Key Difference Between The Three Singapore Company Formations

By Author: Robin Smith
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There are a lot of advantages that businesses in Singapore would enjoy- advantages such as it is near major markets, the government is practical and reasonable, the benefits that foreign companies would enjoy in terms of taxes and corporate laws. These are the advantages why Singapore has always been one of the favorite business spot in the Asia Pacific region

There are three business arrangements available for foreign entrepreneurs who already have an existing business abroad and want to setup a Singapore company in order to expand their operation. These are the three business entities a foreign company can adopt to legally operate in Sinagapore:

Singapore Subsidiary Company

Despite the fact that it is a subsidiary company, it is considered as a independent legal entity because it is not directly obligated to the losses, debts and other unfavorable activities incurred by the parent company in other countries.

Since the nature of the business is locally incorporated private limited company despite being owned by foreigners, a subsidiary company is enjoying the same benefits as the local residents ...
... are enjoying such as tax exemptions.

A foreign company should hire at least one director as a legal requirement, according to the Accounting and Corporate Regulatory Authority (ACRA). In order for the director to be qualified, he must be a local resident or someone holding an Employment Pass, EntrePass, or Permanent Residence Status.

Maintaining a registered office is also a legal requirement since it is where a subsidiary company holds and store Singapore mandated documents.

Singapore Branch Office

A branch office is just like a subsidiary company which means that it can also engage in business activities performed by its main office. However, there some glaring differences between these two entities.

First, a branch office is treated as a legal extension of its parent company which means that the latter is directly liable for the financial losses and liabilities of its Singapore branch.

The next salient difference is that since the branch office is considered as a legal extension of the parent company from other country and thus, considered a non-resident business, it will not benefit from the tax exemptions and other benefits enjoyed by subsidiary companies and local businesses.

Singapore Representative Office

The major disadvantage of a representative office is that it cannot engage in a profit-generating and other activities deemed "commercial" because it is not treated as a legal business entity.

According to the Singapore Companies Act, a representative office is only permitted to conduct activities such as doing market research on the feasibility of the business in the country, directing local agents and distributors of its parent company and engaging in customer service provided that it will not engage in any technical or repairing inquiries and negotiations.

A foreign company is required to renew the permit for its representative office annually at a maximum of three years, and after this period, it must shift to a branch office or subsidiary company if it wants to maintain its business presence in Singapore.

Any of the aforementioned business structure can be used in getting your business started in Singapore depending your needs. It is highly recommended that you seek professional advise from a reputable company registration firm to assist you in your endeavor.

Resource Box:

Asiabiz is the leading Singapore company registration firm. It has successfully helped foreign entrepreneurs setup a Singapore Company. Our office is located at Raffles Place, in the heart of the Singapore business district. ("CBD") If you're in our neighborhood and want to discuss any aspect of our service then feel free to come in to our offices during business hours for advise and consult.