Starting a Company in Singapore – Step-by-Step Guide

What is a Company?

In Singapore, a company is an organisation set up under the Companies Act. A company is a separate legal entity, which means it is independent of its owners, shareholders, and directors.

Generally, there are two types of companies in Singapore: private and public companies.

According to Section 18(1) of the Companies Act, a company is private if the articles of the memorandum in association with the company restrict the transferability of shares and limit the number of members to a maximum of 50. Both conditions have to be met for a company to be considered a private company.

On the other hand, a public company does not have such restrictions. They can be listed on the Stock Exchange and typically have more than 50 members. However, it is important to note that not all public companies must be listed on the stock exchange.

Under the law, companies have to be registered with the Accounting and Corporate Regulatory Authority (ACRA).

Why Should You Register Your Company?

By incorporating a company, a separate legal entity can be created, allowing the company to own property. The property will belong to the company and not its members. Moreover, debts racked up in personal capacity cannot be paid with the company’s assets.

One advantage of setting up a company is that the owners of the company have limited liability. Hence, personal assets cannot be seized to settle the company’s debts.

Furthermore, in a situation where the company is suing or being sued, the company’s liabilities cannot be enforced against the personal assets of any members, and any action cannot be taken against the members. In this case, the proper person to institute the action against would be the company. If rights were to be enforced, the appropriate person to initiate the action would be the company, where it must be acted through someone such as the director.

The company also has perpetual succession until it is liquidated. Thus, there will be no disruption to the business even if the directors or owners pass away or become bankrupt.

For companies who want to scale, registering a company would be the most suitable option. A company offers a range of benefits from the limited liability and is in a better position to raise capital.

Pre-Registration

The requirements for registering a company are as follows:

Directors

Under Section 157A of the Companies Act, directors have the power to manage the company. Section 145(1) of the Companies Act provides that every company shall have at least one director who shall be ordinarily resident in Singapore, who is either a Singapore Citizen, Singapore Permanent Resident, or an Employment Pass holder.

A director must be at least 18 years of age with full legal capacity. The Companies Act does not prescribe any maximum age.

However, there are restrictions in the constitution of the company that has further bars on the qualifications of the directors. Under Section 148(1), an undischarged bankrupt cannot be a director or indirectly take part in the management of a company. Disqualification is automatic, and the person who disobeys will be guilty of an offence.

Shareholders

A shareholder can either be a natural person or a legal entity. In Singapore, both local and foreign ownership is allowed. Private companies must have a minimum of one and a maximum of 50 shareholders.

Company secretary

Under the Companies Act, all companies must appoint a company secretary within six months of incorporation. The company secretary must be a natural person and shall be ordinarily resident in Singapore.

The position of the company secretary cannot be filled by the sole director or shareholder, and the position cannot be vacant for more than a period of six months.

Share capital

For registration of a company in Singapore, a minimum paid-up capital of $1 is required. This capital can be increased anytime after the incorporation of the company.

Registered address

By law, all registered are required to have a local registered address in Singapore, which will keep all its registered documents. The registered address must be a physical address (whether commercial or residential) and not a P.O box.

Company Constitution

Section 19 of the Companies Act states that a “constitution” must be lodged. The constitution has to provide basic information about the company and also contain rules governing the internal management of the company. Private companies can also use model institutions provided by ACRA if they want to.

However, it is essential to note that under section 20, the Registrar may refuse registration on specific grounds, such as if the company appears to be used for unlawful purposes or for purposes prejudicial to public peace.

Registering a Company

Registration for the incorporation of a company can be done fully online in Singapore. It is rapid and efficient. There are three main tasks to get approval for:

Get approval for the company name

Before registering for a Singapore company, all company names must first be approved by ACRA.

The name approval process is online. An easy search can be done on BizFile+ to find out whether the intended company name has already been taken.

