Singapore is the world’s fourth leading financial capital. Over the years, several foreign businesses have found a loyal and rewarding market in the country. Currently, thousands of foreign nationals are looking for business opportunities in Singapore. According to the World Bank, the country has ranked #1 for seven consecutive years for the ease of doing business. With the corruption-free environment and the high per capita income, the country has rapidly become a favoriteamong international corporations and new startups alike.
Why do foreign entrepreneurs love Singapore?
Setting up a new business in Singapore is easier than most entrepreneurs believe. The company owner needs to be present in Singapore to monitor the progress of his or her business operations. At the same time, he or she must apply for an Employment Pass at the Ministry of Manpower (MoM). Before applying for the Employment Pass, you must know a few details –
- The company must not have a registration older than six months while applying for the pass.
- The foreign nationals as applicants need to own at least 30% of the company shares.
- The business must have at least $50,000 (SGD) of capital at the time of application.
- The business must be entirely legal.
In most situations, the company owner has other businesses in other countries. It is impossible for the entrepreneur to remain in Singapore for the entire time. In such cases, when the foreign national has no intention of staying in Singapore, he or she can appoint a resident director to take care of the administrative processes. The owner does not have to apply for an EntrePass, but he or she must abide by the regulations of ACRA and appoint a representative director to conduct the paperwork.
How can you register your offshore company or corporation?
Singapore has emerged as the top location for new offshore companies. You can register as one of the following business entities –
- Private Limited Company (PLC)
- Sole Proprietorship
- Limited Liability Partnership (LLP)
Most corporate entities register as one of the following options –
- Branch office
- Subsidiary company
- Representative office
The process of company incorporation is rather hassle-free in Singapore. You need to register the company’s name and then register the company with ACRA as per the revised Singapore Companies Act. The latest amendments came into force in 2017. According to which, there have been several changes in the regulatory framework in the companies operating out of the country. These changes reduce the burden of paperwork, improve the ease of conducting business and simplify the debt infrastructure of any corporation. The amendments influence the country’s compliance requirements as a whole.
How has the role of a director changed after the Companies Act 2017?
According to the first phase of change the Companies Act 2017 implemented, there have been significant alterations in the roles of controllers and directors of a company. The foreign companies and the locally registered LLPs must maintain non-public registers of controllers. The new Bill describes the controller as a person with “significant control” and at least 25% ownership of the company. These changes fortify the recommendations of the Financial Action Task Force (FATF).
Any company has already taken necessary action if they have already located a controller by any of the following means –
- The company is an LLP that has a registry of controllers.
- A corporation, which has public shares on any Singapore exchange.
- Any Express Trust or a trustee.
In the years before the amendment of the Companies Act, it was not mandatory for the nominee directors to disclose their nominee status. After the enforcement of the amendment of 2017, all nominees must disclose their nominee status. Additionally, they must also mention the identity of their nominators to the company. The changes aim to enhance clarity in company administration and finances in the coming years. At the same time, the alterations in laws and regulations are making filing official paperwork, payment of tax and channeling of information according to hierarchy smoother within any corporation or company.
What are the responsibilities of a nominee director?
The Company Law endows the nominee directors with the ultimate decision-making authority and power. The company directors must meet their statutory duties and fiduciary obligations within the company. Some of these duties include the following –
Maintaining accounting records
According to Section 114 of the Companies Act 2014, all companies should keep up-to-date accounting records that explain their finances. It is the responsibility of the directors or nominee directors to preserve these records and update them periodically. Any failure to comply with this section can subject the directors and the company to audits and penalties.
Filing the annual accounts
According to Section 116 of the Companies Act 2014, the director needs to present the financial statements of the company during their annual meeting. The director should submit their initial financial reports within the first 18 months of their incorporation. No two annual general meetings should be more than 15 months apart.
Holding meetings
The Companies Act lays down clear instructions regarding the three most essential meetings –Statutory meeting, Annual general meeting, and Extraordinary general meeting. It is the responsibility of the director to chalk out the meeting plans and prepare the financial reports for these meetings.
Appointment of company secretary
The nominee directors must ensure that the appointed secretary has enough experience, industry membership and necessary qualification for the post. According to the Companies Act 2014, Section 88 it is the responsibility of the director to appoint a company secretary.
Appointment of auditors
Section 125 of the same act also states that the director is responsible for the selection of an auditor or an accounting entity within three months of incorporation.
These are only some of the statutory duties of the nominee director of any offshore Singapore company. Usually, a big corporation with complex business operations and multiple workflows appoint multiple individuals to be the nominee directors of the company. Since the responsibilities are plenty, you need to find someone who has the experience, training, and qualification to become your company’s nominee director. Once you have the right director by your side, company incorporation in Singapore becomes easier than ever.
