Located in South East Asia, Singapore has emerged as the region’s premier business and trade hub. With a highly developed and successful free market economy the city-state enjoys an open and corruption-free environment, legal and political stability, and a low tax regime.
Singapore has long been ranked highly for its favorable tax and regulatory regime. In 2018, it was placed 7th in PwC’s global Paying Taxes Index; 2nd in the World Bank’s Doing Business Index; and second in the Heritage Foundation’s Index of Economic Freedom.
Singapore’s economy is export driven, and its main industries include electronics, petroleum products, chemicals, medical and optical devices, pharmaceuticals, maritime transport and financial services.
Singapore Company Law
Most types of Singaporean company are formed under the Companies Act (Cap 50). The main company formats are summarized below.
Private Limited Company
The private company limited by shares is the most common business structure used in Singapore. The company is a separate legal entity in its own right, and so shareholders are not liable for its debts. The maximum number of shareholders allowed is 50.
Exempt Private Company
An Exempt Private Company (EPC) has a maximum of 20 shareholders, none of which may be a corporation (either directly or indirectly). EPCs are only required to audit their accounts if they have annual turnover of over SGD5m. Accounts do not need to be filed with the Accounting and Corporate Regulatory Authority (ACRA), although an exempt company certificate declaring the EPC’s solvency status must be submitted. An annual tax return must be filed with both ACRA and the local inland revenue (IRAS) within one month of the company’s annual general meeting.
Public Limited Company
A public company limited by shares is a locally incorporated company; it must have the word “Limited” as part of its name. There is no limit on the maximum number of shareholders. Such companies are often listed on a stock exchange and raise capital by issuing shares and debentures. Before it can do so, the company must register a prospectus with the Monetary Authority of Singapore. The company must also register with the ACRA and its audited accounts must be filed annually with the authority. An annual tax return must also be filed with both ACRA and the IRAS within one month of the company’s annual general meeting.
Company Limited by Guarantee
A company limited by guarantee carries out non-profit-making activities for the public or national interest. It has no share capital, and therefore usually consists of members rather than shareholders. The company must register with the ACRA and file its audited accounts annually with the authority. An annual tax return must also be filed with both ACRA and the IRAS within one month of the company’s annual general meeting.
Foreign Company
A foreign company may establish a branch or subsidiary in Singapore. The foreign company’s head office is ultimately responsible for a branch. Moreover, a branch does not benefit from tax incentives and exemptions enjoyed by local businesses. The branch must bear the same name as the head office and must have a registered office address in Singapore. Two ordinarily resident agents in Singapore must be appointed by the branch to accept notices and services of process.
Directors and Secretaries
The Companies Act requires a company to have at least one director. In addition, at least one director must be ordinarily resident in Singapore. This means that the director’s usual place of residence is in Singapore.
Every company must appoint a secretary within 6 months from the date of its incorporation. The company secretary must be residing locally in Singapore and they must not be the sole director of the company.
The secretary may be held liable for the company’s failure to comply with the law in certain situations.
The secretary of a public company must have been the secretary of a company for at least 3 of the 5 years immediately before their appointment.
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