In.Telligent Corporate Solutions CORPORATE COMPLIANCE KNOWLEDGE SERIES SINGAPORE COMPANY FORMATION - FOREIGN COMPANY IN.CORP GLOBAL PTE. LTD.

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1 CORPORATE COMPLIANCE KNOWLEDGE SERIES SINGAPORE COMPANY FORMATION - FOREIGN COMPANY In.Telligent Corporate Solutions IN.CORP GLOBAL PTE. LTD. One Raffles Place #41-01 Singapore Enquiry@indotcorp.com

2 OUR IDENTITY Singapore headquartered corporate solutions provider specializing in corporate compliance, accounting, taxation, incorporation and expansion advisory services. WHAT WE DO We are a Pan Asian, full-service professional services firm working with our corporate clients in connecting the Dots for their International expansion journey Solutions across the organizational lifecycle Before the Setup During the Setup Phase During the Steady State And Beyond Whether it is an organic expansion or an M&A driven growth, we assist our clients in providing customized solutions as they start their International expansion journey including due diligence, search packages, valuation and market advisory. Services Portfolio INCORPORATION We assist our clients in incorporating their businesses entities, setting up registered offices, providing qualified directors and establishing every aspect of local administration around payroll, tax registration, banking set up etc. Our clients also rely on us for all their Compliance needs ranging from Accounting & Reporting, Company secretarial requirements, Taxation, Legal administration etc. Business and Company formation services Advisory comprehensive market entry analysis We have a team of industry experts that can work with the clients connecting them with the opportunity: whether this opportunity is in the form of expansion capital or potential merger. COMPLIANCE Advisory comprehensive market entry analysis Nominee services ACCOUNTING Accounting and Finance oustsourcing Special projects Payroll TAXATION Tax planning and structuring Tax filing IMMIGRATION Immigration advisory EP Filings/renewals/cancellations Human capital expansion SOLUTIONS & ADVISORY Banking liaison Treasury advisory M&A & corporate consultancy Tax advisory IP/Trademark filing Compliance advisory International expansion advisory LEGAL & FIDUCIARY Connect clients with legal and fiduciary service providers Why Choose Us? Knowledge centric, One stop solution provider From incorporation to consulting Why Choose Us Professionally diverse management team. Deep knowledge of industry and compliance Value added services portfolio Regional service offering Excellent client relationships and successful track record Responsive, diligent and collaborative Write to us: enquiry@indotcorp.com

3 1 NAVIGATING SINGAPORE Overview Consistently classified as the world s easiest place to do business (Doing Business report by the World Bank), Singapore welcomes investors with a smooth channel for their ventures. Singapore is also widely regarded as The Gateway to Asia and Heart of ASEAN - A safe city with low corruption, excellent taxation and legal environment and is a great place to live, work and play. Singapore also boasts of a huge network of multinationals operating here with over 35,000 of them using Singapore as their favored business jurisdiction. Neighboring Asian cities can be accessed from Singapore by air travel within seven hours. Companies establishing their presence in Singapore typically use it as their Regional headquarter. Strong IP protection regime, over 70 tax treaties with other countries and excellent financial ecosystem are a few other features of this jurisdiction. While it can get challenging to navigate the new jurisdiction, this document briefly captures the processes, timelines, requirements etc. for registering an entity in Singapore. In.Corp looks forward to be assisting you in your Singapore expansion journey. 2 LEGAL STRUCTURES AVAILABLE It is important to understand and choose the most suitable business structure as it can affect you in various ways: number of owners in the business records and accounts you have to keep taxes you have to pay (personal versus corporate tax rates) your financial liability (personal versus limited liability) ways you can raise funds how management decisions are made in the business how easy it is to close the business All business structures must be registered with the Accounting and Corporate Regulatory Authority (ACRA). For a Foreign company, essentially the following options are available: Company A business entity registered under the Companies Act, chapter 50 and treated as an independent legal entity (i.e. separate from its shareholders and directors). Once formed, the company can own assets, enter into contracts, sue or be sued. Options for foreign company set up in Singapore - A Subsidiary or a Branch office A subsidiary is a new legal entity incorporated under the Companies Act, Cap. 50 A branch is an extension of a company incorporated elsewhere (i.e. the head office). A foreign company or a branch is to be registered with ACRA under the Companies Act, Cap. 50. Representative Office - A Representative office merely represents the foreign company from the manufacturing, trading, trade logistics and services sectors by registering with the International Enterprise Singapore (IES). Foreign companies in other sectors need to approach relevant authorities for registering a Representative Office. For example, foreign companies in finance and insurance are required to seek approval from the Monetary Authority of Singapore. A Representative Office is not a legal entity and is also not a permanent establishment. It is not permitted to carry on a business in Singapore. Therefore a Representative Office must not negotiate sales and accept orders or conclude sales or other income generating contracts on behalf of the foreign company The registration of a Representative Office grants a temporary business facility for the foreign company engaged in the above activities. It is normally intended to last no more than 2 to 3 years by which time a Representative Office would have sufficient time and opportunity to decide on the legal status Comparison of available legal structures are captured as follows:

