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5 Must-Know Laws When Incorporating a Business in Singapore

INCORPORATION

5 Must-Know Laws When Incorporating a Business in Singapore

June 2022

The Lanturn Team

Singapore has long been regarded as one of the world's most business-friendly countries. This is due to its strategic location among South Asian countries, a stable government, and tax incentives. It is no wonder that established companies like Meta and Google and startups like Gojek are choosing to open a business here. It is essential to abide by and keep up with Singapore business laws and regulations so one's business can stay operational in the city state.


1. Registration Laws


Every business entity must be registered with the Accounting and Corporate Regulatory Authority (ACRA) to legally conduct business in Singapore. ACRA's job is to regulate companies in Singapore and ensure that all business conduct is above board. Registering your company is relatively simple as it can be done online via the Bizfile+ portal. The application process will take approximately 15 minutes and can be processed in less than a day. 


Remember that several criteria should be fulfilled for the application process to go smoothly and be approved:


  • Appoint a director


You need at least one resident director, a local citizen, a permanent resident, or someone with a work permit. Read our comprehensive guide about company directors in Singapore.


  • Appoint a secretary


You will need to hire a qualified secretary within six months of your company's registration. The secretary's job is to do administrative duties, such as filing taxes and ensuring the company adheres to the latest laws and regulations. Read our guide on company secretaries in Singapore.


  • Obtain shareholders


Your company should consist of a minimum of one, and a maximum of 50 shareholders that can come in the form of an individual, another legal entity, or trust. Note that having a Singaporean shareholder is not a requirement, meaning shareholders can all be foreigners. 


  • Registered address


Setting up a local footprint means having a local address is compulsory.


  • Capital


You must have at least S$1 paid-up capital that can be increased to any amount after incorporation.



2. Appoint a director


Complying with the Companies Act, established by ACRA, is necessary to keep your business operational in the city. One of the requirements is appointing a director whose job is to steer the company in the right direction and be involved in the day-to-day operations and decision-making. Keep in mind that the director must fulfil the following criteria:


  • Must be at least 18 years old. There’s no maximum age for directors who serve in a private company, whereas if you serve for a public company or its subsidiary, the maximum age is 70. 

  • Be physically and mentally capable of performing and executing the job.

  • Be financially sound, meaning not considered bankrupt.

  • Have never been convicted of any offence involving fraud or dishonesty punishable with imprisonment for three months or more. 

  • Have a clean track record of complying with the law and regulations, such as never failing to file their tax returns and other activities mentioned in the Companies Act set by ACRA.

  • Is not a director of three defunct companies registered by ACRA within the last five years.


3. Taxes


The corporate tax rate in Singapore has stood at 17% since 2010, regardless of your total company income.

Tax exemptions are available for new startup companies for their first 3 consecutive YAs: 75% exemption on the first S$100,000 of normal chargeable income and a further 50% exemption on the next S$100,000 of normal chargeable income.

The deadline for filing the Corporate Income Tax Return (Form C-S/ Form C-S (Lite)/ Form C) for the Year of Assessment (YA) 2022 is on November 30.


4. Immigration Laws


With globalisation, your talent pool is not limited to Singapore only; you can find the right candidate overseas and apply for the appropriate work visa on their behalf before starting their employment and life in Singapore. In fact, there are over a million foreign workers on the island. There are several work visas or permits to choose from, either for professionals or semi-skilled workers.


The three most common visas for professionals are the following:


  • Employment Pass


Foreign employees with a salary of 4,500 will be eligible for this work pass. The pass will need to be renewed every two years for first-time candidates and every three years afterward.


  • EntrePass


This pass is ideal for budding entrepreneurs who meet at least one of the seven criteria to be eligible, such as holding an intellectual property, having a good business or investment track record, or having a venture capitalist or an angel investor to back your business. It is required to renew the pass after the first year for first-time holders and every two years afterward. 


  • Personalised Employment Pass


This pass is for high-earning individuals ($12,000 for EP holders and $18,000 for overseas workers). Moreover, this work permit is only issued for three-year eligibility without possible renewals.


Read a comprehensive guide on work passes in Singapore.


5. Employment Laws


The legal working age in Singapore is 17, and no law provides the basis for a minimum wage; it all comes back to the agreement between the employee and the employer. Regardless of the pay, the working hours of all employees should not exceed 44 hours a week. Exceeding that will be considered overtime, meaning employers must pay more. 


Employees are entitled to 11 public holidays, including New Year's Day, Chinese New Year, Labour Day and more.

Employees are entitled to both annual and sick leaves once they reach three months of employment, but the number of days depend on the length of the employment. The annual leave for first-year employees, for example, starts at seven and increases to 14 on their 8th year of service or more.



You can get more information about leaves here.

While it is true that Singapore is one of the ideal places to base a business, it is not without regulation. You need to consider the five laws explained above so your business can grow and thrive here.


Need to incorporate your company in Singapore today? Look no further; start it with Lanturn. Contact us now.




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