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Geography & People
The Republic of Singapore consists of a main island and fifty-four smaller islands situated at the southern tip of the Malay Peninsula. It has a total land area of approximately 622 square kilometers (240 square miles) and a population of approximately 3 million. It is a multiracial state consisting predominantly Chinese (76 per cent) and Malays (15 per cent), followed by Indians (7 per cent) and others (2 per cent).
There are four official languages in Singapore, namely, English, Mandarin, Malay and Tamil. English is the language of government and business.
Economy & Infrastructure
Singapore has had phenomenal economic growth since becoming an independent republic in 1965. The Government has always promoted export oriented industrial growth, particularly in the high-tech sector, and that it will continue to develop Singapore as a major service centre offering a wide range of financial and insurance services, and technical know-how. Singapore already competes with Hong Kong as the major financial centre for Southeast Asia and has an active stock market and a gold exchange.
Singapore has a highly developed infrastructure. It has a well-paved road network including modern expressways and a modern subway system. It has a world class international airport at Changi at the eastern end of the island. This airport has all the modern facilities for handling cargo as well as passenger traffic. Singapore is served by more than 35 international airlines and handles a large volume of passenger and cargo traffic.
Singapore is a major regional and global telecommunications center. It has a modern telephone system with international direct dialing facilities to 157 destinations. International telex service is available and Singapore has a satellite telecommunications link. E-mail, telefax, telebox and telepac are amongst the many services available.
Time Zone
Singapore is 8 hours ahead of the Greenwich Mean Time.
Introduction
The law relating to incorporating a company in Singapore is found in the Companies Act, Chapter 50 and administered by the Accounting & Corporate Regulatory Authority (ACRA).
From 1 April 2004 under the Companies’ Act, one or more persons associated for any lawful purpose may form an Incorporated Company by subscribing their names to a Memorandum of Association and complying with the requirements for registration set out in the Act. The Company may be one of these types: -
| a) |
a company limited by shares - a company in which the liability of its members is limited to the amount paid and unpaid (if any) on the shares taken by them. |
| b) |
a company limited by guarantee - a company in which the liability of its members is limited to the amount they individually undertake to contribute to the assets of the Company. |
| c) |
An unlimited company - a company in which the liability of members is unlimited. This is often used by professional organisations desiring corporate status. |
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Income in Singapore is taxed on a territorial and remittance basis. Capital gains are not taxed. The corporate rate currently stands at 18%.
Both resident and non-resident companies are subject to tax on Singapore sourced income and on foreign sourced income remitted to Singapore. A resident company is one which has management and control of its business carried on in Singapore. A resident company is entitled to double tax reliefs for foreign taxes suffered on income remitted from countries which Singapore has concluded double tax treaties with.
A Singapore company is required to withhold tax from certain payments made to a non-resident persons, such as interest, royalty and rent, etc. The current rate of withholding tax is 15%, subject to the various double tax agreements that Singapore has concluded with other contracting countries.
Under Section 63 of the Singapore Income Tax Act, a company is required to file a return of its income with the Inland Revenue Authority of Singapore (IRAS) every year. The dateline for filing falls on 31 July of every calendar year.
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From 1 April 2004, subscriber(s) to the Memorandum & Articles of Association must be at least one person(s). Either an individual or corporation.
Every company must at all times have at least 1 director, one of whom must be a local resident. The first director(s) of a company are named in the articles, subsequent directors are usually elected at annual general meetings which is a common stipulation in the Articles of Association.
A person cannot be appointed director unless he has signed the Form 45 and e-file with the Registrar, a consent in writing to act as director. Consent must be signed before an advocate and solicitor in Singapore, an approved company auditor or a notary public.
Some of the duties of director as prescribed by the Act include:
Description |
Section |
| Observing the restrictions, limitations or prohibitions of a private company |
27 |
| Complying with the instruction of ACRA to change the company’s name |
28 |
| Ensuring that the requirements relating to the issue and the contents of a prospectus (for public company) are satisfied |
43-45 & 56 |
| Complying with the required procedures for reduction of share capital |
73 |
| Ensuring the registration of transfers of shares and issuance of share certificates |
127 & 130 |
| Ensuring the registration of charges |
131 |
| Maintaining a registered office |
142 |
| Ensuring the publication of company name |
144 |
| Disclosing his interests in any contracts or proposed contracts that the company may enter into |
156 |
| Acting honestly at all times and using reasonable diligence in the discharge of the duties of his office |
157(1) |
| Ensuring that he does not make improper use of any information obtained by virtue of his office to gain advantage for himself (either directly or indirectly) or to cause detriment to the company |
157(2) |
| Obtaining approval of the company in general meeting before disposing of or executing any transaction for the disposal of a substantial portion of the company’s undertaking or property, notwithstanding that the directors are often described as “trustee” of the company’s assets and undertaking. |
160 |
| Disclosing to the company his shareholdings and any changes thereto |
165 |
| Securing the appointment of qualified persons as secretaries |
171 |
| Ensuring that all registers or statutory books are kept and up-dated |
173 |
| Holding of the statutory meeting and the preparation and filling of the statutory report in relation to a public company |
174 |
| Holding of Annual and Extraordinary General Meetings, and convening of meetings |
175-177 |
| Ensuring the registration of certain resolutions and agreements |
186 |
| Ensuring the proper recording of minutes of all meetings |
188 |
| Preparing and lodging the Annual Return with ACRA |
197 |
| Keeping of proper accounting records |
199 |
| Tabling of accounts, balance sheet and directors’ report at the Annual General Meeting |
201(9) |
| Securing the appointment of first auditors |
205 |
| Making a declaration of solvency, in the case of a voluntary winding up by members |
293 |
| Ensuring that dividends are only paid out of profits |
403 |
The Companies Act requires directors of a company to make a report relating to the profit and loss of company for the financial year and the state of the company’s affairs at the end of the financial year.
