Establishing a branch office in Singapore is one of the options for foreign companies. Those corporate entities which are interested in outreaching to the Asian market via Singapore and also interested in retaining the control of the Singapore office, take this option.
By Singapore companies act, a branch office is not a legal entity. It is taken as the extension of its parent company which is located outside Singapore. This makes the liabilities of the branch office in Singapore, the liabilities of the parent company. All the debts and losses of the branch office are payable by its parent office.
Requirements for Registering a Branch Office in Singapore
- Name: Name of the branch office must resemble that of the parent company.
- Employee: The branch office must employ two local agents. They must be citizens or residents of Singapore.
- Delegation: Parent company must delegate legal powers to its local employees working at the branch office.
- Activities: Memorandum and Articles of Association (M&A) of the parent company forms the basis for the activities of the branch office.
- Address: A branch office needs to register its permanent address with the authorities.
- Documents: At the time of registration of branch office, supplying details about the parent company’s M&A, directors and incorporation certificate is necessary.
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Registering a representative office in Singapore is an option for those foreign corporate entities which believe in preparation before entering unknown markets. A representative office is not established to carry out profit making commercial activities for its parent company.
Purpose of Representative Office
A representative office is for tasting foreign waters. Its main activities are geared to let the parent company have as clear picture about the Singapore markets as possible. Representative office in Singapore carries out market studies and surveys. It also prepares market feasibility reports for the consumption of its parent company.
By Singapore companies act, a representative office is a legal extension of the foreign parent company. It does not have a legal existence in Singapore and its activities are controlled by the parent company. It has a short life-span.
Period of Validity of Representative Office
The registration of a representative office is valid for only one year. After that, it can be renewed annually, but its life cannot be extended beyond three year. After three years of its existence in Singapore, a representative office must transform itself into a subsidiary company or a branch office or it ceases exist.
Requirements for the Registration of a Representative Office
- Foreign parent company must exist for three or more year and its sales turnover must be more than S$250,000.
- Parent company’s certificate of incorporation.
- Parent company’s latest financial statements.
- An application form.
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Subsidiary company is not a special type of company specially designed for the Singapore market. It is a private limited company incorporated by a corporate entity; a foreign company or a local company. For small to mid-level foreign companies, it is the most viable option.
A foreign parent company can own 100% shares of the subsidiary company. By Singapore law, it is a separate legal entity. Its liabilities are not the liabilities of its parent company. That is why majority of the company incorporations in Singapore are of this type. The option of limited liability is very attractive for the investors and entrepreneurs.
Features of a Subsidiary Company in Singapore
- It must have paid-up capital of S$1.
- It must appoint a nominee director, an auditor and at least a company secretary. These professionals must be either Singapore citizens or residents. Failing that they must have EntrePass, Employment pass or a Dependent Pass.
- It should acquire a registered permanent address.
- At the time of registration, it must supply parent company’s Memorandum and Articles of Association and certificate of incorporation.
- A corporate memorandum needs to be submitted, delegating powers to the local employee to sign the documents for the subsidiary.
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