Types of Companies in Singapore: Key Requirements and Considerations

Why Establish a Business in Singapore?

Singapore is widely regarded as a prime destination for business incorporation due to its strategic location in Southeast Asia, its robust economic framework, and its pro-business policies. Entrepreneurs, corporations, and startups of all sizes choose Singapore for its many advantages, including:

• Ease of International Trade: Recognized as one of the most trade-friendly nations, Singapore provides an ideal gateway for businesses looking to operate globally.
• Favorable Corporate Tax Structure: A competitive corporate tax rate of 17% ensures businesses of all sizes operate in a cost-efficient manner.
• Tax Benefits: Singapore’s tax system is structured to benefit investors and businesses, featuring no capital gains or dividend tax.
• No Estate, Inheritance, or Death Taxes: A business-friendly environment that allows for smooth wealth transfer and succession planning.
• Progressive Personal Tax System: Tax rates are structured to favor individuals, starting at 0% and capping at 22% for incomes exceeding S$320,000.

With a business-friendly climate, strategic location, and tax-efficient policies, Singapore continues to be a top choice for businesses looking to expand in Asia.

Choosing the Right Business Structure in Singapore

Understanding the different types of business entities and their requirements is essential for a seamless incorporation process. Below is a breakdown of the most common company structures in Singapore:

Private Limited Company (Pte Ltd)

• Features: The most popular company structure, offering limited liability protection to its owners.
• Ownership: Can have up to 50 shareholders, including individuals and corporate entities.
• Regulatory Requirements: Fewer compliance obligations compared to a Public Limited Company.
• Capital Structure: Shares are not publicly traded on the stock exchange.

Public Limited Company

• Capital Raising: Able to raise capital by offering shares to the public through the stock exchange.
• Regulatory Compliance: Subject to stringent reporting requirements due to public funding.
• Liquidity: Shares are freely traded, giving investors flexibility.
• Best Suited For: Large-scale businesses with significant capital needs.

Subsidiary Company

• Ownership: Wholly owned by a parent company but operates as a separate legal entity.
• Limited Liability: The parent company is not responsible for the subsidiary’s financial obligations.
• Independence: Functions autonomously while complying with local regulations.
• Best Suited For: International businesses looking for a Singaporean presence.

Branch Office

• Structure: An extension of a foreign corporation operating in Singapore.
• Legal Status: Not a separate legal entity; liabilities remain with the parent company.
• Operations: Engages in the same commercial activities as the foreign headquarters.
• Best Suited For: Companies wanting a Singaporean presence without forming a new legal entity.

Representative Office

• Functions: Primarily used for market research, feasibility studies, and promotional activities.
• Legal Status: Cannot engage in revenue-generating activities as it lacks a separate legal entity.
• Duration: Typically set up temporarily before transitioning into a subsidiary or branch.
• Best Suited For: Foreign companies exploring business opportunities in Singapore.

Sole Proprietorship: An Alternative for Small Businesses

For individuals looking for a simpler business setup, a sole proprietorship may be a viable option.

• Ownership: Owned and operated by a single individual.
• Liability: The owner is personally liable for all business debts.
• Decision-Making: Full control over business decisions.
• Taxation: Business income is taxed as personal income.
• Ease of Setup: Less complex and more cost-effective compared to incorporated entities.
• Growth Potential: Limited scalability and access to funding.
• Best Suited For: Freelancers, consultants, and small business owners seeking low-cost operations.

Key Requirements for Company Incorporation in Singapore

Once you have determined the best business structure for your goals, you must meet specific incorporation requirements to ensure compliance.

1. Directors

• A minimum of one director is required.
• At least one director must be a Singaporean citizen, a Permanent Resident, or hold an Employment Pass.

2. Shareholders

• A minimum of one and a maximum of 50 shareholders.
• Shareholders can be individuals or corporate entities.

3. Company Secretary

• Must appoint a qualified company secretary within six months of incorporation.
• The secretary must be a Singaporean resident and ensures regulatory compliance.

4. Registered Address

• The company must have a registered local Singapore address.
• This address is used for official correspondence and legal notices.

5. Share Capital

• No minimum paid-up capital is required.
• Companies can choose any currency for their capital structure, with SGD being the most common.

6. Company Name

• The name must be approved by ACRA (Accounting and Corporate Regulatory Authority).
• It must be unique and should not infringe on existing trademarks.

Final Thoughts

Ensuring compliance with Singapore’s business incorporation requirements is crucial for a smooth setup. If you need expert guidance in establishing your business in Singapore, feel free to reach out. Our team is ready to assist you in every step of the process.