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Entrepreneurs Guide to Forming a Company in Singapore

08th December 2010
By Mackie in Bankruptcy Law
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In Singapore a foreign business organization can choose three business structures namely representative office, branch office, and subsidiary company. Each of these structures has its objective, benefits as well as drawbacks.

Meanwhile, this is a guide to foreign business organizations interested to form a Singapore company:

Representative office

This structure is designed for conducting market research and feasibility studies that determines whether the business is viable in Singapore. Furthermore, the said office can also carry out non-commercial ventures like supervising local distributors and agents' activities of its parent company; being a liaison office in a deal that includes negotiations; and accommodating assistance to costumers not pertaining to repair and inquiries in technical aspect.

It is important to take note that this set up is prohibited to implement any activities that is commercial in nature such as rendering services that cost a fee, leasing warehouse facilities, storing and shipping goods or products in Singapore and entering in a contract involving business.

Because of these limitations, foreign companies are advised to treat their representative office as a temporary setup.

Branch office

A Singapore branch office is allowed to conduct commercial activities as long as these are also performed by its parent foreign company.
Legally speaking, a branch office as an extension of the parent company entails that the latter cannot benefit a limited liability from the losses, legal claims, debts, and other financial drawbacks incurred by the branch office.
Conversely, a branch office is not entitled for the local tax benefits and exemptions for it is considered as a foreign entity.

Subsidiary company

Even if its owned 100% by a parent company abroad, a subsidiary company is intrinsically a regional incorporated private limited company that makes it suitable for local tax exemptions and other benefits.
Under the Singapore Companies Act, a subsidiary company may have one to 50 shareholders who may be a foreign individual or Singapore resident.

A subsidiary setup can survive on its own as a legal venture from its parent company, in effect, parent company have restricted obligations such as being protected from bankruptcy and other financial drawbacks incurred by a subsidiary company in Singapore.

Because of the notable advantages of a Singapore subsidiary company, most business professionals believe that this structure is the most ideal to foreign companies that are planning to stay longer in the country.

Resource Box:

Asiabiz is the leading Singapore Company Incorporation Solutions Specialists. It has successfully helped foreign entrepreneurs Incorporate 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.
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