如何在新加坡开展电子商务业务
您如何开展电子商务业务以在新加坡销售产品呢？
这其实是蛮简单的。有许多在线电子商务平台提供电子商务自动服务，例如线上广告、营销、电子邮件和仓库管理，都助于您的交易流程。如果您正在考虑在新加坡开展电子商务业务，我们将为您提供所需的信息！
您是否需要许可证才能在新加坡开展在线业务？
一般来说，在新加坡开展电子商务业务不需要许可证。不过，这可能会因您销售的产品而异。例如，如果您销售烟酒产品，某种药物或指定的健康食品，电子商务平台可能需要遵循某些要求。所需的专业和贸易许可证取决于您销售的产品和服务。
决定在您的新业务上卖什么
作为商业计划的一部分，您需要决定要销售哪些产品或服务。您的电子商务平台是否会出售多种类型商品的通用电子商务业务呢？或者您是否只考虑了特定的市场，例如服装或食品？谁是您的目标关众？这些问题能帮您决定哪些电子商务平台更适合。您也可能需要考虑开设自己的电子商务网站。这能让您更好地掌控网站的外观和风格，以及您决定销售的产品。
为您的电子商务业务选择商业模式
您可以为您新的电子商务业务选择 3 种公司结构模式。
在多数情况下，我们总是建议我们的客户选择选项 1。私人有限公司为股东和董事提供更多的责任保护。随着您的业务规模扩大以及您在未来引入新的投资者和股东，它还提供了更多的灵活性。
成立公司并开始电子商务业务
在您决定电子商务平台和商业模式之后，是时候将您的电子商务业务成立在新加坡了。在 SG Company Services，我们为您的所有注册需求提供一站式解决方案。在新加坡成立公司的过程并不复杂。我们还可以协助您为自己的电子商务商店开设商业银行账户。查看这篇文章以了解更多关于在新加坡成立公司的要求。
选择您的电子商务平台
注册完成后，您就可以开始经营您的业务了！您接下来需要决定的是您将在哪个平台上销售您的产品/服务。
会在亚马逊、Lazada 和 Shopee 等平台上还是打算建立自己的电子商店呢？大多数电子商务平台如亚马逊和 Shopee 都提供从电子邮件到营销的电子商务功能，因此您几乎可以在这些平台上销售任何东西。其中缺点是这些平台上已有许多和您销售的物品相似的选择，必然存有一定的竞争。
这些公认的电子商务平台也有自己的条款和条件，您在注册这些平台前就应熟悉这些条款和条件，因为这会影响您销售产品或服务的运作。所有电子商务平台都会从您的每笔销售收取佣金，从而降低您的利润。如果客户投诉过多，您将面临平台账户被暂停或终止的风险。
如果您决定建立自己的电子商务网站，您将需要花更多时间与精力，自己设计和开发网站或聘请网络开发人员。一般网络开发人员的聘用费取决于您所设计得网站外观，功能等。您还必须考虑到网站托管、域名注册和 SSL 证书 （SSL 证书是一个数字证书，用于认证网站的身份并启用加密连接）。这不但让您可以更好地掌控您的电子商务业务的外观以及决定销售的产品，您也不受电子商务平台设定的条款和条件的支配。更重要的是，您可以创建品牌来培养客户忠诚度。通过您自己的网站，您还可以安装营销工具来分析和跟踪客户行为，从而通过数据分析来优化您的业务。
设置支付系统
下一步是设置您的支付系统。新加坡最受欢迎的电子商务支付网关包括贝宝 （Paypal) 和 Stripe。它容易使用并与许多电子商务平台集成。它还为买家提供保护，因此如果您身为卖家没有按照成交约定递送产品或完成服务，买家可以获得退款。贝宝（Paypal） 和 Stripe 会从每笔交易收取佣金，以换来这份保障。若是主要在本地销售的企业，卖家也普遍接受 Paynow，这是一种即时且零交易成本的本地银行间支付方式。
设置会计系统
下一步是设置会计系统。这将让您能够记录您的支出和收入以及纳税情况。新加坡小企业通用的会计软件是 Xero。它基于云且易于使用，使其成为刚起步的电子商务企业的良选之一。Xero 也提供了许多功能，例如开具发票、记录费用和员工付款。它还与贝宝 (Paypal) 和 Stripe 集成，以便您可以在一个系统里查看您业务的所有财务状况。若您想完全专注于发展业务而不想进行财务管理，您可以考虑将财务管理外包给注册会计师。
建立客户关系管理系统
最后一步是建立客户关系管理（CRM）系统。CRM 将帮助您记录客户的联系信息、购买历史以及您与他们的任何其他互动。这些宝贵的资料，能助您把营销计划针对特定目标客户。新加坡小型企业流行的 CRM 软件是 Salesforce。它能提供许多功能，例如联系资料管理、客户点击和购买行为资料管理。Salesforce 还与贝宝 (Paypal) 和 Stripe 集成，以便您可以在一个系统里查看您业务的财务状况。
有了正确的辅助系统，您就能轻易地在新加坡开展电子商务业务。有许多在线平台提供软件设备和其他服务来帮助您开启，例如仓库管理、营销等。
今天就联系我们吧，我们将为您提供如何开始自己的电子商务业务的有关资料与信息！
How does a company pay dividends in Singapore
We hear so much of this term dividends but we seldom discuss the rules and implications associated with it. As most will know, it is basically profit (or part of it) that a company distributes to its owner(s) at the end of or during a company’s financial year.
