COMPANY REGISTRATION SINGAPORE FOR LOCALS​

The Definitive Guide (2021 Update)

It’s no secret that setting up a Private Limited (Pte. Ltd.) company in Singapore has its value.

As the term ‘Private Limited’ suggests, all directors and shareholders aren’t personally liable for your company’s debts if things go south.

Bottom line? 

If you want to scale your business losing your personal assets to creditors from poor business decisions, and reap the rewards of your company’s success through tax-free dividend income, then setting up a private limited company is a great solution.

And in this guide we’re going to show you what you need to know before registering your Private Limited company in Singapore.

Let’s dive right in.

CONTENTS

CHAPTER 1

ACRA-Approved Company Name

CHAPTER 2

Brief Description of Biz Activities

CHAPTER 3

Registered Business Address

CHAPTER 4

Appoint One or More Directors

CHAPTER 5

Consensus Among Shareholders

CHAPTER 6

Capital Requirement

CHAPTER 7

Corporate Bank Account

CHAPTER 8

Appoint a Company Secretary

CHAPTER 9

Company Constitution

CHAPTER 10

Appoint an Auditor

CHAPTER 11

Tax Exemptions & Incentives

CHAPTER 12

Company Registration Cost

CHAPTER 1:

ACRA-Approved Company Name

You might already have a business name in mind.

But here’s the deal:

You must ensure that your organisation’s name is approved by ACRA (the Accounting and Corporate Regulatory Authority in Singapore).

In this chapter, we’ll show you how to choose your ACRA-approved business name that distinguishes itself from another organization.

Company Name vs. Brand Name?

Did you know that the name of your product brand and company don’t have to match?

For instance, if the name of your product brand is Freedom Fashion, it’s not mandatory that your company name has to be Freedom Fashion Pte. Ltd. or Freedom Fashion Singapore Pte. Ltd.

In fact, it may be more advantageous for you to give them different names so you can communicate your various service & product offerings with clarity…

Thinking of your organisation as a parent company that aligns all of your product brands is useful and important when choosing a name.

As an example, Procter & Gamble, a parent company, keeps a clear distinction between their individual product brands, such as Gillette, Olay and Johnson & Johnson.

In the digital media space, Dotdash is an organisation that creates content-oriented websites that are non-related, with each focusing on a specific topic.

When you assign to your organization the name of your product brand, you may feel constrained by your brand identity when you consider launching non-related products or services in the future.

Remember that your product brand is not the ‘be-all and end-all’ of your business, especially when you have plans to expand your grow your company.

Check for Names Identical to Existing Businesses

First thing:

Check if the name you have in mind is similar to another business.

To do so, run an online search using the entity search function on the ACRA Bizfile website.

From running the search, you’ll become aware of other businesses whose names are similar to yours.

If your name appears to similar to another business, beware the risks of being sued for passing off as them for the reason that you appear to be their imitator.

ACRA will still most likely approve your company name as long as it’s not identical to an existing registered business.

Second thing:

It’s also important to check if your company name has been or can be trademarked.

Your company name may be approved by ACRA…  but if it’s not trademarked then other companies and brands may claim your name as their rights.

Registering your trademark can be done online at ip2.sg, through which IPOS (Intellectual Property Office of Singapore) will conduct a formalities check and inform you if your application is successful.

Business Brand Identity

You can give your business the most boring forgettable name, and still get your company name approved by ACRA if it meets all legal requirements.

However, we suggest that your business conveys brand personality, which can aid growth in the long term.

Here are 3 ways you can build a strong brand identity:

Action Step!

Come up with at least three proposed names for your business in case any of them fails to work out.

CHAPTER 2:

Brief Description of Your Business Activities

In order to be approved, ACRA needs to know what your business does.

This provides the government with updated statistics on the current social & economical structure in Singapore.

Here’s how you can provide ACRA with a brief description of your business activities:

Find Your SSIC Code

ACRA requires that you search the Singapore Standard Industrial Classification (SSIC) for your code that corresponds to your business activities.

You can access it search tool on ACRA’s site here.

To help you with your search, ACRA also provides a guide on using the SICC search here.

Action Step!

Find your SSIC code on ACRA here.

CHAPTER 3:

Registered Local Business Address

To be registered as a legal company, you must be locatable and contactable in Singapore for compliance-related matters.

