Types of Company in Singapore

Foreign investors can set up a variety of business structures in Singapore for their investments. Establishing a subsidiary, branch office, or representative office are some of the most popular options. Investors need to assess their specific business needs before deciding on a corporate structure to operate from.

Contributing Advisor

David Stepat

Country Director

Those entering Asia for the first time, for instance, may want to set up a low-risk, exploratory presence in the form of a representative office, while those looking to use Singapore as a springboard to access the ASEAN markets may need more strategic commitments by setting up a branch office or subsidiary company.

Investors need to be aware of the risks presented by each avenue of investment and determining the ideal route for market entry or expansion needs thoughtful consideration about the intended scope of investment, the nature of business activities, tax implications, and legal liability.

Private companies limited by shares

A private company limited by shares, also known as a private limited company, is the preferred structure among foreign companies for setting up a local business presence in Singapore.

A private limited company can benefit from tax incentives available to local companies. It is also a separate legal entity from its directors, shareholders and officers of the company. This means that the foreign holding company cannot be held for the liabilities of its subsidiary. In addition, the holding company’s liability is limited to the share capital subscribed in its subsidiary.

As a private limited company can be wholly owned by a foreign individual and/or corporate investor, this legal entity can be established as a regional holding company or subsidiary of the foreign holding company.

However, there are certain sectors in Singapore that are considered crucial for national security, such as telecommunications, broadcasting, domestic news media, financial services, legal and accounting services, ports, airports, and property ownership. In these sectors, Singapore has implemented some restrictions on foreign investment. According to Singaporean law, the articles of incorporation for businesses in these sectors can specify limits on the shares that foreign individuals or entities can own.

Registered capital

Initial paid-up share capital of at least S$1 (US$0.74)

Time to establish

One week if the following conditions are met:

• All the documents are in order;
• KYC has been cleared; and,
• Name of the company is approved by Accounting and Corporate Regulatory Authority (“ACRA”).

Key requirements for setting up a private companies limited by shares

A private limited company can be wholly owned by a foreign individual and/or corporate investor and can be established as a regional holding company or subsidiary of the foreign holding company.

Reservation of company name

• The company name must be approved by the Accounting and Corporate Regulatory Authority (ACRA) prior to the company registration process;
• Once a name is selected, the name application shall be submitted via ACRA BizFile for approval, which may be rejected if the name is identical, similar or phonetically similar to a company that has already been registered; and
• The name reservation fee charged by ACRA is S$15 (US$11.1), which will be reserved for 120 days upon approval.

Appointment of Company Officers

The officers of a company include the following:

• Director;
• The appointment of at least one director who is either a Singaporean citizen, permanent resident, EntrePass or Employment Pass holder;
• The director needs to be at least 18-years of age and must not have a history of misconduct or bankruptcy;
• Auditor (to be appointed within 3 months of incorporation unless exempted from audit requirements);
• Company secretary (to be appointed within 6 months of incorporation); and
• Shareholders, (the minimum issued, and paid-up capital is S$1 (US$0.74)).

Registered Address

This must be a commercial business address in Singapore.

Register for nominee shareholders and nominators

Singaporean and foreign companies registered in Singapore are obligated to maintain a register of nominee shareholders and their nominators. Further, Singapore companies, foreign companies, or Singapore limited liability partnerships (LLPs) who have no registrable controller or are unable to identify the controller are required to identify individual(s) with executive control as their registrable controller. The changes were set out under the Corporate Registers (Miscellaneous Amendments) Act 2022. The company or foreign company must update its non-public register within seven days after receiving information from a nominee shareholder or a nominator in their company. This new requirement aims to minimize the risk of companies in Singapore being controlled by illicit actors.

A nominee shareholder is defined as:

• A person or limited company that is registered as a holder of the shares in a company on 
  behalf of another person or company; and
• Receives dividends in respect of the shares that they hold as a representative of another 
  person or company.

Nominee shareholders must also notify the company if they cease to become a nominee shareholder within 30 days of cessation. Non-compliance with these requirements is punishable with a fine of up to S$5,000 (US$3,685).

