Foreign Company Registration in Singapore
A comparative overview of the three types of business structures available to foreign companies that wish to open their office in Singapore.
nce a foreign company has decided to open an office in Singapore, the next step is to choose the appropriate business structure for their registration. The guide below provides an overview of the business structure options available to foreign companies. The following topics are covered:
A foreign company can register in Singapore as a subsidiary company, a branch office or a representative office. Below are the key differences of these structures:
Most foreign companies establish their offices in Singapore as subsidiaries for the following reasons:
- Singapore permits individuals or corporations to be shareholders of private limited companies; thus, the shareholding structure of a subsidiary can be very flexible. The parent foreign company can be the sole shareholder in a subsidiary if that is the structure the parent desires.
- A subsidiary company is a separate legal entity from its parent company. Thus, it can have a different name and can conduct different activities from those of the parent.
- The separate legal status protects the parent company from any debts and liabilities the subsidiary incurs. These debts and liabilities do not flow to the parent.
- A subsidiary company operates like any other local Singapore company and thus enjoys the rights and privileges of being a true Singapore company.
- A subsidiary is taxed as its own entity, at the low Singapore corporate tax rate.
- A subsidiary is eligible for business incentives offered by the Singapore government.
- A subsidiary company can have a name that's different from its parent company.
The following are the key requirements to keep in mind when registering a subsidiary company in Singapore:
- The company must have one or more directors, at least one of whom must be a Singapore citizen, permanent resident, or an employment pass holder. This requirement can be satisfied one the following ways:
- If the foreign company is hiring a local executive, he/she can be appointed as the local director.
- If one of the foreign company's overseas executives is relocating to Singapore, he/she can be appointed as the local director after the executive's Employment Pass is approved. .
- Alternatively, the foreign company can subscribe to the nominee local director service offered by their incorporation agent in Singapore.
- The company must appoint a local company secretary and have a local registered office address.
- The company must hire a local corporate services firm to assist with incorporation of the subsidiary company.
To learn more, see requirements and procedure for setting up a subsidiary company in Singapore.
A Subsidiary Company is the most commonly used corporate structure by foreign companies in SingaporeCorporateServices.com
As an alternative to a subsidiary company, a foreign business can set up a branch office in Singapore. A branch office is an extension of the parent company and lacks the liability protection, local tax rate and government incentives that are available to subsidiary companies.
Below are the key facts you need to consider before setting up a branch office:
- The branch’s corporate structure and activities must conform to the foreign parent company’s Constitution. Thus, it is restricted in the business activities it can undertake.
- The branch must use the same name as the parent company.
- All debts and liabilities accrued by the branch office are passed to the parent company.
- A claimant can file suit against the parent in a Singapore court and the case will be heard in Singapore.
- Because it is not a local company, branch offices are not eligible for business incentives offered by the Singapore Government to Singapore-based companies.
- Singapore mandates that two local agents must act on behalf of the branch, unlike a subsidiary, which requires only one local director. The agents must be “ordinary residents” of Singapore, meaning they must be Singapore citizens, permanent residents, or employment pass holders.
- The company must hire a local corporate services firm to assist with registration of the branch office.
To learn more, see requirements and procedure for setting up a branch office in Singapore.
Foreign entities that are keen on exploring the viability of doing business in Singapore or the Asia Pacific may wish to set up a Representative Office (RO) on a temporary basis. An RO does not permit you to conduct business activities; it is a structure that is to be used only for performing exploratory or marketing activities before commencing profit generating activities. If you decide to commence business activities in Singapore, you must register a subsidiary company or a branch office in Singapore.
Below are the key features of a representative office:
- It has no independent legal status.
- The representative office can only engage in market research or feasibility studies. It is expressly prohibited from engaging in any activities that yield a profit.
- It is a temporary arrangement with a maximum duration of three years.
- The entity setting up a representative office must be a foreign company that meets certain requirements. An application to set up a representative office is subject to approval from the Singapore government.
To learn more, see requirements and procedure for setting up a Representative Office in Singapore.
What to Choose
A Singapore representative office provides a simple structure but with very limited benefits. It may be suitable if you are not sure whether Singapore is the right location for your company and want to explore the market. A branch office has several limiting factors that make it an unattractive option for foreign entrepreneurs. A subsidiary company remains the best option for a foreign company in Singapore. Remember that you even do not need to visit Singapore to open a company. You are also welcome to read our guide on how to incorporate from Malaysia in Singapore.
Planning to register your foreign company in Singapore? Contact us for a FREE consultation today.
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