Your business address has to be legally valid…

This means you can use a residential or commercial address to register your Private Limited company, but a Post Office (P.O.) Box doesn’t qualify.

Your registered office address must also be opened to public on weekdays for minimum of three hours (during normal business hours) per day.

Here are two things you need to know when choosing your registered business address:

Registered Address vs. Operational Address

If you’re an entrepreneur who works from home, you may use your home as your registered address…

Using your home as your office is acceptable as long as you’re a considerate resident who doesn’t impose any inconvenience on your neighbours.

This means that you can use your residential address as a business operation office as long as it’s…

  • Not a crowd-puller because it disrupts the residential surroundings
  • Mainly desk bound and doesn’t involve heavy machinery
  • A small-scale registered business with up to 2 non-residential staff members

“I don’t want to use my home address as my registered business address”

Traditionally, companies would rent a physical office space.

However, more people are now choosing to use virtual offices. This allows companies to rent business addresses…

… And for good reason:

As its name suggests, a virtual office is an office which exists mainly in cyberspace. And, in Singapore, you can use the address of your virtual office as your registered business address!

If you’re just starting out in business, renting a virtual office is space is great because it helps keep your operational costs to a minimum.

Virtual offices may also provide amenities like phone service, reception service, a physical street address, mail forwarding and fax handling.

If you plan to use your home office as your registered business address, we suggest you get a virtual office as a separate mailing address for your partners and clients to contact you (to protect your privacy on Google too).

Some virtual office providers will even go so far to provide company secretarial services and/or physical spaces for your business meetings!

When choosing your virtual office, conduct your research to check that your provider is trustworthy.

Here are two of the most important things you need to take note of:

Action Step!

Decide if you want to use a physical (commercial or residential) address or a virtual office address for your registered business address in Singapore.

CHAPTER 4:

Appoint One or More Directors

A Private Limited company must appoint at least one director who resides in Singapore

…This means that your company must elect a minimum of one director who holds either one of the following:

  • Singapore Citizenship
  • Permanent Resident Status
  • Employment Pass
  • Entrepreneur Pass
  • Dependant’s Pass with a residential address in Singapore

The director can also be a shareholder of the company.

Since the director represents the company, it’s important to appoint directors who are ethical and prudent.

If you founded (or co-founded) a company, your business is probably your brainchild, and it’s natural that you’ll want to appoint yourself as director.

Before coming to a decision, let’s cover what you need to know when electing a director (or directors) for your company:

Directors must carry out their fiduciary duties

Fiduciaries duties refer to your role as a director to direct your company towards its true north – which will happen as a result of your company and shareholders’ trust in you, your confidence, integrity, responsibilities, and ability to add value to your business through your leadership qualities.

Company directors must be capable of moving the needle forward in their business and convey their goals & visions with clarity.

Because the reputation of a company is hinged upon the performance of its directors, it’s the directors’ responsibility to ensure an alignment of interests between the management team and the shareholders.

Directors must keep financial records

It’s the director’s responsibility to keep the company’s accounting records.

Here’s why:

As these records explain the company’s financial position, financial statements must always be readily accessible for inspection. If the directors are unable to comply with this rule, then the company and its directors will be charged guilty for acts of non-transparency.

Financial records are also required for submission at your company’s AGM (Annual General Meeting), which gathers its shareholders yearly.

The AGM preparation requires a legal document called the Company Constitution (formerly known as the Memorandum and Articles of Association), which will be explained in chapter 9 of this guide.

At the AGM, financial records will be presented to keep shareholders updated on your company’s ‘business health’ – such as it’s position in the market, the progress of its performance and an indication of where it’s heading in terms of growth.

In Singapore, there are ACRA-compliant accounting and bookkeeping services which you can engage in order to properly manage your financial accounts.

Directors hold mandatory formal meetings

There are four main meetings that directors call:

Directors will appoint a company secretary

ACRA has made it compulsory that you must appoint a corporate secretary within 6 months of registering your company.

Essentially, your company secretary is your company’s ‘guide’ or ‘advisor’, who’ll help you draft your important documents necessary for your meetings and take care of your company regarding all government-related issues.

The role of your company secretary will be explained in greater detail in chapter 8 of this guide.

Action Step!

Decide who you’re going to elect as your company’s board of directors.

CHAPTER 5:

Consensus Among Shareholders

ACRA requires that a Private Limited company has at least one shareholder, and not more than fifty shareholders.

