporate tax?

A branch office will be registered with the Inland Revenue Authority of Singapore (IRAS) automatically for corporate tax purposes once its incorporation is completed with ACRA. The branch office must register for Goods and Services Tax (GST) with IRAS if the taxable annual turnover is more than SGD $1 million.

4. What are the tax rates?

All companies (as well as branch offices) are subjected to a flat corporate tax rate of 17% on their taxable income. If their taxable annual turnover is more than SGD $1 million, they can also be subjected to a 7% GST on most goods and services they supply.

5. Can I send the profits of the branch office back to the foreign (head) company?

Singapore has no major restrictions on remittances or capital movements (i.e. transferring of funds in and out of Singapore). A branch office is just an extension of the foreign entity, so the branch office is free to remit or reallocate its profits and capital back to the foreign entity (head office).

Incorporating a branch office is a fairly straightforward process in Singapore. It can be an attractive option for foreign companies looking to set up their business here.

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how to set up a subsidiary in Singapore

How to Set Up a Subsidiary in Singapore?

A company that is majority-owned or the composition of the board of directors (the authority to appoint or remove a majority or all directors) is being controlled by another company, which is known as a subsidiary. In this article, we will go into detail on how to set up a subsidiary in Singapore.

A company is considered a subsidiary when another company holds a minimum of 51% of the first company's shares, it will be known as the parent or controlling company. The parent company can be a local or a foreign company.

What are the benefits of setting up a subsidiary?

A subsidiary is considered a separate legal entity. This basically means that the controlling company will not be directly liable for any debts or legal actions against the subsidiary.

Therefore, if the subsidiary ever becomes insolvent or bankrupt, the parent companies will be able to limit their liabilities and risks and prevent any form of creditors from trying to make a direct claim from the parent companies.

Singapore-incorporated subsidiaries will be considered as Singapore tax residents if the management of the company is local. As such, foreign companies can take advantage of the competitive corporate tax schemes here in Singapore (please read below).

How can I set up a subsidiary?

Registering a subsidiary can be done online through Singapore's Accounting and Corporate Regulatory Authority (ACRA).

To register, the following information will be required:

  • Name of your subsidiary
  • Description of business activities
  • Shareholders’ particulars and information
  • Directors’ particulars and information
  • A Singapore registered address
  • Company Secretary’s Particulars
  • Company constitution

The requirements needed and procedures for registering a subsidiary in Singapore are generally similar to that of an exempt private limited company. Please refer to our other article on registering a company in Singapore for details.

If the parent company is a foreign company or any directors or shareholders of the subsidiary is/are foreigners, you should engage a registered filing agent in Singapore such as us to help with the registration.

The reason being all shareholders and directors need to accept their appointment as shareholders and directors using SingPass, and as foreigners, they do not have any SingPass account. As such, the filing agent will be able to help you.

If the registration is successful, you will receive an official email and a business profile for free with details of the newly incorporated subsidiary and details of all of its officers and shareholders from ACRA.

What is next?

The new subsidiary exists as a separate legal entity once incorporated. We recommend that you open a separate corporate bank account under the subsidiary’s name for accounting purposes.

Besides that, the new subsidiary may have to apply for a licence again, in order to operate in some industries, for example, the restaurant industry. The subsidiary has to apply for the licence under its own company name.

The parent companies may apply for the respective employment passes or permits if there is a need to transfer foreign staff to work in the new subsidiary in Singapore.

Needless to say, the new subsidiary must comply with the relevant authorities' ongoing regulatory requirements. Do refer to our article on compliance requirements in Singapore for details.

Questions and answers (Q&A)

1. Is a subsidiary allowed to operate with a different company name from the 'parent company'?

Yes. Should you choose to, you can operate under a different business name from the parent company. The names are subjected to approval by ACRA. ACRA has the authority to reject an application if the name chosen is inappropriate.

Refer to this article on the selection of a business name to find out more.

2. Is a subsidiary allowed to do different business activities from the 'parent company'?

Yes. A subsidiary is allowed to.

3. Is a subsidiary allowed to be 100% foreigners owned?

Yes. A subsidiary can be fully foreign-owned.

4. Are you needed to be physically present in Singapore to incorporate a subsidiary?

No. You are not required to be physically present in Singapore. The application can be done online entirely by registered filing agents in Singapore. Most of them offer incorporation services either online or through email communication.

Visitation to Singapore may be required to set up a corporate bank account. Most Singapore banks will ask for a face-to-face interview with the company’s shareholders and directors. Remote calls can be an option sometimes in certain circumstances.

5. Is the subsidiary required to file corporate tax?

A subsidiary has enrolled automatically for corporate income tax with the Inland Revenue Authority of Singapore (IRAS) after successful incorporation.

A subsidiary will have to register for Goods and Services Tax (GST) with IRAS if its turnover per annum is more than SGD $1 million.

6. How much is the tax rate for a subsidiary?

A subsidiary is subjected to a flat corporate tax rate of 17% on all taxable income. Subsidiaries can be eligible for some tax benefits and exemptions like all Singapore incorporated companies.

Some of the benefits include (for Year of Assessment (YA) 2010 to 2019):

  • For the first 3 YAs, full tax exemption on chargeable income for the first SGD $100,000. An additional 50% tax exemption on the subsequent chargeable income of SGD $200,000.
  • Thereafter, a tax exemption of 75% on the first chargeable income of SGD $10,000 and the next chargeable income of SGD $290,000 will enjoy a further 50% tax exemption.
  • Reduction or full exemption of tax on foreign-sourced income from those countries that have signed Double-Taxation Agreements (DTAs) with Singapore. Such as major countries like China and Japan.

These benefits are subjected to certain conditions only. You can refer to this article on corporate tax in Singapore for details.

7. Are the capital or profits belonging to the subsidiary allowed to be repatriated to the 'parent company'?

Yes. Subjected to under the Companies Act capital return requirements, a wholly-owned subsidiary will be free to send any capital or profits it has back to the parent company in general.

8. If the 'parent company' becomes insolvent, what happens to the subsidiary?

The parent company will be shielded from liabilities against its subsidiary's creditors in the event it becomes bankrupt or goes under insolvency. But the reverse may not be necessarily true, because the controlling company has ownership over the subsidiary.

Thus, if the parent company goes under, the liquidator can sell off part or all of the subsidiary's assets to pay off the debts of the parent company.

Incorporating a subsidiary is a fairly fast and straightforward process with plenty of benefits if properly structured. It is an option worth considering, whether is it a Singaporean company looking to limit its liabilities and risks or a foreign-owned business looking to have a presence in Singapore.

Get in touch with us today

If you need assistance in incorporating a subsidiary, please do not hesitate to get in touch with us.

 

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