SINGAPORE

Business Climate

Singapore’s open economy and excellent strategic location in Southeast Asia make it a very attractive business hub for companies who want to build their presence in the ASEAN (Association of Southeast Asian Nations) region. The city-state of 5.69 billion people is located where major East and West shipping lanes converge and is one of Asia’s largest trading hubs. This, in addition to its stable political environment, low taxes and highly skilled workforce contributes to Singapore’s consistent rating as one of the most favourable business locations in the world by the World Bank.

Singapore is a global financial hub, but the city is also known for its diverse business ecosystem, which is a generator for ideas and innovation. Testament to this is the city’s vibrant start-up scene. This draws many international entrepreneurs who find the combination of Singapore’s high living standards, impressive education system (of both local and international schools), busy port and pro-business environment the perfect English-speaking gateway to the ASEAN market.

 

Sectors

Trade has always been a consistent economic driver for Singapore. But the growth of its business services and a market-driven economy have become determining qualities that made Singapore become the fourth largest business centre in the world.

Apart from being one of the main financial and economic hubs world-wide, Singapore is a strong, export driven economy focussed on electronics, technology, and pharmaceuticals.

In recent years Singapore’s economic landscape has developed into one that stimulates knowledge-based and research-intensive industries. Significant growth and development can also be seen in the biomedical sciences, clean technologies, and interactive digital media industries.

 

Growth

Singapore is an advanced, successful, free-market economy that scores persistently high on the Corruption Perceptions Index, meaning its government, business and society experience little or no corruption. The city is globally connected with a strong and stable infrastructure that is equipped and keen to encourage growth across industries. Singapore is already the world’s 4th largest global exporter of high-tech goods, and the government wants to further boost advanced manufacturing capabilities through investing more than S$3 billion over five years through its Research, Innovation and Enterprise 2020 plan.

Because of Singapore’s maturity, strategic location, and low trade barriers with the region it is the perfect hub for businesses from all over the world wanting to capitalize on the enormous increase in business opportunities across the ASEAN region.

At this point in time, the progressive easing of Singapore’s domestic and border restrictions as its vaccination rates continue also makes it one of the most accessible hubs in Asia from which to do business, further stimulating its growth.

 

Setting Up

Even though Singapore has a very high pro-business environment, potential investors need to be aware of additional regulations and permits that apply to non-Singapore citizens. Getting professional advice from experts like Clockwork is essential before starting your registration process.

All businesses of any sort must be registered with the ACRA before commencing business. Financial institutions must be licensed by the MAS, and firms intending to manufacture or sell certain restricted goods will need appropriate licenses. Some companies will require additional licensing to operate and in this process, Clockwork can be of fundamental value. Clockwork has a comprehensive understanding of the international business environment in Singapore and its regulatory and compliance requirements. This means we can support foreign investors in selecting the right company formation and efficiently manage its registration process.

Corporate business structures most common in Singapore:

1. Company

In Singapore, foreign investors may incorporate their business as one of the following under the Companies Act:

Private company limited by shares

A private limited company is one of the limited liability companies registered and governed by ACRA (Singapore’s Accounting and Corporate Regulatory Authority). ACRA expects members of a private limited company in Singapore to hold and control their shares privately, based on the rules they set out in their company constitution. Shareholders of a private limited company can be both individuals and corporate organizations.

Main characteristics:

      • The most popular business entity in Singapore.
      • Usually use “Pte Ltd” or “Private Limited” in their name.
      • A minimum of 1 and maximum of 50 shareholders (to have more shareholders the company must be converted to a public company limited by shares.)
      • A legal entity separate and distinct from its shareholders and directors.
      • Must have a Singapore registered office address
      • Required to have a Company Secretary
      • Minimum initial paid-up capital is S$1

Less common but available structures under the Companies Act are:

Exempt Private Company (EPC)

An EPC is a private limited company that has a maximum of 20 shareholders. Shares can be acquired and held by individuals (foreign or domestic) but not by corporate entities.

Main Benefits:

      • Shareholders only liable for their own investment in the shares of the company.
      • Can extend loans to their directors. 
      • Tax exemptions for some new EPCs under the Start-Up Tax Exemption Scheme
      • Simplified annual returns filing process
      • Small EPC’s are exempt from audit requirements

Public company limited by guarantee

Main characteristics:

      • For non-profit making activities that have some basis of national or public interest.
      • Has no share capital

 Public Company limited by shares

Main Characteristics:

    • May have more than 50 shareholders.
    • May raise capital by offering shares and debentures to the public.
    • Must register a prospectus with the MAS before making any public offer of shares and debentures.

2. Sole Proprietorship

A sole proprietorship is suitable only for a very small single-owner business that does not carry any risks. A sole proprietorship does not provide limited liability protection and the owner’s personal assets are not protected from business risks.

Main characteristics:

      • Owned by a local resident (i.e., citizen, permanent resident or  foreigner with employment or dependant pass).
      • A manager who is resident in Singapore must be appointed.
      • Simple and flexible business structure with unlimited liability.
      • Partnership

Partnerships can be registered as:

General partnership

      • Has to be registered under the Business Registration Act and may consist of individuals or companies (minimum number of partners: 2, maximum number of partners: 20).
      • Is not a separate legal entity, members of the partnership are jointly and severally liable for the debts of the partnership.
      • A local manager must be appointed if none of the partners reside in Singapore.

Limited Liability Partnership (LLP)

      • Offers all its members limited liability while providing the operational flexibility of a partnership.
      • A LLP is required to appoint at least one local manager.
      • LLPs are commonly used by professional firms and start-ups.

Limited Partnership (LP)

      • Consists of one or more general partners and one or more limited partners (there is no cap on the maximum number of partners allowed for an LP).
      • A LP is not a separate legal entity – it does not have a separate legal personality apart from its owners/partners.
      • Limited partners of an LP enjoy limited liability but can’t take part in the management of the firm. (This structure could suit investors who wish to be “silent partners” in a business, and whose liability is limited to the extent of their investment in the LP.)
      • A LP is required to appoint at least one local manager if all general partners do not originally reside in Singapore.
      • LPs are increasingly used for private equity and fund investment businesses.

Please click here for more detailed  information about:

    • Incorporating a company in Singapore
    • Clockwork Business Support Services