Singapore Company Incorporation – Types of Foreign company registration
If an individual wishes to set up a foreign company in Singapore he/she may do so under the supervision of a registration firm in Singapore as per ACRA (Accounting and corporate regulatory Authority) guidelines. A foreign company may register as Branch Office, Subsidiary Company, or a Representative Office in Singapore. Here is a small guide on the types of registration and why you should choose them.
A branch office
- A branch office is not a separate legal entity; it is an extension of the parent company. Therefore, a branch office affects unlimited liabilities for the parent company.
- A branch office is required to have the same name as its parent company and carry out the same activities as its parent company.
- A branch office is required to submit its own audited accounts as well as the accounts of its head office.
- A branch office is treated as a foreign entity though registered with the registrar as its main activities are exercised outside Singapore.
- A Singapore branch of a foreign company will be deemed as a non-resident company for tax purposes.
What happens if you choose a Branch Office registration?
As a branch office is required to submit its audited accounts along with that of its head office. Many foreign companies may not be comfortable with this regulation. Moreover securing investment and incentives will be relatively difficult as branch office does not have a long-term vision due to fewer commitments. As a branch office is termed a non-resident entity, some of the tax exemptions available to resident companies such as a subsidiary company will not be available to a branch office. It takes up to 2 days for registration and there is not a restriction in hiring local or foreign staff.
A subsidiary company
- It is considered a separate legal entity and distinct from its parent company, therefore, treated as a Singapore local company.
- In a subsidiary, liabilities are limited and do not extend to the parent company.
- The name of the company does not have to be the same as the parent company.
- A subsidiary must file its accounts annually and can open a bank account in Singapore for transactions.
- A subsidiary must appoint at least one local resident director.
What happens if you choose to register a Subsidiary Company?
As a subsidiary company has limited liabilities the foreign company does not hold responsible and its assets cannot be held for the debts and liabilities of the subsidiary company. For a subsidiary company, raising funds locally or availing government incentives is comparatively easier than for a branch office. Since a subsidiary company enjoys a resident status it can avail the benefits of several favourable tax schemes in Singapore.
A representative office
- A representative office is temporary administrative arrangements and has no legal status.
- The liabilities of a representative office extend to its parent company.
- The name must be the same as its parent company but must include the term ‘representative office.’
- The time limit for a representative office is three years after which it can continue its operations only if it upgrades itself to a branch office or subsidiary before or at the end of the three-year period or the registration has to be renewed every three years.
- A representative office can have only a limited number of employees and must appoint a chief representative who will relocate from headquarters.
What happens if you choose a representative office registration?
A representative office is ideal when a foreign company wishes to study the business environment in Singapore before setting up a business in Singapore. In short, it is a short-term arrangement for a company which wants to gather information on the market that is to carry out non-profit activities.
These are the types of registrations a foreign company can choose from and commence Singapore company registration.