Setting up a private limited company in Singapore as a foreign individual or business

The most preferred type of entity among foreign individual entrepreneurs and business in Singapore is the private limited Company because of the flexibility that it offers and how it protects your personal assets limited to the paid-up capital. It is also a common choice to setup an investment holding structure starting with a Singapore entity before expanding/investing to the rest of Asia.

A private limited company is a locally incorporated company where the maximum number of shareholders is limited to 50. Such entity type is limited by shares, and it is a separate legal entity from its shareholders, meaning it is also recognized as a taxable entity. Shareholders of a private limited company will not be liable for its debts and losses beyond the amount of share capital they each own.

Such private limited companies usually required to have a suffix “Private Limited”, “Pte Ltd” or “Ltd” as part of their company name. The registration of companies in Singapore is done through the Accounting and Corporate Regulatory Authority (ACRA). If you are not registered with ACRA, you cannot do business in Singapore. 

Advantages of setting up a private limited company in Singapore as a foreign individual or business

• It has its own legal identity and shareholders are not liable for debts and losses of the company.

• It can be a wholly foreign owned business entity, no requirement for a mandatory local shareholder to be involved.

• Shareholders’ personal assets are protected as they are not liable for debts and losses of the company. 

• Profits taxed at corporate tax rates and dividends are tax-free in the hands of shareholders just like any other wholly local owned private limited companies.

• The effective corporate tax rate for first SGD300,000 of annual profit is at 8.5% and 17% thereafter, once of the lowest across the whole of Asia. 

• Newly incorporated companies are entitled to tax incentives and exemptions regardless of the type of ownership (foreign/local).

• Ownership of the company is transferable and additional shareholders can be appointed.

• The company’s existence does not rely on the continued involvement of any of its members. This ease transfer of shares or changes in shareholders and to ensure that the company continues to exist in the event of resignation, death or insolvency of shareholders or directors.

• Capital requirement minimum is just SG$1.00.

• Instant incorporation within one business day if there should be no complications. 

• Opening up of bank account in Singapore is relatively simple and straight forward with most local banks.

• A foreign director can take over the role of the resident director if he/she have the relevant Employment Pass (EP) approved by the manpower authority. 

• Join venture with a local partner is a breeze as there is no restrictions on the type/percentage share of ownership for such entity unlike some Asian countries.

Step by step guide to setting up a private limited company in Singapore?

• You must have Company name that is unique and not in used by others

• One resident director is required. This person can be a citizen, permanent resident or someone with a valid employment pass.

• You need to appoint one company secretary who is a natural person living in Singapore.

• At least one shareholder is required and must be an individual or corporate entity.

• A registered address is required for the business.

• An initial paid-up share capital of at least SG$1.00.

• Apply for an Employment Pass of any foreign individuals who will be director/working in this entity in Singapore.

• Bookkeeping is required to ensure all transactions are properly recorded.

• Annual statutory filing is required with the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS)

The list seems heavy but the Singapore government had a tech empowered environment making such compliance procedures less cumbersome. These are best managed if one work with a creditable service provider as most can manage all of the above while the business focus on developing the commercials growth of the company. 

Post-Registration

Certificate of Incorporation
The Company Registrar will send you an email and it confirms that your company has successfully been incorporated. Also, you will receive your Company Registration Number. This is an official certificate of incorporation. Should you wish to obtain a physical certificate, the Company Registrar will charge you at SGD50 and it takes approximately between 3-5 working days.

Company Business Profile
The Company Registrar will produce a company business profile for your Singapore register company after the company registration process is done. The PDF file contains:

Ø Company name and registration number

Ø Previous names for the company, if any

Ø Incorporation date

Ø Principal activities

Ø Paid-up capital

Ø Registered address

Ø Shareholders details

Ø Directors details

Ø Company Secretary details

After obtaining email notification and company business profile, you can proceed with all legal and contractual tasks in Singapore such as:

Opening a corporate bank account – you can opt to open a bank account with any local or international banks in Singapore

Application for business licenses – there are some businesses that you might need a special license. This applies to companies that perform activities related to:

Ø Restaurants

Ø Financial services

Ø Travel agencies

Ø Educations institutes

Ø Import & export of goods

Ø Recruitment agency

· Goods and Services Tax Registration – all businesses that have an annual revenue of more than SGD1 million will need to register for GST. Once you have received your GST registration, you will get to charge your customers an additional 7% of the goods and services you provide to the Singapore authorities.

· Annual Filing Requirements as per Singapore Companies Act

· Annual Income Tax Requirements as per Singapore Income Tax Act