What are the types of dividends?
There are mainly 2 types in Singapore: interim dividends vs final dividends.
You can announce Final dividends during the Annual General Meeting (AGM), after reporting the company’s financial statements and confirming the final profits for the year. You cannot cancel it once declared.
Interim dividends, as the name suggests, can be distributed any time between 2 AGMs. It can take place before confirming the annual profit or loss and the final financial statements. You can pay out of retained earnings or current year profits.
How to declare dividends?
You need to prepare the following documents in preparation for dividend declaration:
- Dividend vouchers
- Dividend register
- Resolution for dividend payment
- Shareholders’ approval with signatory
- Warrants to shareholders
- Minutes of the meeting specifying the location, date and time of the meeting, and details on the declared dividends
For final dividends, the dividend amount and payment form, i.e. cash, shares, options or other properties) is suggested by the directors during the AGM. The shareholders will then vote and finalise the proposal. You can then pay the dividend any time after this declaration date.
For interim dividends, the process is similar. The only difference is the board of directors alone can decide on the dividends, as long as the company’s profits justify it.
Do note there is no limit for dividends as long it does not exceed the final net profit of the company to date.
How to distribute dividends?
The company’s board of directors will announce in detail in the form of a dividend declaration. It is important to note that dividends should be given only when the company has made profits.
This is specified in Section 403 in the Companies Act, that you can only pay dividends to shareholders of any company out of profits. Some of the common questions we received from our clients are:
- Can dividends be paid out of profits of a larger holding group of companies of which the dividend-receiving company is a member?
Answer: No, the dividends payable must be profits of its own company.
- Is it necessary to maintain paid-up capital before declaring dividends?
Answer: No, the dividends payable must be profits of its own company.
- Is capital appreciation or gains part of the company’s profits?
Answer: Yes, as long as the company’s constitution allows such dividend payment.
- Can current profits include profits that have been carried forward from previous years?
Answer: Yes, dividends can be issued from retained earnings even if there is no current-year profit
In the same section, it also states that any violation could lead to a fine of up to S$5,000 or imprisonment up to 12 months for the director or chief executive officer. They are also liable to the company’s creditors to the extent to which the dividends paid have exceeded the profits. If you are a shareholder who received dividends that are wrongfully distributed, talk to us today so we can advise you better.
What is the tax treatment of dividends in Singapore?
Generally, shareholders who received dividends from a Singapore resident company will not need to pay tax on that dividend income. This is due to Singapore’s one-tier taxation system, where corporate tax applies to the company’s profits already. To be precise, non-taxable dividends include:
- Dividends paid by a resident company on or after 1 Jan 2008
- Foreign sourced dividends received by resident individuals on or after 1 Jan 2004
- Income distribution from Real Estate Investment Trusts (REITs)
Dividends that are taxable include:
- Dividends paid by co-operatives
- Foreign sourced dividends received in Singapore by resident individuals through a partnership in Singapore. In some cases, no tax is payable if certain conditions are met. Talk to us to find out more.
- Income distribution from REITs derived by individuals through a partnership in Singapore.
