Guide for Singapore Company Formation

Source: Government of Singapore

Guide for Singapore Company Formation

Choosing a Company Name

Every business needs a name to differentiate itself and to make it easy for others to find the business. The first step is to choose a suitable name and submit a name application via BizFile+, ACRA’s electronic filing and information retrieval system. Once the name application is approved, you can proceed to incorporate the company.

Determining the Company Type

Type of Company

1) Private Company
1.1) Private Company Limited by Shares
– Has a maximum of 50 shareholders.

1.2) Exempt Private Company (EPC)
– Has a maximum of 20 shareholders.
– No corporation is a shareholder.
– The Minister has deemed to be an EPC under the Companies Act.

2) Public Company
2.1) Public Company Limited by Shares
– May have more than 50 shareholders.
– May raise capital by offering shares or debentures to the public.
– Must register a prospectus with the Monetary Authority of Singapore (MAS) before making any public offers.

2.2)Public Company Limited by Guarantee
– Is usually formed to carry out non-profit making activities such as promoting arts, etc.
– Is one which has members instead of shareholders. These members agree to pay a fixed sum in case the company is wound up

Appointing Directors, Company Secretary and Other Key Personnel

The next step is to appoint officers in your company. You will need to provide their personal identification details, contact information (telephone number and e-mail address) and residential addresses when submitting the application online.

Officers of a company include the following:

Director

A director is the person in charge of managing the affairs of the company. He must make decisions objectively and in the best interests of the company. Every company must have at least 1 director who is locally resident in Singapore. Here are the basic requirements for a company director. He must be:
– At least 18 years old;
– Of full legal capacity;
– A Singapore Citizen, Singapore Permanent Resident or EntrePass holder.
– A director may also be an Employment Pass (EP) holder. However, a EP holder wishing to become the director of a local company must first get a Letter of Consent (LOC) from the Ministry of Manpower.
– Cannot be disqualified from acting as a director of a company e.g. an undischarged bankrupt.

Company Secretary

A company must appoint a secretary within 6 months from its incorporation date. A company secretary must be:
a. A natural person;
b. Locally resident in Singapore.
The position of company secretary must not be left vacant for more than 6 months. The sole director of a company and the company secretary cannot be the same person.

Chief Executive Officer and/or Managing Director

A company can choose to appoint a Chief Executive Officer (CEO) and Managing Director to manage and oversee all or part of the company’s business. It is not compulsory to appoint either CEO or Managing Director with ACRA.

Auditor

Every company must appoint an auditor within 3 months of incorporation, unless it is exempted from audit requirements under relevant sections of the Companies Act. Read more about the small company concept for audit exemption here.

Foreigners Who Wish to Incorporate a Local Company in Singapore

Foreigners wishing to incorporate a local company in Singapore must do the following:

– Engage the services of a registered filing agent (e.g. a law firm, accounting firm or corporate secretarial firm) to submit the online application.

– Employ a director who meets the requirements described in the above section on Directors. You may choose to reside outside Singapore after setting up your local company. However, if you wish to be present in Singapore to manage the company operations, you must seek approval from the Ministry of Manpower (MOM).

Shares and Shareholders

The company must have at least one shareholder. You will need to provide the personal identification details, contact information (telephone number and e-mail address), and residential address of each of the shareholders when submitting the application online.

You must also indicate the amount of issued capital i.e. the total amount that shareholders have paid for their shares. The minimum issued capital must be at least $1. However, there is no minimum paid up capital required.

A company may issue different types of shares with different conditions. Generally, a company issues two main types of shares:

– Ordinary shares: Carry voting rights and entitle shareholders to variable rates of dividends (i.e. payments to shareholders from profits of the company)

– Preference shares: Has preferential rights over ordinary shares, usually in respect of dividend distributions. The specific rights and benefits of preferential shares are commercial decisions decided by each company. They are contained in the Constitution or resolutions passed during meetings.

Note: Companies with paid-up capital of $0.5 million and above automatically become members of the Singapore Business Federation.

Registered Office Address and Constitution

Registered Office Address

You must provide a registered office address during your application to incorporate a company. A registered office address refers to the place where all communications and notices to the company are addressed to, and the place where the company’s register and records are kept.

A registered office must be operational and accessible to the public during normal office hours, but need not be where the company conducts its activities (e.g. the registered office address may be in Raffles Place but the factory could be located in Tuas).

Constitution

The constitution is a legal document that:
– Describes the key characteristics of the company.
– Contains the rules and regulations for its governance.
– Describes how its operations will be carried out.
– States the rights and responsibilities of the directors, shareholders and company secretary.

A copy of your company’s constitution must be submitted when applying to incorporate your company.