The Corporate Registers (Miscellaneous Amendments) Act also introduces a new mandate for both local and foreign companies as well as LLPs to disclose registrable controllers. Registrable controllers are individuals, such as CEOs, directors, partners, or entities, who exert executive influence over daily operations. Previously, there was no obligation for companies or LLPs to maintain such a registry. Now, these entities must identify and register all individuals or entities exercising executive control.

Failure to comply with these regulations can result in fines of up to S$5,000 (US$3,685) per offense, with each defaulting officer subject to the same penalty.

Branch Offices

Foreign companies can establish branch offices to conduct any type of business activity that falls within the scope of the parent company.

Branch offices are not eligible for the tax exemptions and incentives available to local companies as ultimate control of the branch remains vested in the overseas parent company. As such, branch offices are regarded as an extension of the foreign holding company and is therefore taxed as a non-tax resident at the corporate tax rate of 17 percent.

The name of the branch office must be the same as the parent company and as a legal extension of the parent company. The parent company must bear ultimate legal responsibility for all liabilities and be registered with ACRA, which is responsible for the monitoring of new companies in Singapore. Because of this liability, many foreign companies choose to establish a subsidiary or private limited company rather than branch offices.

The parent company will bear all the liabilities of its branch office as it is viewed as a legal extension of the parent company. This means they are also subject to Singaporean taxes and are not eligible for local tax incentives and exemptions.

Time to establish

One week if the following conditions are met:

• If all the documents are in order;
• No deferrals in the procedure of name approval; and
• Client due diligence is approved.

Registered capital

No minimum capital requirement is needed.

Key requirements for setting up of a branch office

Reservation of name of branch office

• The name of the branch office must be the same as the foreign parent company;
• The name of the branch office must be approved by the Accounting and Corporate Regulatory Authority (ACRA) prior to the branch office registration process;
• Once a name is selected, the name application shall be submitted via ACRA BizFile for approval, which may be rejected if the name is identical, similar or phonetically similar to a company that has already been registered; and
• The name reservation fee charged by ACRA is S$15 (US$11.1), which will be reserved for 120 days upon approval.

Appointment of company officers

The officers of a company include the following:

• Director
  • The board of directors of the Singapore branch office must be the same as the board of directors on the foreign parent company; and
  • The director needs to be at least 18-years of age and must not have a history of misconduct or bankruptcy in their work history;
• Authorized representative
  • The branch office must have at least 1 authorized representative who is ordinarily resident in Singapore;

Registered Address

This must be a commercial business address in Singapore.

Investors looking to set up branch offices must ensure its activities do not go outside the scope of the parent company.

The parent company will bear all the liabilities of its branch office as it is viewed as a legal extension of the parent company. This means they are also subject to Singaporean taxes and are not eligible for local tax incentives and exemptions.

Representative Offices

A Representative Office (RO) serves as a temporary arrangement that enables a foreign entity to evaluate the feasibility of establishing a permanent presence in Singapore. Once approved, an RO can operate for a duration of one year from its commencement date. Extension beyond this initial period is possible on a case-by-case basis, up to a maximum of three years. If an RO intends to continue its operations in Singapore beyond the permitted period, it is necessary to register with the Accounting & Corporate Regulatory Authority (ACRA) of Singapore to establish a more permanent establishment.

ROs can be staffed by a maximum of five individuals, with the parent company bearing liability for the activities of the RO and is responsible for financing its operations. The RO is confined to activities set out by Enterprise Singapore, which include:

• Gathering of information on markets and potential clients;
• Carrying out research to ascertain product/service information;
• Developing trade contacts and manage product enquiries;
• Participating in trade shows and exhibitions; and
• Gathering information on regulatory requirements for the set-up of a permanent entity.

Time to establish

1-2 weeks after the submission of the application form

Registered capital

No minimum capital requirement

Key requirements for setting up a representative office

A representative office (RO) is a temporary administrative office set up to coordinate non-commercial activities of the foreign company.

They are normally established to explore potential opportunities in Singapore and the region and can operate for a maximum of three years from inception.