What is the accounting treatment?
Upon the declaration of the dividends, the dividend payable is a credit entry under a liability account. It is owing to shareholders until full settlement. After paying the dividends, the dividend payable account is debited by its full amount, together with a credit entry to the company’s cash account by the same amount.
If you have further questions on the company’s dividend declaration and its implications, feel free to contact us for a non-obligatory discussion.
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Senior Worker Early Adopter Grant
In 2019, the Singapore government announced it will increase the retirement age (RA) to 65 years old by 2030, while it will increase the re-employment age (REA) up to 70 years old. This year, the Central Provident Fund or CPF contribution rates will be increased as well to boost elder workers’ retirement savings.
In addition to these changes to support elder workers, the government has in place support packages namely the Senior Worker Early Adopter Grant (SWEAG) and the Part-Time Re-employment Grant (PTRG).
These grants are available from 1 July last year, to employers who are willing and able to implement higher internal retirement age and re-employment age and provide more part-time re-employment opportunities.
What Is the Senior Worker Early Adopter Grant (SWEAG)?
It provides support of up to a maximum of $250,000 for employers to increase their own retirement and re-employment ages ahead of legislative schedule.
The SWEAG funding computation will be based on the number of resident Senior Workers (SWs) and the extent of increase in internal retirement and re-employment ages. The total eligible funding caters to a maximum of 50 Senior Workers (SWs) per employer.
| The extent of advancement of internal retirement age and re-employment age | Funding per SW (age 60 and above) | Total Eligible Funding (Cap of 50 SWs per company) |
| By 1 year each | $1,000 | $50,000 |
| By 2 years each | $2,500 | $125,000 |
| By 3 or more years | $5,000 | $250,000 |
If there are varying extensions to the workers’ retirement or re-employment ages for different groups of Senior Workers, i.e. increase the RA/REA for its 40 Executives by 3 years, but for its cleaners by 1 year, the Grant will be tied to the lowest tier of Funding which is the first row from the table.
What Is the Part-Time Re-employment Grant (PTRG)?
It provides support of up to a maximum of $125,000 for employers who commit to a part-time re-employment policy for its eligible senior workers.
The PTRG funding computation will be based on the number of Senior Workers (SWs) employed, at $2,500 per resident senior worker, up to a cap of $125,000 per employer.
How to qualify?
In order to be eligible, employers have to complete the following.
- a) Furnish updated HR policy properly documented on:
- SWEAG: internal retirement and re-employment ages showing the respective increases from current policy.
- PTRG: the part-time re-employment policy for Senior Workers
- b) Document the communication of the new policy to all employees via mediums such as employees’ accessible website, email, memo/circular and employee handbook.
- c) Submit duly completed claim form that includes information on all senior workers.
- d) Issue addendums to employment contracts documenting the policy change to all employees.
- e) The addendums will need to be individually addressed to and signed by the Senior Workers.
- f) For all other workers, the addendums can be standardised without having to be individually addressed nor acknowledged.
- g) Submit CPF Form 90 of all the senior workers you are claiming for.
- h) Prepare NRICs of Senior Workers for sighting by the programme partner (either physically, virtually or via photocopies).
How to apply?
All employers can apply for SWEAG and/or PTRG if they are legally registered or incorporated in Singapore. This includes societies and non-profit organisations such as charities and voluntary welfare organisations. Governmental agencies, statutory boards and other organs of state are not eligible.
NTUC’s e2i and SNEF are the appointed Programme Partners for SWEAG and PTRG. This service is available to employers at no cost. Employers are to directly submit the applications themselves. If you wish to find out more, talk to us today.
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What You Need To Know About Free Trade Zones And Free Zone Companies
In Singapore, there are nine free trade zones that allow companies to import, sell, or export goods without customs, duties, or goods and services tax (GST). They are:
– Brani Terminal;
– Keppel District Park;
– Tanjong Pagar Terminal and Keppel Terminal;
– Jurong Port;
– Sembawang Wharves;
– Pasir Panjang Wharves,
– Changi Airport Group;
– Changi Airport Cargo Terminal Complex;
– Singapore FreePort is located in the Airport Logistics Park.