If you do not wish to create your own constitution, you may choose to adopt the Model Constitution. This option will be presented during your application for incorporation.

Deciding on a Financial Year End

You must also decide on the first financial year end (FYE) of your new company. The FYE will determine when your corporate filings and taxes are due. Common choices by companies include 31 March, 30 June, 30 September or 31 December.

You must also decide whether your accounting period covers 12 months or over 52 weeks.

Submitting your Application via BizFile+

When you have all the information you need, you may log in to BizFile+ to submit your application. You will need the transaction number of your approved company name application.

How to Register

To incorporate the company, log in to BizFile+ using your SingPass (for first-time registration) to submit the online transaction. To register a SingPass account or check your eligibility for SingPass, visit www.singpass.gov.sg.

Once you have setup the company, you will need a CorpPass to file transactions in Bizfile+. To register for CorpPass, please visit www.corppass.gov.sg

All of the company’s directors, shareholders, and company secretary must endorse their consent online via BizFile+ within 120 days from the name application approval date. An e-mail notification will be sent to the appointed officers. The e-mail is also accessible from the dashboard in BizFile+.

The government fee for registering a company is $300. You can pay using credit/debit card (Visa, MasterCard or American Express), PayPal, Apple Pay and Google Pay.

Licences and Approvals

Depending on the business activity of the company, you may need to apply for licence or approval from other government agencies before commencing business. Visit the LicenceOne website for more information.

What you have to file each year

A director of a company has to comply with a number of statutory obligations under the Companies Act. Some of these key obligations include:

Annual General Meeting

Companies, unless exempted, are required to hold an Annual General Meeting (AGM).

Annual Return

All companies must file their annual return within 7 months after the closing of the financial year end.

Register of Registrable Controllers

With effect from 31 March 2017, companies, foreign companies and LLPs (unless exempted) are required to maintain beneficial ownership information in the form of a register of registrable controllers, and to make the information available to public agencies upon request.

Electronic Register of Members

All companies must maintain with ACRA an electronic Register of Members, which is a listing of all shareholders. This information is updated whenever a company files a registration of share ownership or changes in share ownership. All companies’ electronic Registers of Members are available for purchase by members of the public through our iShop@ACRA.

Electronic Registers of Directors, Secretaries, Auditors and CEOs

Similarly, companies must maintain electronic registers of directors, secretaries, auditors and CEOs with ACRA. Companies are required to update ACRA within 14 days after changes in appointments.

Changes in Company Information

Companies are required to update ACRA within 14 days of any changes to the company’s name, address and business activity.

Changes in Personal Particulars of Company Officers and Shareholders

Companies are required to update ACRA within 14 days of any changes to the personal particulars of company officers and shareholders.

Other important information

CorpPass

CorpPass is a corporate digital identity for businesses and other entities (such as non-profit organisations and associations) to transact with government agencies online. CorpPass is the single login method for G2B transactions from 1 September 2018 and is managed by the Government Technology Agency (GovTech).

To set up your CorpPass account, please visit www.corppass.gov.sg.

Unique Entity Number

After incorporation, every new business will be issued a system-generated Unique Entity Number (UEN). Businesses must use this UEN when transacting with government agencies.

Special UEN

ACRA also offers a Special UEN (SUN) service which allows you to reserve a preferred UEN from an list of reserved UENs at the point of entity incorporation/registration . The preferred UEN numbers costs either $1,000 or $3,000 each, depending on the selected tier.

Free Business Profile

From 2 June 2017, all newly incorporated entities will receive a free business profile. This profile is an electronic report containing details about the new entity. Upon successful incorporation/registration, the lodger will receive an email with a URL to download the profile. The free business profile applies to successful annual filing/renewal/declaration for an entity. For business renewal via GIRO, upon successful renewal, the free Business Profile will be sent to all the individual business owners the next day.

Alternate Address

Directors and company officers have the option of providing ACRA with an address in addition to their usual residential address. The alternate address will be displayed in the Business Profile for public information, instead of the residential address. It must be an address where the company officer can be contacted, and must be within the same jurisdiction as the residential address. It cannot be a P.O. Box address. This service costs $40. ACRA reserves the right to display the company officer’s residential address in the Business Profile if he/she cannot be reached via the alternate address provided.

Membership with Singapore Business Federation (SBF)

Under the SBF Act, all Singapore-registered companies with share capital of S$0.5 million and above are members of SBF. Companies registered with ACRA with paid-up capital that meets the threshold of $0.5 million will receive a notification letter from SBF on their membership. For more information, please visit the SBF website.

