Different Types of Business Structrure
Before setting up a new business in Singapore, an important decision is to decide what legal form your business will take. You can choose to operate your business as a private limited company, sole proprietorship, partnership, limited liability partnership, branch office or representative office. The most common and widely used business form in Singapore is a private limited company.
Singapore Incorporated Company
Singapore incorporated company includes private limited company and public company. A company may be registered as a private company if it does not have more than 50 shareholders. Otherwise, the company must be registered as a public company. A private limited company is the most common and widely used business entity in Singapore.
Foreign company
A foreign company wishes to register an office in Singapore may register either
- A subsidiary company- private limited company
- A branch office
- A representative office
A Subsidiary company is in fact a Singapore incorporated company. The only difference is that majority of the shares is owned by a foreign entity instead of a local investor.
An Exempt Private Company (EPC) is a type of private limited company which has not more than 20 shareholders and its shares are not held by another company. An EPC is exempted for auditing requirement if its revenue does not exceed S$5 million. However, it is still required to prepare unaudited accounts, also called compilation report for purpose of AGMs and filing with ACRA.
Singapore Branch Office
A Singapore Branch of a foreign company is not a separate legal entity as it is considered to be merely an extension of a company incorporated outside Singapore. Therefore, its entire assets belong to its head office and its liabilities may be enforced against all the assets of the head office. Any potential claims (whether in the country of incorporation, Singapore or elsewhere) against Singapore branch or head office may, therefore, have impact on the financial of Singapore branch or head office.
Representative Office
A foreign company may establish a representative office in Singapore to undertake promotional and liaison activities on behalf of the parent company. A representative office in Singapore has no legal status and is not permitted to engage in business, conclude contracts. It is thus not liable for Singapore income taxes.
A Representative Office in Singapore has very limited use since it cannot engage in any other business activities but promotional activities.
A Representative Office is usually valid for one year and must re-apply for a continuation of its status after the expiry of the initial period of approval.