As a temporary administrative office, the RO cannot engage in profit-yielding business activities and can only participate in information gathering or market research-based activities.

Investors wishing to establish a RO in Singapore must ensure:

• The parent company has been established for more than three years;
• The parent company has incurred an annual sales turnover of more than US$250,000;
• The foreign chief representative is from its headquarters; alternatively, the RO may appoint a Singapore citizen to fulfil the role of the chief representative; and
• The RO does not hire more than five local employees as support staff.

The following documents are required to setup the RO:

• A completed application form;
• Copy of the company certificate; and
• Copy of the parent company’s latest annual reports and audited accounts. 

The application must be made through Enterprise Singapore, rather than ACRA.

Variable Capital Companies

The Variable Capital Company (VCC) is a new innovative corporate structure for all types of collective investment schemes (investment funds) in Singapore.

The VCC is regulated under its own legal framework through the Variable Capital Companies Act and offers more operational flexibility compared to investment fund structures currently available in the country through trusts, limited partnerships, or private limited companies.

This means fund managers can establish investment funds across both traditional and alternative strategies and as open-ended or closed-end fund strategies.

Open-ended funds are offered through fund companies that sell shares directly to investors, allowing them to enter and exit according to their convenience. There is also no limit on the number of shares they can issue, as long as there is an appetite for the fund.

Close-ended investments, however, are overseen by a fund manager or brokerage firm and are listed on the stock exchange. There are a fixed number of shares that are issued.

The government hopes this flexibility will attract more investment funds to be domiciled in Singapore and bring the country to the forefront of the global investment services industry.

What are the key benefits of using the VCC structure?

There are several benefits a VCC structure has over current collective investment schemes in Singapore.

• The VCC can be used as a standalone fund (comprising of a single investment portfolio) or as an umbrella entity with various sub-funds allowing for the segregation of portfolios and liabilities. Having multiple funds in a single VCC can improve cost efficiencies;
• The VCC capital will always be equal to its net assets. This is because the VCC’s shares are only created when investments are made. This provides flexibility in the distribution and reduction of capital as dividends can be paid out of capital, easing the ability of fund managers to meet dividend payment obligations; and
• Fund managers can easily re-domicile existing overseas investment funds by transferring their registration as a Singapore VCC.

There are also several tax benefits for VCC’s. These include:

• A VCC is not burdened by the same capital requirements of an open-end fund in Singapore, and has access to the country’s more than 100 tax treaties;
• An umbrella VCC will only need to file a single corporate income tax return (CIT) to the Inland Revenue Authority of Singapore (IRAS);
• Income from a VCC can be exempt from tax if it qualifies for the government’s Enhanced Tier Fund (ETF) Scheme. There are two criteria for this:
  • The VCC must have a minimum fund size of S$50 million (US$36.8 million); and
  • Must have a local business spend of S$200,000 (US$147,541).
• The VCC could qualify for the tax exemptions for startups scheme (SUTE) and obtain a 75 percent tax exemption on the first S$100,000 (US$73,770) of chargeable income during the first consecutive three years. The next S$100,000 of chargeable income can receive a 50 percent tax exemption; and
• The entity can recover goods and services tax (GST) on expenses occurred in Singapore.

Time to establish

It may take between 14 to 60 days for the application for incorporation of VCC to be processed. This includes the time required for referral to government agencies for approval or review, if necessary.

Registered capital

No minimum capital requirement

Key requirements for setting up a VCC

There are several key components of the VCC:

• The VCC must have at least three directors who are Singaporean residents. At least one director must be a representative of the fund manager;
• The VCC will require a Singapore regulated and licensed fund manager or it can use a Singapore licensed bank to be the fund manager. The entity cannot be self-managed;
• The VCC can have a single shareholder or hold a single asset;
• The requirements for investment funds listed under the Existing Securities and Futures Act (SFA) will apply to VCCs;
• The VCC must have a registered office in Singapore and appoint a Singapore-based secretary; and
• It must be audited by a Singapore-based auditor and present its financial statements as per the International Financial Reporting Standards (IFRS) or US GAAP.