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All You Need To Know About Subsidiary Company Registration In Singapore
Viewed by 1,856 Smart Towkays
Singapore, known for its thriving business ecosystem, welcomes foreign businesses, expats, and non-Singaporeans with open arms. One of the key ways to establish a presence in Singapore is through setting up a subsidiary company. This guide aims to provide a detailed and easy-to-understand overview of the process involved in registering a subsidiary company in Singapore, catering to both business professionals and those new to the world of entrepreneurship.
Understanding Subsidiary Companies
A subsidiary company refers to a locally incorporated company that is partially or wholly owned by another company. The parent company, or the holding company, possesses control over the subsidiary's operations and decisions. This type of business structure offers various advantages, making it an attractive option for foreign companies expanding into Singapore.
Why Set Up a Subsidiary Company in Singapore: The Advantages
Limited Liability Protection:
When establishing a subsidiary company in Singapore, one of the key advantages is the concept of limited liability protection. This means that the personal assets of shareholders are separate from the company's liabilities. In the event of financial or legal issues faced by the subsidiary, every individual shareholder's personal assets is safeguarded. This protection provides peace of mind and encourages business owners to take calculated risks without fearing personal financial ruin.
Attractive Tax Incentives:
Singapore's tax system is renowned for its competitive rates and various incentives aimed at fostering business growth. Subsidiary companies can take advantage of these incentives to optimize their tax position. For example, the partial tax exemption scheme allows companies to enjoy reduced tax rates on their chargeable income, while certain foreign-sourced income may be tax-exempt. Additionally, Singapore has an extensive network of double tax treaties with numerous countries, further minimizing the tax burden on subsidiary companies engaged in international transactions.
Access to a Vibrant Business Ecosystem:
Singapore's business ecosystem is highly conducive to growth and innovation. By establishing a subsidiary company in Singapore, businesses gain access to a well-developed infrastructure, efficient legal system, world-class financial services, and a talented workforce. The country's strategic location serves as a gateway to the rest of Asia, making it an ideal base for companies looking to expand their reach across the region. The presence of numerous multinational corporations, startups, and industry clusters creates opportunities for collaboration, networking, and knowledge exchange.
Political and Economic Stability:
Singapore has consistently been ranked as one of the world's most politically and economically stable countries. Its pro-business government policies, strong rule of law, and robust regulatory framework provide a secure environment for companies to operate in. This stability instills confidence in investors, customers, and business partners, making Singapore an attractive destination for subsidiary company registration.
Intellectual Property Protection:
Singapore places great importance on intellectual property (IP) rights and has a robust legal framework to safeguard them. Companies that prioritize innovation and have valuable IP assets can benefit from the stringent IP protection measures in place. These measures include a well-established legal system, efficient dispute resolution processes, and dedicated government agencies that facilitate IP registration and enforcement.
Global Reputation and Credibility:
Singapore has earned a global reputation as a leading business and financial hub. Being associated with Singapore adds credibility and enhances the reputation of subsidiary companies, making it easier to attract investors, secure partnerships, and expand into new markets. The country's strong regulatory framework, transparent business practices, and adherence to international standards contribute to this positive image.
Key Considerations before Setting Up a Subsidiary Company
Before embarking on the subsidiary company registration process, it's crucial to address certain considerations:
Shareholder and Director Requirements
A subsidiary company must have at least one shareholder and one director who can be individuals or corporate entities. At least one director must be a Singapore resident.
There are no minimum capital requirements for subsidiary company registration in Singapore. The capital amount can be decided by the shareholders based on the business's needs.
Compliance with Singapore's Legal Framework
Familiarize yourself with Singapore's legal and regulatory framework, including the Companies Act, which governs company registration and ongoing compliance obligations.
Steps to Register a Subsidiary Company in Singapore
Choosing a Company Name
Select a unique and meaningful name that reflects your business and is not already in use (check company name availability on BizFile+ using Search). Avoid names that are offensive, identical to existing companies, or infringe on trademarks.
Appointing Directors and Shareholders
Appoint at least one director who is a Singapore resident and eligible to hold the position. Shareholders can be individuals or corporate entities, with no restrictions on nationality.
Engaging a Professional Services Firm
Working with a professional services firm can streamline the registration process and ensure compliance.
These firms provide services such as company incorporation, corporate secretarial support, and tax advisory.
Submitting the Registration Application
Prepare the necessary documents, including the company constitution, certificate of incorporation of the parent company, director and shareholder details, and registered office address.
Submit the application online through Singapore's business registration portal, BizFile+.