SMECEN (SME Cloud Exchange Network)

SMECEN is a cloud-based integrated software that provides accounting, human resource and compliance modules. It helps to increase SME’s productivity by leveraging technology to manage day to day operations such as invoicing, purchase and sales orders, leave, claims etc. With built-in regulatory compliance features, SMEs can easily prepare and file on time with ACRA, IRAS and CPF. Visit the SMECEN website for more information.

Corporate Tax Rates

Tax Rates, Corporate Income Tax Rebates and Tax Exemption Schemes for both local and foreign companies.

Below gives an overview of the Corporate Tax Rates, Corporate Income Tax Rebates and Tax Exemption Schemes.

Tax rate for year of assessment (YA) 2013 and subsequent YAs

– 17%

Tax exemption/ rebate

– Partial tax exemption and tax exemption scheme for new start-up companies
– Companies can enjoy the partial tax exemption and tax exemption for new start-up companies, as provided in the tables below.

Partial tax exemption for companies (from YA 2020)

– First $10,000 chargeable income@75% exempted from tax= $7,500
– Next $190,000 chargeable income@50% exempted from tax= $95,000
Total $200,000 chargeable income with $102,500 exempted from tax

Tax exemption scheme for new start-up companies (where any of the first 3 YAs falls in or after YA 2020)

– First $100,000 chargeable income@75% exempted from tax=$75,000
– Next $100,000 chargeable income@50% exempted from tax=$50,000
Total $200,000 chargeable income with $125,000 exempted from tax

Partial tax exemption for companies (YA 2019 and before)

– First $10,000 chargeable income@75% exempted from tax= $7,500
– Next $290,000 chargeable income@50% exempted from tax= $145,000
Total $300,000 chargeable income with $152,500 exempted from tax

Tax exemption scheme for new start-up companies (where any of the first 3 YAs falls in or before YA 2019)

– First $100,000 chargeable income@100% exempted from tax=$100,000
– Next $200,000 chargeable income@50% exempted from tax=$100,000
Total $300,000 chargeable income with $200,000 exempted from tax

For more details on the above exemptions, please refer to common tax reliefs that help reduce the tax bills.

YA 2019
Companies will be granted a 20% Corporate Income Tax Rebate, capped at $10,000.

YA 2018
Companies will be granted a 40% Corporate Income Tax Rebate, capped at $15,000.

YA 2017
Companies will be granted a 50% Corporate Income Tax Rebate, capped at $25,000.

YA 2016
Companies will be granted a 50% Corporate Income Tax Rebate, capped at $20,000.

YA 2013, YA 2014 and 2015
Companies will be granted a 30% Corporate Income Tax Rebate, capped at $30,000 for each YA.

Corporate Income Tax (CIT) Rebate for YAs 2013 to 2019

Below summarizes the CIT rebate percentage and cap given for companies*

Year of Assessment (YA): 2019
20% Corporate Income Tax Rebate, capped at $10,000

Year of Assessment (YA): 2018
40% Corporate Income Tax Rebate, capped at $15,000

Year of Assessment (YA): 2017
50% Corporate Income Tax Rebate, capped at $25,000

Year of Assessment (YA): 2016
50% Corporate Income Tax Rebate, capped at $20,000

Year of Assessment (YA): 2013-2015
30% Corporate Income Tax Rebate: capped at $30,000

The rebate will not apply to income derived by a non-resident company that is subject to final withholding tax.

Companies need not factor in the Corporate Income Tax Rebate when filing the Estimated Chargeable Income and the Income Tax Return (Form C-S/ C) as IRAS will compute it and allow the Rebate automatically.

*includes Registered Business Trusts, non-resident companies that are not subject to a final withholding tax and companies that receive income taxed at a concessionary tax rate.

How the Corporate Income Tax Rebate is Computed

The rebate will be computed on the tax payable after deducting the tax set-offs (e.g. foreign tax credit).

Example (1): Company with no chargeable income

– Chargeable income=Nil

– Tax payable=Nil

– Corporate Income Tax Rebate does not apply as there is no tax to be paid.

Example (2): Company with income taxable at 17%

– YA 2019

– Chargeable income (after exempt amount): $500,000

– Tax payable at 17%: $85,000

– Less: Corporate Income Tax Rebate ($85,000 x 20%, restricted to cap of $10,000): $10,000

– Net tax payable: $75,000

Example (3): Company with income taxable at 17% and a concessionary rate of 10%

– Chargeable income at 10%: $180,000

– Chargeable income at 17% (after exempt amount): $500,000

– YA 2019

– Gross tax payable
($180,000 x 10% + $500,000 x 17%): $103,000

– Less: Corporate Income Tax Rebate: $10,000
($103,000 x 20% = $20,600; restricted to cap of $10,000)

– Net tax payable : $93,000

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