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[ESTABLISHING A BUSINESS ENTITY IN SINGAPORE]
Statutory requirements It is mandatory to hold an annual general meeting ( AGM ) (attended by the shareholders) every calendar year. The company’s financial statements and appointment of auditors are tabled at the AGM for the shareholders’ approval. Unless exempted, a company must also file annual returns ( AR ) on Bizfile+ along with the approved financial statements. The AR contains details of the company such as the name of the directors, secretary, its shareholders, share capitalisation and any changes and updates to these particulars. The purpose is to provide information to stakeholders to make informed decisions. Subsidiaries of a Foreign Company The incorporation of a subsidiary is a way for foreign businesses to establish a presence in Singapore. The subsidiary is a separate legal entity from its parent with the parent company holding more than 50% of the total shareholding. For consistency and easier accounting group- wise, the subsidiary can opt to have a paid-up capital in the same currency as the parent/holding company and a financial year end that matches with the parent. The subsidiary is taxed as a Singapore company and can benefit from the many local grants and tax incentives. Earnings from the subsidiary may be repatriated out of Singapore. (2) Branch of a Foreign Company Apart from incorporating a company as a subsidiary of its parent/holding company overseas, a foreign company may also enter the Singapore market by setting up a branch office in Singapore.
As a branch office is considered an extension of the head office of the foreign company, it may not benefit from all grants and tax incentives extended to local entities. The parent remains fully liable for the acts, debts and losses of the branch office. The branch is required to submit its own audited accounts as well as that of the head office. It must bear the same name as the parent company which must be approved by ACRA. The branch must have at least one authorised representative who is ordinarily resident in Singapore. (3) Partnership A partnership is a business owned by two to twenty partners. The limit in the number of partners does not apply to partnerships formed solely or mainly for the purpose of carrying on any profession that is regulated by other legislation (for example, law firms, accounting firms and medical practices). The partnership needs to be registered with ACRA under the Business Names Registration Act 2014. The registration may be renewed for one year or three years. The rights and obligations of partners amongst themselves may be governed by a partnership agreement. Where there is no partnership agreement or where the agreement is not comprehensive, the relationship between partners is governed by the relevant provisions of the Partnership Act 1890. Unlimited Liability The partnership is not a separate legal entity from the partners. The partners collectively own the assets of the partnership, and each partner is liable jointly and severally with all his other partners for the full debts and liabilities of the partnership, subject to any restrictions or limitations agreed in the partnership
ILN Corporate Group – Establishing a Business Entity Series
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