4 Most common legal structure adopted is that of a Company that is private limited. 3 COMPARISON SUBSIDIARY, BRANCH AND REPRESENTATIVE OFFICE Entity type / Parameters Subsidiary Branch Rep Office Minimum Requirements At least 1 shareholder (local or foreign), 1 resident Director, 1 resident company secretary Local registered address Minimum S$1 share capital Name Any name can be selected Ownership & No. of members Can be local or foreign owned with maximum 60 members Filings Audit report apart from other ACRA and IRAS filings Tax Local tax resident and tax benefits are available Same activities as the parent Not a legal entity Specific approvals required for set up A number of documents required to be submitted Not governed by filing requirements as specified for companies Same as parent Exhibit the name as Representative Office everywhere 100% parent owned and No. of members is not applicable Branch as well as parent entity reports apart from ACRA and IRAS filings Non tax resident entity and Tax benefits are not available NA. Representative of the parent company Not governed by ACRA approval specific filings Non tax resident entity and Tax benefits Liability Limited Not limited Parent entity responsible for all liabilities Officers Resident Director At least 2 Resident Chief representative Secretary agents staff member Activities Can be any Same as parent Allowed to carry out marketing and promotional activities and liaison work for one s parent company in Singapore 4 REQUIREMENTS REPRESENTATIVE OFFICE IN SINGAPORE A Representative Office is most suitable when the foreign company intends to achieve the following objectives in Singapore: to conduct market research to assess trading opportunities in Singapore and the region to provide technical advice and to demonstrate its products to liaise and co-ordinate with regional distributors and sales agents Tax Implications Since a Representative Office is not permitted to carry on a business in Singapore, it is not subject to Singapore tax. No tax return is required to be filed in Singapore. Any person employed by the Representative Office in Singapore having regional responsibilities may be taxed on a "days-in-days-out" basis. This means that the employee's income will be pro-rated according to the number of days present in Singapore. The employee must

5 be employed by the foreign company and not for the benefit of any Singapore entity. Also, the remuneration must not be charged to any Singapore entity. Other Requirements Every Representative Office is required to: exhibit its name as "Representative Office" in its name plaque, letterheads and name cards and other communication materials inform the IES within 4 weeks from the date of change of name of the foreign company inform the IES within 4 weeks from the date of change in address renew registration within 4 weeks from the date of expiry Approval Process and Documentation The process of setting up a Representative Office administered by the IES generally takes about 2 to 3 weeks to complete from the date of submission of an application. The approval for a Representative Office may be obtained for one year. The information/documents required are listed below. Name, address and intended main activities in Singapore. The name should be similar to that of the foreign company. Main products sourced from the region for the past two years. If the Representative Office is to be a regional office, countries to be covered. Number of staff to be employed and their details like, name, NRIC/Passport no, and nationality. Total estimated operating expenses giving break up of salaries, rental (office, residence, machinery and equipment, etc) and others (travelling, marketing, utilities, etc) Details of foreign company like name, address, date and place of incorporation, authorised and paid-up capital, nature of business, turnover in the last 3 years, main activities, agents/distributors in Singapore and other Representative Office under the same foreign company Name, designation, passport number and nationality of the person who will be signing the application form. Annual Reports of foreign company for the last three years (in English). A certified copy of foreign company s Certificate of Incorporation (in English). The certification must be by a person holding or purporting to hold an office corresponding to that of the Registrar of Companies in the place of incorporation. Product brochures/leaflets, if available. Details of the shareholders of the company and their respective shareholding in the company. 5 REQUIREMENTS PRIVATE LIMITED COMPANY IN SINGAPORE Below are some of the general statutory and compliance matters facing private limited companies in Singapore. This is not exhaustive but will provide a broad idea of business compliance matters relating to the Singapore Companies Act, Cap. 50. Minimum Statutory Requirements of a Company At least one shareholder. That shareholder can be a corporate body or an individual which can be foreign or local. 100% foreign ownership is allowed. Minimum of one share with typical paid up capital of $1 only (in any currency). The concept of authorised capital no longer exists. Minimum of 1 director required. Must have a local registered address.

