Singapore incorporation can be a bit tricky for some who are not familiar with how things work here in the country. Even if the country is known to be one of the best countries to start a business in and the paperwork to start the incorporation of your company are somewhat straightforward, if you are not familiar with the laws around Singapore incorporation, you might end messing up and could potentially delay your company’s incorporation.
This article will discuss 5 of the must-know Singapore company incorporation laws business owners should be familiar with before incorporating in the country.
1. Registration Laws
According to the company incorporation law of Singapore (Companies Act of 1967), 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. The incorporation of a 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 the following 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 Singapore company incorporation 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. According to Singapore company incorporation laws, 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 1 SGD paid-up capital that can be increased to any amount after incorporation in Singapore.
2. Appoint a director
Complying with the Singapore company incorporation law, 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.
Our comprehensive guide on work passes in Singapore can help explain more about how work passes work and how to get them.
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 leave once they reach three months of employment, but the number of days depends 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.