Every company must hold its first annual general meeting within 18 months after its incorporation. Subsequently, an annual general meeting must be held at least once in every calendar year. The interval between two general meetings should not be more than 15 months.
An annual return must be made after the annual general meeting. The return is to be made not later than 14 days after the meeting.
Failure to hold Annual General Meeting or failure to file Annual Return, fine will not be exceeding $5,000 and a default penalty respectively. In practice late for filing Annual Return, fine will be ranging from $60 to $700.
The legal and procedural requirements for incorporating companies are specified in the Companies Act and the Companies Regulations. The provisions are applicable for all kinds of companies. The procedures for incorporating a private limited company are as follows:-
| a) |
A name must be chosen and submitted via Bizfile to ACRA for approval (within two hours from the time of submission). Once the name applied for is approved, it is automatically reserved by ACRA for 60 days from the date of application. |
| b) |
Upon approval of the company name by ROC, incorporation papers are need to be signed by client before we bizfile with ACRA for incorporation, namely :-
| i) |
Memorandum and Articles of Association |
| ii) |
Form 45 (Directors confirming in writing that they have consented to accept directorship). |
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| c) |
The ACRA will issue an acknowledgement once the company is incorporated. There is no hard copy certificate of incorporation issued by ACRA unless special request by the company at a application fee of $50.00 and this usually takes about 7 working days from date of application. However, shelf companies may be purchased for immediate use. |
| d) |
Fees for registration of a company are charged depends on the whether the company has a share capital are as follows:- |
Types of Companies |
Registeration Fee |
| Local Companies |
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| * Private companies incorporated in Singapore |
$300 |
| * Private companies incorporated in Singapore without share capital |
$600 |
Registration of the following names is prohibited under the Companies Act :
| a) |
identical to another; |
| b) |
undesirable; or |
| c) |
of a kind the Minister has directed the Registrar not to accept. |
Virtually no restrictions are placed on the type of business which may be carried on in Singapore but all businesses must be registered with ACRA, or in the case of a representative office, with the Trade Development Board. There are no restrictions to the business entity being 100% foreign owned.
Certain businesses will also be required to apply for special licences from the government (e.g. Banks, finance, companies, insurance and share-banking companies). Similarly, businesses which intend to manufacture certain goods must consult with the Economic Development Board before doing so.
Registered Office
Every company must have a registered office in Singapore which must be open and accessible to the public for not less than three hours between 9 am and 5 pm each day, except Saturdays, Sundays and Public Holidays. If there is any change in the address of the registered office or the name of the building, the company must notify ACRA within 14 days.
Company Auditor And Secretary
Directors shall appoint an auditor and a company secretary/secretaries within 3 months and 6 months respectively after incorporation of a company. In respect of appointment of secretaries, at least one of secretaries must be present at the registered office of the company.
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| a) |
Countries (e.g. Indonesia) that prohibit the use of International Business Companies (IBC) to trade may indirectly do so by setting up a Singapore company to act as an agent for the IBC so as to circumvent any direct trading between Indonesia and the IBC. |
| b) |
There is no capital gains tax in Singapore and as such, an Investment Holding Company may be set up to hold overseas investments which may later be disposed as capital gains. |
| c) |
Singapore has entered into Investment Guarantee Agreements with the Belgo-Luxembourg Economic Union, Canada, China (People’s Republic), France, Germany, Netherlands, Sri Lanka, Switzerland, Taiwan, United States. Under these agreements, investments in each contracting country are protected for a specified period (usually 15 years) against war and non-commercial risks of appropriation. In the event of non-commercial appropriation, Singapore will compensate foreign investors either directly or through their governments based on the market value of the property destroyed or appropriated. |
| d) |
Singapore is a member of the Association of South-East Asian Nations (ASEAN) . Companies incorporated in Singapore can benefit from the signing of an Asean Free Trade Agreement that aims at creating a free trade area for 10 years. Over 15,000 items produced by member nations have been placed on the Asean Preferential Trade Arrangement and will enjoy various margins of preference. |
| e) |
The removal of exchange controls on capital brought into Singapore and tax free remittance of profits and repatriation of Capital in June 1978 are some of the major factors in influencing foreign corporations to invest in Singapore. |
| f) |
With the use of nominee/trustee shareholders and together with the appointment of nominee Directors one could ensure complete confidentiality and anonymity of the beneficial shareholders. |
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