6 The Company Officers to be appointed are Directors o Must have at least one director who is ordinarily resident in Singapore (i.e. citizen, permanent resident, employment pass holder with a local residential address) o Directors must be at least 18 years of age; and they must not be disqualified (eg. undischarged bankrupts). o Statutory Duties in line with Companies Act (Cap 50) Company Secretary o Every company must appoint a company secretary within six months of incorporation o The company secretary must be a natural person with principal or only place of residence in Singapore (i.e. citizen, permanent resident, employment pass holder with a local residential address) o The office of the secretary must not be left vacant for more than 6 months at any one time o The directors of the company are under a statutory duty to ensure that the persons appointed as company secretary are persons who appear to them to have the requisite knowledge and experience to discharge the functions of company secretary of the company. Auditor o o o o o Generally a company is required to appoint an auditor within three months of incorporation and have its accounts audited Shall hold office until the conclusion of the next Annual General Meeting ( AGM ) and to be reappointed by the shareholders of the company However, if the company qualifies as an Exempt Private Company ( EPC ) and has an annual revenue of not more than S$5 million in a financial year, it is exempt from audit requirements and the appointment of an auditor is not required An EPC must have the following characteristics: Not more than 20 individual shareholders; and Shares are not beneficially held directly or indirectly by any corporation. Note: Despite exemption from audit requirements, the company still has to prepare unaudited financial statements which are to be sent to all shareholders. If an EPC has an annual revenue of more than S$5 million in a financial year it must have its accounts audited but it is not required to file the audited accounts with the Accounting and Corporate Regulatory Authority ("ACRA"), if it is solvent it need only complete an online declaration of solvency instead. Recent Updates Under the new legislative changes that come into force on 1 July 2015, a small company or a small company which is part of a small group would be exempt from audit requirements subject to meeting prescribed criteria. A company is a small company for a financial year if: o a) It is a private company; and o b) It meets at least two of the three criteria below for the immediate past two financial years: revenue for each financial year does not exceed S$10 million; value of the company s total assets at the end of each financial year does not exceed S$10 million number of employees at the end of each financial year does not exceed 50. A small group is one which meets at least two of the three quantitative criteria above on a consolidated basis for the immediate past two consecutive financial years. The new law applies for financial years commencing on or after 1 July Few points to note: You do NOT need a special visa to visit Singapore for the purpose of incorporation however, if you want to work in Singapore, specific permits are required. If you intend to work in Singapore on a long term basis, you need to apply for Employment pass (In.Corp can assist in applying on your behalf).