Background of these zones
The Free Trade Zones Act which was last amended in 2014, regulates these zones. Within these zones, companies can temporarily store their goods until they are loaded for export without customs clearance. The law mainly covers the following:
- The respective authorities are responsible for verifying the activities conducted by the companies in these zones.
- The activities allowable by free zone companies in Singapore
- The types of licenses and permits necessary to carry out such activities in the free zones
- The penalties for not abiding by the regulations imposed by the authorities
How to form a free zone company?
To incorporate a free zone company is the same procedure as incorporating any other company in Singapore. Upon incorporation, the free zone company will need to obtain a permit from PSA Corporation Authority and TradeNet for permission to import, export and transport their goods overseas.
The next thing to note is that the minimum share capital to set up a free zone company is S$100,000 and S$50,000 if the company requires warehousing spaces and office spaces respectively.
Useful to note that
To operate in Singapore free trade zones, you need two types of licenses. One for corporate users, and the other for individuals with limited validity, lasting between 24 hours to 2 weeks. In the case of corporate users, it can last 1 or 3 years depending on the companies’ requirements and varying fees will apply. The application process takes about 4-7 days’ time.
The advantages of free trade zone companies in Singapore are:
- You do not need permits or licenses for the trans-shipment of goods in the free zones
- No custom duties for goods transiting or stored in the free zones
- There is no GST applicable on goods imported into the free zones
- Custom procedures are streamlined for companies operating in the free zones.
Interestingly, the two largest free zones in Singapore are Jurong Port and Changi Airport, with the former accessing the largest river in Singapore, and the latter being the largest and busiest airport in the region.
To find out more about incorporation matters, feel free to approach us for a non-obligatory discussion.
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What is the Limited Liability Partnership (LLP) In Singapore?
What is an LLP?
An LLP can be defined as a partnership where the individual partner’s own liability is generally limited. As the name suggests, it requires a minimum of two partners with no limit on the maximum number of shareholders.
Some facts of the legal status include:
- It is a separate entity from its partners
- Can sue and be sued in LLP’s name
- Can own property in LLP’s name
- Partners are personally liable for debts and losses resulting from their own wrongful actions, but not from others’ doings
What about statutory requirements?
The statutory requirements of an LLP are lesser than that of a company, which is mainly an annual declaration of solvency/insolvency by all partners of whether is LLP is able or unable to repay debts incurred over the course of the business. Compared to a company, there are statutory requirements for general meetings, directors, company secretary, share allotments, etc. These can be additional costs to the business.
Tax?
The profits of the LLP are taxed at all partners’ personal income tax rates assuming all are individuals. If the partner is a corporation, it will be applied at the corporate tax. For a company, corporate tax rates apply to its profits.
Business implications?
What may be interesting to note is that, in an LLP arrangement, individual partners can enter into business agreements without the consent of the other partner(s). This is highly unpredictable unless partners are of close and amicable relationships.
Another possible concern with the LLP is when it comes to transferring ownership in an LLP, the assets, licenses, and permits must be transferred individually. In other words, you cannot sell the LLP as a whole like how you can for a company.
if you wish to find out more about the requirements to set up a Limited Liability Partnership (LLP) in Singapore, or any other forms of corporate structure, do approach us for a non-obligatory discussion.
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How To Set Up A Register of Controllers
In our previous article, we have introduced the registers of registrable controllers with ACRA and its requirements. How do you set up this register of controllers properly? We summarise for you in this article:
Identification
First, you have to reasonably identify and obtain the relevant information on the controllers with these 2 notices:
- Notice for Controllers
– Send to the persons whom you know, or you believe, to be registrable controllers of the company.
– Ensure the addressee state whether he or she is a registrable controller of the company.
– Ensure the addressee state whether he or she knows or believe that any other person is a registrable controller of the company, or likely to have that
knowledge. If so, provide the particulars of that other person. - Notice for Persons who may know controllers
– Send to persons whom you know, or you believe, that they know or are likely to know the identities of the company’s registrable controllers.
– Ensure the addressee state if he or she knows or believe that any other person is a registrable controller of the company.
– Ensure the addressee provides the particulars of that person(s) who are within his or her knowledge.
Documentation
Second, list down in a Word or Excel document the particulars of the persons who are likely to be registrable controllers of the company. This document will be the Register of Controller. You can keep this in either hard or soft copy.