It doesn’t matter if your company’s shareholders all reside in Singapore or not; individual or corporate shareholders are also welcome.

In this chapter, we’ll list the important things you need to know about shareholding and to protect your rights in the company…

Shareholder Agreement

Since shareholders have vested interest in your company, it’s important to have a ‘corporate prenuptial’ in place, before or upon registering your company, to avoid potential disputes… especially if your company has more than one shareholder.

This ‘prenuptial’ is known as the Shareholder Agreement, which governs the relationships between shareholders and their lawful rights & obligations in the company.

Since hopes and excitement are buzzing at the start of a business with a high upside, it feels morbid for anyone to think about what might go wrong and how they can escape their shareholding obligations.

But, when things aren’t going well, fear and greed creep in. And if there’s no existing legal binding contract … then shareholders might find loopholes and exploit the situation to their advantage.

In short, the shareholder agreement is in place to remind each shareholder that are a clear rules to play by.

Share Certificates

Singapore companies must issue share certificates to all of its shareholders.

The purpose of the share certificate legalises ownership of the specific number of shares that a shareholder has in your company. Whether your Private Limited company has one or fifty shareholders, the issuance of share certificates is compulsory under Singapore laws.

Each certificate is kept by the respective shareholder and must be re-issued when there is a reclassification or change in the number of shares owned by the shareholder.

Your company must also issue share certificates to new shareholders within two months of allotting shares.

Your company secretary will prepare these share certificates and issue them…

…Then it will be signed by any two directors or – if your company has a single director – one director and your corporate secretary.

Meetings

As mentioned in part 3 of chapter 4, there are two compulsory meetings that your company shareholders must attend:

Shareholders also attend and vote at the Extraordinary General Meeting (EGM) which is held only if issues requiring shareholder approval must be addressed before the next AGM.

If shareholders are unable to attend the meeting, they can appoint a proxy – rights to do so must be specified in the notice of the meeting – to be present and vote on their behalf.

All meeting notices must be drafted and sent out by your company secretary.

Action Step!

If your company has two or more shareholders, assign to your corporate secretary the responsibility of drafting a shareholder agreement to make clear the rights and obligations of each shareholder. This ensures that are no ‘surprise rules’ of which they’re unaware as company shareholder.

More details about finding the right secretary for your company will shown in chapter 8 of this guide.

Now, read on to find out what you need to know about the minimum capital required to register your new company…

CHAPTER 6:

Capital Requirement

To open a Private Limited company in Singapore, you need just S$1.

The question is:

What does this $1 represent?

This chapter will cover what you need to know about share capital and what it says about your company.

notes-and-coins-1.png

“What is a paid-up capital of S$1?”

Paid-up capital is the amount of money that your firm receives through the shares issued to shareholders.

Now… why does a company issue shares?

When your company issues these shares, it puts up them up for sale in order to raise funds to grow the business.

Think of Shark Tank!

Why would shareholders want to buy these shares?

Shareholders who see value, a sustainable competitive advantage, a great management team, a proven & solid track record, a strong financial position and sustainability and/or growth potential in your business will then buy these issued shares as their investment in your company…

… and the payment you receive from shareholders who purchase your company’s shares is known as paid-up capital.

Ultimately, shareholders who buy shares issued by great businesses are looking to increase their net worth!

Here’s an example of how issued shares and paid-up capital works:

If your company issues 1000 shares at $2 each, then the issued capital is $2000. If all 1000 shares are paid in full, then these funds (S$2000) are known as paid-up capital. No more issued capital is left until your company decides to sell more shares.

Your company may issue two share types:

Since a huge amount of paid-up capital isn’t required to register a Singapore Private Limited company (only S$1 is required), local startups will find it financially easier to become incorporated.

However, it’s important to know what the paid-up capital says about your business…

“Why is paid-up capital so important?”

Paid-up capital represents two things: commitment to the business and money not borrowed.

First...

Paid-up capital represents the amount of personal commitment (a.k.a vested interest) shareholders have to your business.

This means the more value and potential for growth shareholders can identify in your business, the more money (paid-up capital) they’ll inject to your firm, with the end goal of increasing their net worth and/or receiving dividend income (‘passive income’) when your business eventually starts profiting with free & stable cash flow!