7 As in case of an individual any overseas body corporate or business entity can also subscribe shares in the Singapore Company and incorporate the same. Singapore companies act allows a 100% foreign ownership of companies. So, whatever assets & profits which business generates will be totally belonging to the foreign individual or corporate. There are no special qualifications, or visas required for incorporation. In.Corp provides Registered address services we are located in the heart of Central Business District (CBD), in the Raffles Place. We also offer Virtual Office solutions inclusive of mail forwarding, Virtual telephone services etc. We are Singapore company Incorporation specialists, can provide Nominee/Resident Directors and professional Company Secretaries for corporate compliance. 6 REGISTRATION PROCEDURE & TIMELINE Procedures and Timelines Registration of a Singapore subsidiary is computerized and can be completed within a day. The basic steps include name approval and company incorporation. Delays in the process can happen only when the documents are incomplete and/or there is a delay in the approval of name. All foreigners setting up a company in Singapore are required to use a professional firm that specializes in setting entities in the country. For personal visit incorporation, we recommend the following process: Send the information pack (proprietary In.Corp format) and scanned copies all the documents to us for verification We will review the documents and reserve the proposed name of the entity for you Your visit to Singapore would then involve execution of all incorporation documents apart from document and signature verification in our office - post filing, the incorporation usually happens within a day We also recommend spending the next day in Singapore for completing bank account opening formalities. Depending on the bank you select, we can arrange the meeting either in our office or make arrangements to visit the branch. Alternatively, you may chose to get the account opened through your existing arrangements Over the next two weeks, we will receive all the bank account related documents in our office. These will be mailed to you upon receipt. For Incorporation without personal visit: In the event you want the process to be completed without visit to Singapore, shareholders/directors will need to sign the documents in presence of a Notary public and documents will have to be duly certified by notary public as well. Do note that most of the banks in Singapore insist on face to face meeting before opening the bank account unless you have an exiting International bank that can assist you with the process. Documents required for Incorporation Information pack for In.Corp covering various details around the proposed Singapore entity company name, shareholding, director information etc. KYC documents (proof of address, proof of identity such as passport copy etc.) for all the proposed officers as well as shareholders of the Singapore entity

8 For Corporate shareholder certificates of incorporation/incumbency (showing the list of shareholders and directors), articles, latest bank statement etc. Incorporation specific documents for filing - Signed Memorandum and Articles of association for filing, Signed forms required for the proposed Directors All documents and signatures will have to be verified / certified by our officers in case you are planning to visit Singapore for incorporation If documents are proposed to be executed outside of Singapore, they will have to be certified by a Notary public. Documents Issued post Registration Certificate of Incorporation The Company Registrar will send an official notification confirming the incorporation of the company. The notification includes the company registration number and is treated as the official certificate of incorporation in Singapore. A hard copy of the certification of incorporation is no longer issued by default as it is not needed in Singapore. However, if you do prefer a hard copy, an online request can be made to the Company Registrar after the incorporation of the Singapore company. A fee of approximately S$50 is applicable and the hard copy can be collected the next day from the office of the registrar. Company Business Profile A business profile containing the particulars of the company can be obtained from the Company Registrar by making a request online and paying a small application fee. Generally, the document (a PDF file) is available for download within an hour of the request and contains the following key details: Company name and registration number Previous names for the company, if any Incorporation date Principal activities Paidup capital Registered address Shareholders details Directors details Company Secretary details The above two soft documents (i.e. notification of incorporation and company business profile) are sufficient in Singapore for all legal and contractual purposes including opening of corporate bank accounts, signing office lease, subscribing to telephone/internet services, etc. Some of the other items you will almost certainly need upon registration of your Singapore company include: Share certificates for each of the shareholders Share register indicating shares allotted to each of the shareholders Company seal for the company A rubber stamp for the company