Most often, the shareholders from the ACRA business profile are the first to be included in the Register of Controller. However, the criteria to qualify as a registrable controller still applies. You can read more about the criteria to qualify here.
Based on the replies from the 2 notices, make the necessary amendments as required.
If the company is confirmed to have no registrable controllers, ensure the Register of Controller is documented with, “As of [date], the company knows or has reasonable cause to believe that there are no registrable controllers in relation to the company.”
Maintenance
Third, ensure that the information in the Register of Controllers is current and accurate thereafter.
We advise performing an annual review of the register. This is to check if there is any relevant change to the particulars of each controller. It is also good to reaffirm if any of the particulars are incorrect. Any communication trail of this review process should be documented to provide evidence of work done.
In the event, there are grounds to believe of a relevant change to the controllers’ particulars, or that the controllers’ particulars are incorrect, you need to send either a
- Notice for Change in Particulars
– Ensure the addressee confirms if the relevant change has occurred.
– Ensure the addressee provides the date and details of the change. - Notice for Incorrect Particulars
– Ensure the addressee confirms if all particulars are correct.
– Ensure the addressee provides the correct particulars if any are incorrect.
Finally. do note that each of these notices follows a standard format and phrasing. Speak to us if you are unsure of how to start.
Companies and LLPs that do not comply shall be liable up to a fine not exceeding $5,000.
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Disposing personal data: what you do not know
In Singapore, the Personal Data Protection Act (PDPA) comes into full effect on 2nd July 2014 with new amendments as recent as November 2020. This act governs the collection, use and disclosure of personal data by all private organisations.
Most are aware of the collection and use of personal data, and its implications. However, it is the disposal of such information that is equally important but given less emphasis. According to the PDPA, failure to properly dispose of such information can lead to fines as high as SGD$1 million.
What is personal data?
To define personal data, it is data to identify a specific individual directly or indirectly. Examples of personal data include an individual's full name, NRIC number, passport number, photograph, video image, personal telephone numbers, personal e-mail addresses, fingerprints and DNA profile.
Since personal data are stored mainly either in physical or electronic copies, it is imperative that organisations take reasonable steps to secure such information in both forms, such as ensuring physical documents are properly filed and kept in locked cabinets, and electronic documents are encrypted with passwords. Eventually, when it comes to disposing of such information, is it sufficient to throw the physical documents into the bin? Or simply press delete to remove all electronic documents into your computer’s recycle bin?
How do you dispose of them?
The recommended ways to dispose of physical media is by shredding, pulping or incineration.
- Shredding cuts the physical medium into tiny pieces making reassembling the medium almost impossible. It is also the most common way of disposing in most offices as shredders are easily available.
- Pulping is to remove the ink from the paper and then dissolving the paper into a pulp with chemicals. This will require a lot more cleaning up thereafter than simply putting the document through a shredder.
- Incineration basically burns the physical medium completely, again not the safest or most convenient option around an office.
For electronic media, it is not sufficient to press delete and clear the computer’s recycle bin. The recommended ways are
- Using dedicated software that can overwrite selected files or entire storage drives.
- Using special hardware appliances to produce strong electromagnetic fields in order to destroy magnetically recorded data
- Physically destroying the storage devices by crushing, drilling or breaking them beyond repair
If you think your personal data has been compromised, seek legal advice or approach us for a non-obligatory discussion.
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The Choice Destination for Business
Singapore is known to be one of the top financial hubs in Asia. We have a strategic location, a competitive and talented workforce of varied backgrounds, and a pro-business environment for both local and foreign investments. It is easy to see why Singapore is your choice destination for businesses.
What the rest of the world says?
Based on the latest Doing Business 2020 report, Singapore is placed 2nd as the easiest economy to conduct your business in 2019, just closely behind New Zealand. Hong Kong follows at 3rd on this ranking. A closer look at the criteria shows that Singapore comes in first on “Enforcing Contracts”. This established strong confidence in entering into contracts of various purposes, from business contracts, employment contracts and leasing contracts. Any breach of a contract allows non-defaulting parties to carry out recourse in a lawful manner. Some of the other criteria that rank Singapore high on the list include ease of starting a company, dealing with construction permits, protecting minority investors and paying taxes.
Any tax exemptions?