Afterall, shareholders who invest a considerably large amount into your organisation don’t just throw cooked spaghetti onto the wall and hope something sticks… it’s so much skin they’re putting into the game!

Also, putting in a paltry sum like S$1 doesn’t reflect well on your company because it indicates that you intend to keep the company dormant.

Second...

The more paid-up capital you have, the more money you readily have to use to grow your business – which indicates a lower chance of debt or liabilities through borrowing money (loan capital) to run the business.

Although the minimum paid-up capital for Singapore Private Limited companies is just S$1, you can always increase it later at a later date in just three steps.

Read on to find out how…

“How to increase paid-up capital?”

Important!

Some banks in Singapore require a minimum balance for corporate accounts and will charge a fee if your bank balance falls below a certain amount.

Given that you’ll most likely incur higher expenses (e.g. renovation costs, purchase of equipment or inventory, rental deposits, etc.) at the start of your business and a large portion of the capital will be used…

…you might want to consider having a higher paid-up capital so that the amount left in your account doesn’t fall below the minimum balance required by the bank.

Commencing a business requires a lot more money, and a higher paid-up capital will also help fund the cash shortage from the start to the breakeven point of your business.

Action Step!

Gather your shareholders to decide on their share rights (ordinary or preference shares) and the paid-up capital for your company at startup. Eventually, you’ll be able to increase the paid-up capital.

In the next chapter, we’ll show you the process of setting up your corporate bank account…

CHAPTER 7:

Corporate Bank Account

One of the many benefits of owning a Singapore Private Limited company is that you and your shareholders are protected from loss of personal assets if your company winds down.

This is why it’s important that your company must have its own corporate bank account, independent from other legal entities.

“How to choose a Singapore bank for my business?”

Singapore has one of the most stringent banking laws in the world.

The good thing about this? 

You don’t have to concern yourself excessively with finding a reliable bank in Singapore when it comes to opening your company account!

Still… as a general rule of thumb, there are several things to look out for when selecting a bank for your corporate account.

Here are the two of the most important ones:

Also take into consideration other variables, such as chargeable services you may use in the future, when making your choice.

When you open a corporate account in Singapore, most banks require that the signatories and company directors be physically present to sign documents.

Since banks are careful in approving companies as clients, delays and rejections may occur due to insufficient documents that prove the credibility of your business.

“What are the requirements to open a corporate bank account?”

Before opening a bank account for your company, you’ll need to complete the business registration process with ACRA to have the documents listed below…

  • Certified copies of the directors, signatories and beneficial owners’ passports and a proof of their residential address
  • Certificate of incorporation
  • Copy of the Company Business Profile from ACRA
  • Copy of the Company Constitution
  • Copy of certificate of incumbency of the holding company (for corporate shareholders only)
  • A resolution by the board of directors approving the opening of the corporate bank account. The resolution must also specify the signatories to the bank account. (This is the resolution of the first board meeting held within the first month of incorporation, during which all directors and shareholders are confirmed.)
  • Completed and duly signed account-opening forms by the authorised signatories

Important!

Immediately after setting up your corporate bank account, you’ll need to pay up the issued share capital declared on your Company Business Profile from ACRA.

Next, send a copy of your company’s bank statement to your corporate secretary as proof of having paid up the capital declared on your Company Business Profile.

Finally you can use the paid-up capital immediately for your running your business (no lock-up period)…

…Now, the paid-up capital in your corporate bank account belongs strictly to the firm and any amount taken for personal use will be considered your debt until the loan is paid back to the company.

Action Step!

Do your research to find a bank in Singapore that best meets your needs for your business. Alternatively, contact your corporate secretary who’ll help make your account-opening experience as fuss-free as possible.

CHAPTER 8:

Appoint a Company Secretary

Now that you’ve read the 85% of this guide, you’d have realised the importance of the company secretary’s role in ensuring regulatory compliance and that share rights & obligations are kept clear and formally documented.

It’s also mandatory under Singapore laws that every Private Limited firm appoints a company secretary within six months of incorporation.

Here’s a quick summary and run-through of the corporate secretary’s duties:

“Can a company secretary and director be the same person?”

The answer: No.

And here’s why…

Because a corporate secretary is responsible for the statutory records, and drafting documents such as shareholder agreements and share certificates, it’s important that the personal interests don’t conflict with that of the company.

