July 7, 2020
Got a business idea and looking to incorporate a company in Singapore? If yes, this guide will give you all the information you need. Company registration in Singapore can be overwhelming for first timers. But don’t worry, we’ll explain the various options you have and considerations you should run through before making your company official.
Here are the things you’ll need to think about:
- Selecting a company name
- Choosing your type of company
- Picking an SSIC code
- Referral authorities
- Appointment of company directors and corporate secretary
- Foreigners who wish to incorporate in Singapore
- Shareholders and paid up capital
- Registered office address
- Constitution
- Financial year end
- Maintaining a company
- Selecting a company name
The first part of your application to register a company is to apply for its name. Other than thinking about how you’d like to brand your company or choosing a catchy and memorable name, there’s one important thing to check: your new company name must be available. In other words, it cannot be similar to existing entities, because it may cause confusion in the market.
To see whether someone’s already registered the name(s) you had in mind, do a free entity search in ACRA’s registry on their filing website, BizFile (www.bizfile.gov.sg.)
Take note that ACRA may also reject company names that include vulgarities or racial slurs, so be sure to steer clear of such words.
Bear in mind that all companies must have either the word “Limited” or “Ltd” at the end of their names.
Can you change your company’s name after you’ve incorporated it? Yes, for a small fee. You must however seek shareholders’ consent and undertake some paperwork, so it’s best to pick a name that you’ll likely stick with right from the start.
- Choosing your type of company
Legally, there are several types of companies recognised in Singapore (e.g. public vs. private companies) but if you’re an entrepreneur, most likely at this stage you are looking to either register an Exempt Private Company (maximum 20 shareholders, all of whom are people and not business entities) or a Private Company Limited by Shares (maximum of 50 shareholders, can include other business entities.)
An Exempt Private Company, or EPC, is generally a good place to start because EPCs enjoy certain regulatory benefits, such us being exempted from requiring audited financial statements. This is part of the government’s move to make business easier for entrepreneurs.
- Picking an SSIC code
When you incorporate your company, or register other types of business entities, you will be required to describe your company’s business activity using the Singapore Standard Industrial Classification or SSIC for short. It’s mostly used for the government’s census and administration purposes.
View the latest list SSIC codes on SingStat’s website, and pick up to 2 codes for your new company.
- Referral authorities
In Singapore, certain business sectors are regulated by the government through the various statutory boards. For instance, the F&B industry is regulated by the Singapore Food Agency, and the tourism industry regulated by the Singapore Tourism Board.
If you are entering a regulated industry, you may need to obtain prior approval before incorporating your company. The supporting documents must be submitted together with the name application.
Hence, it’s best to check ACRA’s list of referral authorities to see if you need to make additional applications before setting up your company.
- Appointment of company directors and corporate secretary
Companies incorporated in Singapore need at least one company director and one corporate secretary.
By legal definition, a company director is a person who will be managing the affairs of the company. Company directors must be at least 18 years old, and either a Singaporean citizen, permanent resident (PR), or EntrePass holder. At least one company director must be residing in Singapore.
A corporate secretary ’s role is to ensure that the company complies with corporate filing and taxation laws, and do not breach laws enforced by the relevant regulators. This person is not to be confused with a personal assistant who acts as your point of contact, manages your schedule, books your trips, etc.
If your company has only one director, you must appoint a different person to be a corporate secretary. If your company has more than one director, then one of them can hold a second appointment as the corporate secretary.
For each appointed person – whether director or secretary – you must have on hand their name, personal identification details, e-mail address, residential address and telephone number.
Not willing for your residential address to enter public records? For an extra fee, you can take up ACRA’s option to provide an alternate address, which appears instead whenever somebody purchases your company profile. This alternate address must be a place where you can be easily contacted (e.g. your office) and cannot be a P.O Box address.
- Foreigners who wish to incorporate in Singapore
(Skip to the next section if you are not a foreigner)
If you are a foreigner who wishes to set up a company in Singapore, you must hire a filing agent to submit the application on your behalf. Without a government-issued SingPass, you would not be able to log into the business registration portal.
You also have to employ a locally resident company director. This type of company directors is also referred to as “nominee directors”. Their role is to help you meet this requirement so that you can set up your company in Singapore. They will not be involved in the operations or business matters of your company, unless they observe risky activities that could lead to non-compliance with the laws.
- Shareholders and paid up capital
There must be at least one shareholder of your company. So other than yourself, think about whether there’s anyone else you’d like to issue shares or ownership to at this stage.
The minimum issued capital, that is the total amount paid by shareholders in exchange for ownership of your company, is $1.
ACRA allows you to issue ordinary shares or preference shares. Ordinary shares come with voting rights and entitles shareholders to dividends. Preference shares are a more complex tool, usually used to raise capital for your company operations without giving away voting rights.
- Registered office address
Submissions to start a company must include a registered office address. This address is for all official correspondence from the government (and other institutions such as banks), and also the address listed when people conduct a free search on ACRA’s directory. It must be publicly accessible and open during business hours.
If you’re hiring a professional corporate secretary, you can discuss with them about listing their address as your registered office address. This is useful if you haven’t secured a business premise yet, or intend to operate from home and don’t want to disclose your address to the public. Your corporate secretary will typically manage your official correspondence for you so that you don’t miss important notices or reminders.
- Constitution
All companies must have a Constitution, which is a legal document that contains the rules and regulations for how the company will be governed. There is a template you can follow, officially referred to as the “Model Constitution,” but you should read it in advance and see if there are any clauses you would like to add or change.
For instance, if you intend to issue preference shares (explained above), you should give some thought on how you intend to structure the rights of a preference shareholder and word it into your company’s Constitution.
- Financial year end
A financial year is the 12-month period which your company’s financial statements will be based on. Your financial year end will affect when your taxes and annual returns are due.
Financial year ends must be on the last day of the last month (e.g. 31 Dec, 31 Mar, 30 June and 30 Sep.)
If you have no other considerations that would affect your choice of your financial year end, it would be prudent to stretch your financial year end to just before 12 months from the time your application is submitted. The reason is that new companies enjoy special tax incentives for the first 3 years of assessment.
Therefore, if your first year of assessment is relatively short, your company will lose out in terms of tax savings. For instance, if you are incorporating your company on 7 August, your financial year end should ideally be on 31 July. This way, you get to maximise your first year’s tax incentives for an 11-month period, instead of say, a 4-month period if you had chosen 31 December instead.
- Maintaining a company
Once your company has been incorporated, the main statutory obligations are to
- file annual returns seven months after your financial year end,
- keep proper accounting records and prepare accurate financial statements,
- keep proper records of all beneficial owners (i.e. people with a significant interest or control in your company), company officers and shareholders, and
- update changes in your company’s information or changes in the personal particulars of the company officers.
When preparing your company’s financial statements, it’s best to engage a reliable bookkeeper to help you manage your accounting. Accounting standards are always evolving, so a professional who keeps abreast with the latest developments can help to ensure that your financial statements are proper. Otherwise, regulators may fine your company for declaring inaccurate/misleading financial statements.
Conclusion
There are many considerations and preparations to make before registering a company in Singapore. Be sure to work them out carefully, so that your business starts on a good note. You should also take note of the statutory compliance regulations that you have to meet after your company has been incorporated to avoid paying unnecessary fines.
If you need reliable experts to help you with registering your company and providing professional corporate secretary and/or nominee director services, get in touch with us today.