Generally, the name approval process is subject to the following guidelines:

• The name cannot be identical or too similar to any existing company in Singapore.
• The name cannot infringe upon any existing trademarks due to copyright issues.
• The name must not be already reserved by another business.

If the company name follows all ACRA guidelines and rules accordingly, it is typically approved within an hour. However, the name may have to go through checks with an external government agency if it contains regulated business words such as “legal”, “law”, “finance” or “school”. In such cases, the name approval process may take up to a few weeks.

Once the company name is approved by ACRA, it will automatically be reserved for you for 60 days from the date of application. If there is difficulty in incorporating the company within the given period, there is a possibility of an extension for another 60 days. However, if you fail to incorporate the name within the given period, the chosen name will be released and can be reserved by another company.

Prepare documents required by ACRA

During company registration, submission of the company constitution is required.

Section 19 of the Companies Act provides that a “constitution” has to be lodged. The constitution has to provide basic information about the company and also contain rules governing the internal management of the company.

This document will be reviewed by legal staff during the incorporation process.

Other than the constitution, prepare the following documents:

• Registered company name
• Registered address of the company
• Particulars and details of the company director, shareholders, and company secretary
• Identification Card/ Passports

Submit an application to ACRA

Once the documents are ready for submission, visit BizFile+ to complete the steps to register the company. This process should be quick, assuming that all required documents are prepared and in order.

There will be a registration fee of S$315.

Post-registration

Documents received upon successful registration

After successful registration of the company, ACRA will confirm the successful incorporation of the company. It will issue several documents including:

Certificate of incorporation

To confirm the incorporation, ACRA will send an official email notification. This email will enclose the company registration number, and the soft copy will be deemed the official certificate of incorporation in Singapore.

If you prefer a hardcopy certificate of incorporation, an online request can be made at a nominal fee.

Company business profile

After incorporation, a company business profile will be available online. To access this document, an online request can be made at a nominal fee.

The document is presented in a PDF format and contains key information about your company:

• Company identification details such as company name and company registration number
• Principal activities
• Share capital
• Directors’ details
• Company secretary’s details
• Shareholders’ details
• Compliance status
• Registered company address

Tasks to be completed

After successful completion of incorporation, you can now start doing business under the company name. There are a few post-registration steps we suggest taking.

Open a corporate bank account

After incorporation, it will be wise to open a corporate bank account for the company. There are a variety of banks in Singapore that offer different account options to suit your every need.

Acquire business licenses and permits if required

Depending on the nature of your business activities, you may require a business license or permit. If the nature of your business requires the permits, it is advisable to acquire these permits before commencing any business activities. Some examples of businesses that require permits include food and beverage outlets, restaurants, financial services, educational institutions and travel agencies.

Goods and Service Tax (GST) registration

In the case where your expected annual business turnover exceeds S$1 million, the company has to register for Goods and Service Tax (GST). This tax is similar to Value Added Tax (VAT). After registration, it is under the company’s purview to collect a 7% GST from your customers.

During GST filing periods, the company must remit the GST to the Inland Revenue Authority of Singapore (IRAS).

Stay in compliance with Singapore’s corporate regulations

All registered companies must stay in compliance with Singapore’s corporate regulations. To remain compliant, each company must fulfil annual filing requirements.

Requirements include:

• Accounting Requirements: All registered companies must comply with accounting requirements. They must maintain general accounting protocol (e.g. general ledgers, accounts payables, and receivables). It is also essential to prepare and file annual financial statements.
• Convening of Annual General Meetings: All companies must hold annual general meetings every calendar year. Shareholders will vet and approve the company’s financial statements.
• Annual Returns Filing: The registered company must file annual returns one month from the date of the annual general meeting.
• Corporate Tax Filing: All companies must file annual taxes on time.
• Financial Year Determination: The registered company must decide their financial year to match relevant accounting cycles.

Maintenance fees

After the registration of the company, some maintenance fees may be incurred on an ad-hoc basis for administrative and compliance matters.