For these reasons, they cannot have vested interest in your company… meaning that they cannot become shareholders of the companies they work for or benefit from any secret profit.

It’s the fiduciary duty of corporate secretaries to carry out their responsibilities with care and diligence.

Like a Singapore company directory (chapter 4), a company secretary of a Private Limited firm must also be a real living individual with a SingPass and ordinarily resident in Singapore.

Since regulations are constantly changing and tightening, it becomes increasingly important that a corporate secretary is qualified and kept up to date about the Singapore Companies Act.

With that said, the position of the corporate secretary is usually outsourced to another company specialising in corporate secretarial services. This keeps companies in Singapore well managed, and business owners can focus fully on contributing to the output of the business.

Do You Need Help Looking for Your Corporate Secretary??

Let us help you find a qualified & experienced corporate secretary for your business at the end of this guide!

Action Step!

Appoint a corporate secretary for your company by engaging the services of a corporate secretarial firm.

CHAPTER 9:

Company Constitution

No intro needed for this chapter.

Here’s what a company constitution is and why it’s important:

Formally known as the Memorandum and Articles of Association, the company constitution is a document that’s required to incorporate your company.

This document states the activities in which the company engages and the rules governing its internal management.

If these regulation are no longer relevant with the new goals of a growing business, company members can request a change in the company constitution by formally passing a special resolution at a general meeting.

Simply translated?

A company, its board of directors and shareholders must always act in alignment with the rights and obligations conferred on the company – outlined by the company constitution.

Action Step!

Have your company secretary draft a company constitution, as part of the incorporation requirements.

CHAPTER 10:

Appoint an Auditor

An auditor provides an objective examination of your company’s financial statements.

The goal is to increase the credibility and value of the financial records submitted by the company’s management. This is particularly important in reducing risks for shareholders and investors.

For this reason, auditors cannot work for companies whose financial statements they’re auditing.

“Do I need to appoint an auditor?"

All companies in Singapore must appoint an auditor within the first three months of incorporation… unless audit exemption requirements are met.

Read on to find out if your company is exempted from auditing requirements…

Action Step!

Appoint an auditor for your company.

If your company meets the above audit-exemption requirements, skip this step and proceed to the next chapter of this guide.

CHAPTER 11:

Tax Exemptions & Incentives

Though it’s no surprise that a registered business has to pay tax, it’s still the responsibility of company directors to know the latest corporate tax laws in Singapore.

One of the benefits of owning a new Singapore company is that you get to enjoy tax incentives!

Now, keep scrolling for a breakdown of the latest corporate tax rates

First Three Years...

In the first three years of incorporation, companies are exempted from tax as long the taxable income is not more than S$100,000:

Taxable Income (S$) Tax Rate (%) Years
0 - 100,000 0 0 - 3
100,001 - 300,000 8.5 0 - 3
300,001 - 2,000,000 17 0 - 3

After Three Years...

Beyond the first three years, companies have to pay taxes, and rates depend on income earned:

Taxable Income (S$) Tax Rate (%) Years
0 - 300,000 8.5 > 3
100,001 - 300,000 17 > 3

CHAPTER 12:

Company Registration Cost

Now that you’ve read this far, you’ll want to know how much the cash outlay is to incorporate a company in Singapore!

Here’s a breakdown of the financial investment you’ll need to make in order to register your Private Limited company successfully:

. Secretary

There are company secretarial firms in Singapore. You must check with them on the services they provide.

Since corporate secretaries must fulfil their fiduciary duties, as explained in chapter 8, it’s important that you engage the services of a corporate secretary who is well-versed with the Companies Act in Singapore.

Be wary when companies are willing to charge an incredulously low fee for this service because this means that they don’t intend to limit the number of companies they accept as clients.

There’s no minimum cap of the number of companies that an individual can be a corporate secretary of…

…Unless the company secretarial firm manages to find a way out of this by perhaps hiring more employees with corporate secretarial qualifications, then the level of care, diligence and responsiveness of the company secretary becomes inevitably compromised.

Afterall… price is what you pay, and value is what you get!

Hey! Want our help on finding a company secretary for your business?

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If so, we can help you!

Because in taking a short clarity quiz below, we can see exactly what your needs are, so we can direct you to a qualified & experienced corporate secretary whose services are tailored for your business.

We’ll also give you a FREE Singapore company registration checklist to keep you accountable!

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