3 Basic Requirements for Company Registration in Singapore
The most common and suitable for any kind of business entity in Singapore is Private Company Limited by Shares (PTE LTD). In order to register company in Singapore, three main conditions must be met:
- There must be at least one local director
- Company must have a secretary
- Company must have a registered address.
Let’s discuss each requirement in more detail.
1. Local Director (Resident Director)
A company in Singapore cannot be registered without at least one resident director. For simplicity, it is common to call it a local director. It can be any individual who is at least 18 years of age. He or she must not be bankrupt and must not be disqualified from being director. Besides the local director, an unlimited number of additional directors can be appointed. Every director’s minimum age must be the same, and there are no restrictions on nationality.
Who is considered to be resident? It can be a Singapore Citizen or Singapore Permanent Resident. It can also be a holder of a long-term work pass in Singapore (Employment Pass), but generally such persons can work for one company only. In other words, if they are employed by one particular company, they cannot randomly hold directors’ positions in other companies in Singapore. They need to obtain a permission from MOM, which is also called Letter of Consent (LOC).
Besides, in order to get the permission from MOM for such candidates, the companies must be connected to each other by business. For example, they can belong to one group or one can be a subsidiary of the other.
Read this article about 3 Different Ways of appointing a Local Director in Singapore
A Nominee Director
There are many thousands of companies formed in Singapore every year. This is because of the popularity of Singapore as a South-East Asia hub and friendly tax regime. Obviously, many of these companies do not have local staff or partners. This is the reason why the service of Nominee Director is so popular and widely used. This is a common practice for the purpose of company setup in Singapore and it is used virtually by all corporate service providers.
Local nominee directors receive annual remuneration (director’s fee) and they are essentially “sleeping” members of the company. Their role is limited to signing the company’s statutory resolutions, such as the annual general meeting (AGM).
Nominee Directors might be required to sign some company documents from time to time, as this may be necessary due to the quorum requirements according to the company’s Constitution.
However, nominee directors do not hold any management roles and are not involved in any business decisions of the company.
However, there could be arrangements in which such directors are more actively involved, depending on the company’s business needs. In other words, they can transition to be an employee of the company,whether on a part-time or a full-time basis. There are no strict rules, the arrangements can be agreed between the parties in the course of business. Otherwise, their activities are limited by the agreement on the provision of nominee service, concluded between them and the company.
At the same time, a nominee director may be subject to legal liability if the company violates certain provisions of the Companies Act. When a company is punished for breaches, the authorities may inquire whether a particular director properly exercised director’s duty, for the purpose of compliance with regulations. Thus, it is in everyone’s best interest, both owners of the company and local director, that there is proper communication going on, to ensure timely compliance and smooth processes.
Local directors are usually represented by the corporate service provider and protected by the Indemnity Agreement.
2. Company Secretary
There are no specific requirements for the company secretary, other than local residency and being “a person who appears to them to have the requisite knowledge and experience to discharge the functions of secretary of the company”. In practice, this means that the secretary must be able to handle the company’s statutory paperwork and filings, be capable of drafting the company’s resolutions, minutes of meetings and keep company’s records properly.
It is a different position from a professional company secretary, who must meet the requirements of a Qualified Individual (QI). QIs have higher requirements and they can perform secretarial work for a number of companies same time, providing it as a professional service. In other words, QIs usually work as corporate service providers.
Every new company must appoint a secretary not later than after 6 months from the date of its incorporation. In practice, the secretary is usually appointed immediately. This helps companies ensure that their paperwork is handled correctly from the start.
If the secretary resigns, the successor must also be appointed within 6 months. As you may have guessed, the position of secretary does not necessarily involve taking calls on behalf of the company. Having a professional company secretary will help you avoid mistakes and fines when dealing with your company matters.
3. Registered Address
There must be a local physical address where the company can be contacted. This address must be accessible during regular business hours. A registered address in Singapore cannot be a PO box. If the company does not rent its own office straight away, the address can usually be rented from a corporate service provider for a small fee. The main purpose of such an address is to tie a company to one particular physical location and enabling it to receive correspondence, which also includes government mails related to the official business of the company. Examples include tax notices, bank statements and many other uses.
If you live in Singapore, then the registered address of the company can also be your home address, but this is generally not advisable.
Once all requirements are ready to be met, the company can start the registration procedure. It is important to remember that registration of companies with foreign participants (directors or shareholders) must be carried out by a Registered Filing Agent (RFA). It can be a certified accounting firm or law firm. Our company Intracorp Pte Ltd is a Registered Filing Agent and can assist with all incorporation matters and make the process quick and efficient.
