Did you know that you can register a foreign company in Singapore?
Singapore attracts many foreigners because of its vibrant business atmosphere that makes it one of the leading financial centres not only in Asia, but also in the world. It is also considered one of the least corrupt countries globally, which makes it conducive for foreigners to conduct business.
In accordance with the Companies Act, Section 4(1) describes locally registered as “Singapore companies” or “local companies”.
In addition, if your business entity is originally created in another country and you are interested in operating it in Singapore, the Companies Act makes this arrangement possible and refers to them as “foreign companies.”
What are Foreign Companies?
The Companies Act defines foreign companies as follows:
- A corporation, company, association, society, or related business entity incorporated in other country except Singapore; or
- An unincorporated association, society, or business entity that may prosecute or be prosecuted outside Singapore, or does not have its headquarters in Singapore, or used a secretary to hold property in Singapore.
Foreign Companies Registration in Singapore
The first step towards establishing your foreign company in Singapore is registering it as a branch with the Accounting and Corporate Regulatory Authority (ACRA).
Below are the documents that you’ll need to present to the Registrar of companies:
- Name and address of your foreign company’s registered office;
- A copy of certificate of incorporation or an corresponding document;
- A copy of the most recent audited financial statements;
- A copy of Memorandum and Articles of Association, constitution, statute or related document;
- A list of company directors and their current residential addresses;
- A notice detailing the business days and hours of your foreign company’s registered office in Singapore;
- A notice containing the names nationalities and residential addresses of Singapore residents appointed to represent your foreign company;
- A statement to show that the appointed representatives have agreed to act on behalf of your foreign company in Singapore;
- A prescribed notice detailing:
- the place of issue of your foreign company’s registration certificate or related document;
- the unique number specified on the registration certificate; or
- the unique number provided by the registrar of companies in your country to operate your business in case you have lost the original registration certificate;
- a detailed account of business activities conducted by your foreign company; and
- the legal entity of your foreign company.
It is important to note that unlike the past, where foreign companies in Singapore were obliged to hire at least 2 authorised representatives, you can register only 1 and you are good to go.
In 2014, ACRA amended the Companies Act [now referred to as the Companies (Amendment) Act 2014] in order to empower it to deregister foreign companies due to the following reasons:
- If the foreign company is carrying out illegal businesses or has completely stopped operating in Singapore;
- If the authorised representative notified the foreign company about his/her resignation followed by a delayed or prolonged response from the directors or the foreign company has appointed a new authorised representative within 12 months of his/her resignation notice;
- If the authorised representative made a written request to the foreign company to clarify about prolonging their registration in Singapore and 12 months has elapsed without response form the directors; or
- If an authorised representative dies and the foreign company fails to replace him/her within 6 months.
Even though it is illegal for a foreign company to operate in Singapore without registration, any existing contracts it entered remain in force.
What are the Liabilities of Foreign Companies Authorised Representatives?
As mentioned above, you must appoint 1 authorised representative who is a Singaporean as a requirement for running a foreign company. However, his resignation can only be ratified if your foreign company decides to replace him/her.
As stipulated under the Companies Act, authorised representatives are responsible for a number of business activities. They are personally accountable to all fines levied on the foreign company and the only way to escape this is to convince a court of law about their innocence by providing reasonable evidence about the same.
Foreign companies must replace an authorised representative within 21 days in case the current one dies while on duty.
What Does “Carrying on Business” Mean in Singapore
Foreign businesses that have their premises or offices in Singapore are obliged to register their entities with the registrar of companies.
However, the courts recently ruled that the “place of business” does not practically refer to a physical building but to a fixed region in the country that a foreign company constantly operates from for an extensive period.
You should note that the Company Act has not categorically defined the meaning of “carrying on business” in its statutes. As an alternative, Section 366(1) of posits that it refers to the running, management or trading using property located within the country’s borders whether you are an agent, employee, trustee or legal representative, or trustee.
On the contrary, s 366(2) also stipulates that a foreign company is considered non-operational in Singapore if:
- It operates an active bank account;
- It holds property and invests funds;
- It uses independent contractors to carry out any sales;
- It transfers shares or operates a share registration office;
- It procures any order that was negotiated outside Singapore;
- It is directly or indirectly mentioned or involved in a lawsuit;
- It levies charges on immovable property and keeps records of debts;
- It borrows debts or conducts debt collection by imposing its own rights;
- It conducts shareholders’ meetings or similar activities relating to its internal business matters;
- It carries out inaccessible transactions at different periods by concealing them within 31 days; or
- It transacts business activities through companies approved by the Monetary Authority of Singapore.
As indicated in s 366(2) (h), if you own a foreign company that is found to carry out isolated but related transactions at recurring periods in Singapore, you are considered to be conducting business deals within our borders.
Therefore, the notion of “carrying on business” points towards various factors including the locations where you entered into contracts as well as where you bought or sold goods and services in Singapore, among others.
In essence, the courts may find you culpable of doing business within the country’s borders by considering a number of factors that are not clearly stipulated under the Companies Act. In addition, while the above-mentioned list does not exhaustively mention such instances, Singapore courts have for the most part referenced Australian and English cases to cross-examine evidence.
With reference to case law, many foreign companies have been found culpable of carrying out business activities in Singapore after the courts looked into their course of conduct regarding repetitive acts that point towards their likelihood of doing business in the country.
In England, foreign companies are usually seen to “carry on business” if they actively took part in transactions with the aim of making considerable amounts of profit or revenue within the borders.
In Singapore, “carrying on business” in the context of a foreign company could also mean using authorised agents to execute or perform business-related activities over a specified period. This can include organising business meetings with prospective customers and soliciting for clients.
What Laws Regulate Foreign Companies in Singapore?
Under the Companies Act, only provisions that refer to “corporation” relate to or can be applied to foreign-owned companies.
To put this into perspective, the provisions use the term “company” for locally registered business entities, while the term “corporation” refers to foreign companies. As a case in point, in areas where the Act delves into how to wound up a company, foreign companies cannot use these provisions in any way because it refers to local companies.
Therefore, apart from those sections that discuss provisions using the term “corporations” under the Companies Act, foreign companies must abide by laws that regulate business entities in their original countries where they were incorporated.
This takes account of a number of issues regarding the companies’ capacity and status with respect to their make-up and cessation as directed by the law in their original countries.
Cessation of Business
The Registrar of Companies in Singapore obliges all foreign companies in the country to take a maximum of 7 days to notify the authorities about their cessation of business activities in the country.
In the event that your foreign company is liquidated in the country where you originally established it, you must strictly take into account the following considerations:
- Your authorised representative must notify the registrar of companies within 14 days once the liquidation or closure has started
- The liquidator in your country will have same powers as the liquidator in Singapore until one is suitably appointed by a Singaporean court.
Once your authorised representative has delivered the notice of cessation to the Registrar of Companies, it will officially record that the foreign company has closed its business operations in Singapore.
The Company Act under Sections 377(9) or 377(10) allows a director or any member of your foreign company to apply for the restoration of the company’s name to the register in case you want to resume business.
Conclusion - Foreign companies
As soon as you decide to register and operate your foreign company in Singapore, the rest of the process is quite simple. For a smooth and effortless way to do this, consult with a reputable professional corporate services firm like Tianlong Services to steer your company in the right direction with respect to complying with all statutory requirements.