Opening a Corporate Bank Account
Open a corporate bank account in Singapore to facilitate business transactions. Research and select a local or international bank that aligns with your business needs and fulfills the account opening requirements.
Registering for Taxes and Licenses
Register for Goods and Services Tax (GST) if your annual turnover exceeds SGD 1 million. Identify and obtain any additional licenses or permits relevant to your business activities.
Post-Registration Obligations and Compliance
A subsidiary company in Singapore has specific obligations to fulfill in order to maintain compliance with the local regulations. These obligations primarily revolve around maintaining statutory registers, filing annual returns and financial statements, complying with corporate income tax obligations, and adhering to corporate governance and reporting requirements. Let's delve deeper into each of these areas:
Maintaining Statutory Registers
It is crucial for a subsidiary company to keep accurate and up-to-date records of its shareholders, directors, and company secretary details. This includes maintaining information such as names, physical addresses, and shareholdings.
The subsidiary company is required to maintain various registers, including the Register of Members, which contains details of shareholders, the Register of Directors, which lists the directors' particulars, and the Register of Charges, which records any charges or mortgages against the company's assets.
Filing Annual Returns and Financial Statements
An annual return provides a snapshot of the subsidiary company's particulars, such as its registered office address, shareholders, directors, and company secretary. It must be filed with the Accounting and Corporate Regulatory Authority (ACRA) within one month of the Annual General Meeting (AGM) on BizFile+.
Alongside the annual return, the subsidiary company needs to prepare and submit its financial statements. These statements must comply with the Singapore Financial Reporting Standards (SFRS) and provide an accurate representation of the company's financial position and performance.
Complying with Tax Obligations
A subsidiary company in Singapore has certain tax obligations that must be fulfilled. This includes filing annual tax returns with the Inland Revenue Authority of Singapore (IRAS) and paying taxes on time.
It is essential for the subsidiary company to stay informed about the applicable tax incentives and exemptions that can help optimize its tax position. Singapore offers various tax schemes, such as the Global Trader Programme (GTP) and the Research and Development (R&D) Tax Measures, which can be leveraged to reduce the overall tax burden.
Corporate Governance and Reporting Requirements
Adhering to corporate governance principles is crucial for maintaining transparency and accountability in the operations of a subsidiary company. This involves implementing proper internal controls, ethical business practices, and effective risk management systems.
Additionally, the subsidiary company must comply with every regulation by government authorities related to financial reporting, auditing, and disclosure requirements. These requirements ensure that the company provides accurate and reliable financial information to stakeholders and meets the necessary standards of financial transparency.
Compliance with these obligations is vital for a subsidiary company's long-term success in Singapore.
Failure to meet these requirements can result in penalties, legal consequences, and potential damage to the company's reputation. Therefore, it is recommended to engage the services of a professional corporate services firm or a qualified company secretary who can assist in maintaining compliance and fulfilling these obligations in a timely and accurate manner.
By proactively fulfilling these obligations and maintaining compliance, a subsidiary company can operate smoothly, gain the trust of stakeholders, and take full advantage of the favorable business environment offered by Singapore.
By following the steps outlined in this guide and fulfilling post-registration obligations, subsidiary companies can unlock these advantages and position themselves for success in Singapore's thriving economy. It is essential to maintain compliance with statutory requirements, uphold corporate governance principles, and leverage the available resources and opportunities to maximize the potential for growth and profitability.
Singapore's business-friendly environment, coupled with its diverse and dynamic market, offers a wealth of opportunities for subsidiary companies to thrive and flourish. So why wait?
Frequently Asked Questions
Is it possible for a subsidiary to participate in different business activities compared to the parent company?
A subsidiary has the exciting opportunity to venture into an entirely new realm of business activities, completely independent from its parent company.
Is it possible for the subsidiary to be fully owned by a foreign entity?
Foreign-owned subsidiaries are allowed in Singapore.
Is it necessary to travel to Singapore in order to establish a subsidiary?
You can incorporate a subsidiary in Singapore online through BizFile+ or with the help of filing agents except for banking-related cases.
Is it possible for the subsidiary's profits or capital be repatriated back towards the parent company?
Yes, as long as it complies with the capital return requirements outlined in the Companies Act.
If the parent company goes bankrupt, what happens to the subsidiary?
A parent company is typically shielded from liability if its subsidiary goes bankrupt, however, the reverse is not always true, as the parent company holds ownership and control over the subsidiary.
In such cases, the liquidator can either sell the subsidiary or liquidate its assets to settle the parent-company's debts.
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