Singapore has one of the most attractive tax structures among developed economies. From Year of Assessment 2020 onwards for the first 3 years for new start-up companies, there will be
- a 75% exemption on the first $100,000 of normal chargeable income and
- a further 50% exemption on the next $100,000 of normal chargeable income.
To qualify for this exemption, the company must
- incorporate in Singapore
- be a tax resident in Singapore for that YA
- have its share capital beneficially held by up to 20 shareholders throughout that YA
How is life in Singapore?
In Mercer’s global Quality of Living Survey released in March 2019, Singapore remains 1st in position in Asia-Pacific, with Tokyo and Kobe in 2nd and 3rd position respectively. This survey compares 230 cities worldwide across multiple factors such as political and social environment, consumer goods availability, housing, public services and transport, medical and healthcare, natural environment, education and recreation.
How risky is Singapore?
In another 2019 survey done by Euromoney, Singapore is the least risky country for investment in Asia. On the global scale, it ranks 2nd just behind Switzerland. This survey is conducted over 174 countries, among several hundred economists and risk experts across 23 political, economic and structural sub-factors. Some of these factors include access to capital markets and bank finance, debt indicators, credit ratings and political environment.
How safe is Singapore?
How about safety? In a 2019 Safe Cities Index report by The Economist Intelligence Unit, Singapore is 2nd safest city in the world. This report is based on 60 major cities across 57 indicators that cover personal security, health security, digital security and infrastructure security. Not only that, but Singapore also ranks 1st in both personal security and infrastructure security.
Is Singapore creative?
According to the Global Innovation Index 2019, Singapore is the leading innovation hub in Asia. This index compares 120 countries using indicators such as political environment, education, infrastructure, and business sophistication as its basis. We retain the top spot as Asia-Pacific’s most innovative nation for the seventh consecutive year.
2020 has been a turbulent year for the world, including Singapore. Many businesses have undergone a transformation in this new business landscape. We continue to strive to be the leading destination for businesses to flourish. If you like to find out more about doing business in Singapore, talk to us today.
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The First Board Resolution Explained
The first board resolution is equivalent to an agreement among all owners of the company. Under the Accounting and Corporate Regulatory Authority legislation, it is a requirement for this document to be completed within a month from the date of the company’s incorporation.
Where it all begins...
This document serves to outline the basic structure of the company. It is usually prepared during the first board meeting, where the basic structure normally includes the following matters:
- Certification of Incorporation. This is the first and most important document to prove the status of any companies incorporated in Singapore. Upon successful incorporation, the regulatory body, known as ACRA (Accounting and Corporate Regulatory Authority) will issue this certificate. This certificate details information of the company such as the date of incorporation, registration number, names of shareholders and directors, and the amount of share capital the company has.
- Constitution of the Company. This is the rulebook of how the company will be run. It entails the business activities of the company, its legal name, to which all members are expected to act in accordance to.
- Appointment of directors and secretary. All directors and secretaries, whether local or foreign will be made known. To qualify as a director, the individual has to be
- At least 18 years old
- Of full legal capacity
- Either a Singapore Citizen, Singapore Permanent Resident or EntrePass holder
- Not of disqualified status to act as a director of a company, eg. an undischarged bankrupt
*an Employment Pass (EP) holder can only act as a director with a Letter of Consent (LOC) from the Ministry of Manpower
To qualify as a secretary, the individual has to be
- A natural person
- A local resident in Singapore
- Registered office address. If the company has no physical office or residence in Singapore, the company secretary's office or residence address is the registered office address. Otherwise, it is usually the company’s physical office based in Singapore.
- First and subsequent financial year-end. We determine the start and end of the company’s financial year-end by noting the following:
- The company’s first financial year must be within 18 months from the date of incorporation
- The company’s first financial year starts on the date of incorporation
- Subsequent financial years starts right after the end of the previous financial year and lasts a standard period of 12 months.
- Details of allotment and issuance of shares. To document the names of the recipient of the shares, the number of shares and the types of shares issued. Last but not least, to issue share certificates in hard copies to the respective shareholders.
For more information on the first board resolution or other incorporation matters in Singapore, talk to us today.
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What is a Trust in Singapore?
What is a Trust?
