For years, Singapore has consistently ranked as one of the world’s top countries for conducting business due to its highly favourable environment for entrepreneurs. The Accounting and Corporate Regulatory Authority (ACRA) is responsible for managing the formalities of registering a corporation in Singapore, and the entire process of incorporating a company has been streamlined with digitalisation. In many cases, incorporating a business can be accomplished in just one or two days. Nonetheless, meeting regulatory standards and compliance requirements can be a source of anxiety for founders and shareholders. This article will outline the essential documents that every founder or shareholder must possess to launch a business in Singapore.
The following information is needed by ACRA to start a business in Singapore:
Business name
In Singapore, the initial step in setting up a company is to select a name for the business, which must then be submitted for approval to the Accounting and Corporate Regulatory Authority (ACRA). Once a name has been granted, it will be reserved for 60 days from the application date. After securing a name, you may apply for a Unique Entity Number (UEN) for your company, which allows you to choose your preferred digits. The UEN serves as a unique identification number for your business and is used for all interactions with governmental agencies related to your company’s operations.
Constitution
In order to register a company, the ACRA must receive a copy of the company constitution, formerly known as the memorandum and articles of association. A company’s constitution states details of the company, among others, the name of the company, the kind of business the company will conduct, the members’ liability, the capital amount that the firm will invest in as well as the rules and regulations on governance (transfer of shares, manner of calling for Annual General meetings or Extraordinary General Meetings, appointment and resignation of directors, secretary). The constitution of a company outlines all primary goals of the company, the duties and privileges of its directors, and the rules that must be adhered to by the company to function efficiently. A company’s constitution is a legally binding agreement that specifies rules for how it will be managed, including how it will be internally controlled, its structure, shareholder rights, and other matters. Typically, attorneys analyse this document as part of the incorporation procedure. If one does not wish to draft his own constitution, he/she may opt to adopt the Model Constitution provided in the Companies (Model Constitutions) Regulations 2015.
When adopting the Model Constitution, one may also choose to have it in force “from time to time” or “at a point in time”. When a Model Constitution is in force from time to time, any amendments to the provisions therein via the Companies Act will be adopted by the company. Contrarily, when a Model Constitution is in force at a point in time, the version which is adopted will remain unchanged unless the company amends it.
Particulars of the Shareholders’ agreement
As a necessary component of forming a company, along with the constitution of the business, a shareholders agreement needs to be drafted, as part of the process of forming a company. It is significant to note that the shareholders’ agreement, along with the company constitution, adds a few provisions that are absent from the constitution. It is in a shareholder agreement that the rules and regulations pertaining to the running of a company are laid out. In addition, the roles and responsibilities of shareholders, directors, and management of the company are also laid out. It is required that there be a minimum of one shareholder and a maximum of 50 shareholders. A foreign shareholding of 100% is permissible in the case of private limited corporations.
Information about the Director
A consent form must be signed by each director before a business can be created. There is no restriction as to the number of directors that a Singapore company can designate, whether they are local or international. A director must be a minimum of 18 years of age and cannot have a history of bankruptcy or malpractice convictions on their record. Directors do not necessarily have to be stockholders as well in order to serve as directors. It is therefore possible for directors who are not stockholders to be selected as directors.
There must be at least one Singaporean citizen, Singapore Permanent Resident, or holder of an EntrePass, Employment Pass, or Dependant’s Pass who lives in Singapore on a regular basis in order to serve as a director for the company.
It is the responsibility of a director of a company to oversee the activities of the company and determine the business plan for the future. In the event that a director breaches his or her duties, there may be repercussions both civil and criminal. There is a wide range of severity in the penalties imposed for various crimes. It is possible for a director to be charged with a fine of up to $5,000 or possibly be jailed for a period of up to two years for minor offences. In the case of certain offences, directors can be barred from serving for a period of five years before they can reapply.
Official address
In order to start a local business, you must include the address of your office when submitting your application. In addition, all correspondence or notices sent to the registered office address should be addressed to that address. This is because it is also where the company’s records and registrations are kept, as well as where the company’s correspondence is sent.
As part of the Housing Development Board (HDB)’s Home Office Scheme, run by the Urban Redevelopment Authority (for HDB flats) and Housing Development Board (for private residences), you are permitted to use your residential address as your office address if you intend to run a small company from your residence (if you live in a private residence). Owners, renters, and authorised residents of housing units may participate in this programme.
Before submitting your application to incorporate your business, you must get authorisation through the Home Office Scheme.
Information about the company secretary
Upon incorporating a company, it is mandatory for the company to have a company secretary within six months of the incorporation date. If the position remains vacant for more than six months, the directors could be subject to a fine of up to $1,000 if the role is left vacant for more than six months.
It is necessary for a company secretary to have the following qualifications:
- A natural
- Locally resident in Singapore.
A company’s sole director and the company secretary cannot be the same person at the same time.
Auditor
You must choose an auditor within three months of your business’s establishment, unless the applicable parts of the Companies Act exclude your company from audit requirements.
Conclusion
In conclusion, starting a business in Singapore may seem like a daunting task due to the various regulatory requirements, but with the right guidance and preparation, it can be a smooth and straightforward process. By understanding the essential documents required and adhering to the rules and regulations set forth by ACRA, business founders can set their companies up for success in this vibrant and business-friendly city-state. It is important to keep in mind that seeking legal and professional advice can help navigate the regulatory landscape and ensure compliance, setting the foundation for a successful business venture in Singapore.
Please note that this article does not constitute express or implied legal advice, whether in whole or in part. For your Free First Consultation or if you simply require more information, email us at info@silvesterlegal.com.