In Singapore, you are able to set up a legal arrangement called a trust. A trustor or settlor initiates this arrangement, by entrusting a trustee to look after his or her properties, assets or any other possessions. The trustee is the person or entity that the settlor appoints to hold the legal title of the trust property and perform the duties required of him or her. The trustee can be the settlor himself or herself – in which case, the settlor declares himself or herself to be holding trust property on trust for the beneficiary.
Who is the Trustee?
The Trustees Act in Singapore provides a wide regulatory framework overseeing the operation of trusts and trustees. The trustee derives his power from the terms of the trust instrument. For instance, a trust deed may specify the trustee to invest the trust fund in low-risk unit trusts or investment-linked policies. The Trustees Act specifically confers certain powers on the trustee; However, these powers only apply if they are not contrary to the terms of the trust instrument. They include (non-exhaustively) the power to invest, insure, maintain minors, and advance the benefits of beneficiaries. Sometimes, you can also appoint a trust protector to ensure the trustee exercises his powers in accordance with the terms of the trust.
Together, the Act and common law stipulate a minimum standard trustee must adhere to. This includes the statutory duty to exercise reasonable care and skill in the discharge of his powers. It also includes exercising his discretion properly, and to abide by the directions of the trust instrument. In relation to the investment of trust property, the trustee has a wide range of duties to undertake. They include the duty to
1. Invest only in authorised investments.
2. Consider the standard investment criteria, such as the suitability of the investment and diversification.
3. Seek advice where it would be prudent to do so.
4. Take proper care and skill reasonably.
What does a trust encompass?
The trust details how the associated benefits of these possessions are passed to the eventual beneficiaries. Sometimes, the trustor and beneficiary can be the same person.
The assets that are commonly included in a trust are properties, bank accounts, investments, shares, patents, jewellery, or any items of tangible and intangible value. In contrast, trust does not include insurance policies, retirement account balances, health savings and motor vehicles.
You can create trusts by contract, will, or deed, collectively known as trust instruments. Deeds are usually used when no consideration is given for an agreement. Due to their complexity, it is advisable to engage the services of a lawyer. Your lawyer can offer specific legal advice in trust law, estate planning, and intergenerational wealth transfer.
Generally, certain requirements must be complied with in order to create a trust. They include:
1. Certainty of intention – The settlor must possess the requisite intention to create the trust obligation.
2. Certainty of subject matter – Trusts must be created over specific property.
3. Certainty of object – A trust usually may only be created in favour of legal persons (except purpose trusts).
4. Constitution – A trust is created when trust property is transferred, or via a declaration of trust whereby the settlor himself is the trustee holding property for the beneficiary.
5. Formalities – Statutory provisions regulating the creation of a trust or a will must be complied with.
6. Capacity – Settlor must have legal and mental capacity to create the trust.
Why do people set up a trust in Singapore?
Here are several benefits:
•There is no need for any formal registration with any government body.
•There are laws in place to maintain strict banking secrecy and personal data protection.
•A trust provides protection from forced heirship claims.
•The trustor can reserve part or all of the powers to him or herself.
•The trustor can appoint a protector to supervise the conduct of the trustees.
•There is no estate duty or inheritance tax.
•There is no capital gains tax.
Here are four common types of trusts in Singapore:
1. Private family trusts – usually for high net-worth individuals who planned to protect their assets, and properly distribute their wealth to their intended next of kin
2. Statutory trusts – mainly for statutory compliance purposes, such that they are structured for insurance policyholders and their beneficiaries.
3. Charitable trust – set up with the purpose to benefit a certain cause or group of people as a form of charity.
4. Collective investment trusts – trust that deals with business trusts, unit trusts, and real estate investment trusts (REITs).
What is a breach of trust?
1. A breach of trust may be deliberate or inadvertent.
2. It may consist of an actual misappropriation or misapplication of the trust property, an investment or other dealing which is outside the trustees’ powers.
3. It may consist of a failure to carry out a positive obligation of the trustees.
4. It may be injurious to the interests of the beneficiaries or be contrary to their benefit.
How much to set up a trust in Singapore?
Depending on the type of trust and assets involved, it can cost you around S$3,000 to S$10,000 to set up a trust. Reasons for setting up a trust usually revolve around wealth control within the family, efficient distribution to the rightful beneficiaries, and protecting assets from creditors and lawsuits. If you like to find out more about setting up a trust here in Singapore, talk to us today.
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