9 Opening a Corporate Bank Account After successful registration of your Singapore company, you can open a corporate bank account in any of the major banks in Singapore such as HSBC, Standard Chartered, Citibank, DBS, OCBC, UOB, etc. Many of the banks in Singapore these days require physical presence of the company principals as part of the account opening procedure. You should consider the following: If you are unable to visit Singapore, you should choose a bank that allows opening of the corporate bank account without your visit to Singapore. If you are able to visit Singapore, you have a wider choice of banks to choose from. In this case, you can explore the features and facilities provided by different banks and decide on the bank that best suits your needs. In.Corp has excellent relationship with a number of local banks and can arrange Bank officers to visit our office to complete account opening related formalities. Applying for Business Licenses Depending on your company s business activities, you may need to obtain one or more business licenses after you have incorporated your company but before you can commence your business operations. Fortunately, very few business activities require such a license. Examples of business activities that require a business license(s) include restaurants, educational institutes, travel agencies, financial services, import/export of goods, etc. For more information, refer to Singapore business licenses guide. Goods and Service Tax (GST) registration If the projected annual revenue of your company exceeds SGD 1 million, your company must register for GST. GST tax is also known as Value Added Tax (VAT) or Sales Tax in many other countries. If your company is GST registered, you will need to charge this tax (currently 7%) to your clients on the goods and services provided and in turn remit this amount to tax authorities. GST registration is not mandatory if your company s annual turnover does not exceed S$1 million. For further details on GST, refer to Singapore GST guide. 7 COMPANY ANNUAL COMPLIANCE & FILING REQUIREMENTS Annual Filing Matters Annual General Meetings First AGM must be held within 18 months from the date of incorporation or within six months from the financial year end, whichever is earlier Subsequent AGMs must be held once every calendar year and not later than 15 months from the date of the last AGM but within six months from the financial year end The requirement for an AGM can be dispensed with by way of all members passing a resolution to that effect in a general meeting and the approval of annual statutory matters can be approved by way of a resolution passed by written means instead; and If the company cannot hold the AGM on time, it can apply to ACRA for an extension of time up to no more than 60 days.

10 Annual Return Must be filed within one month from the date of the AGM Will include a set of audited financial statements (in XBRL format) unless the company qualifies as an EPC and is solvent If the company is an EPC, solvent and has an annual revenue of more than S$5 million, it must have the accounts audited, but it can file a declaration of solvency instead of the financial statements. Maintenance of Company records Accounting Records Every company incorporated in Singapore must keep accounting and other records: o to sufficiently explain the transactions and financial position of the company; o to enable a true and fair profit and loss account and balance sheet to be prepared; o in such manner that will allow them to be conveniently and properly audited. Must be kept for a period of not less than five years from the financial year end they relate to; May be kept either at the registered office or some other place that the directors deem fit and at all times must be open to inspection by the directors. The records can be kept outside of Singapore, however records sufficient to enable a profit and loss and balance sheet to be prepared should be sent to and kept in Singapore; Should be kept in English. If they are not kept in English, translations must be made periodically; Annual financial statements, when prepared, must be prepared under the Singapore Financial Reporting Standards; The financial records can be kept in the company s functional currency they do not have to be kept in Singapore dollars. The company can choose its financial year end it does not have to coincide with the calendar year. The following are entitled to inspect a company s accounting records: Company directors; Company auditors; The Minister for Finance or authorised person; Trustees for debenture holders of the company; Inspectors where the company is subject to investigation; Official receiver and liquidators; Creditors and contributories if empowered by the court; Anyone authorised by the court; The Comptroller of Income Tax or authorised person; Shareholders if allowed by the articles of association or to resolve disputes Other Records The following must be maintained by all companies incorporated in Singapore: o Register of charges and copies of charging instruments; o Register of directors interests in shares, debentures, contracts etc; o Register of directors, managers, secretaries and auditors; o Minute books - minutes of directors and shareholders' meetings must be maintained. Only the minutes of the shareholders' meetings can be inspected by the members; Register of members. o In addition to the statutory records above, other records that are recommended to be kept: o Register of transfers; o Register of application and allotment of shares; o Register of documents sealed or seal book ; o Register of important documents i.e. Memorandum and Articles of Association, Company licenses etc.

11 Preparation of Financial Accounts Based on your company s financial activities during the accounting year, you must prepare your annual financial accounts in accordance with the Financial Reporting Standards of Singapore. If you have medium to large number of accounting transactions each month, we highly recommend that you perform monthly bookkeeping to keep your ledgers in order. If however, the number of monthly financial transactions is relatively small, you can perform bookkeeping on a quarterly or annual basis. The financial accounts should consist of Statement of Comprehensive Income (i.e. Profit and Loss Account), Statement of Financial Position (i.e. Balance Sheet), Cash Flow Statement, and Statement of Changes in Equity. Filing of Estimated Chargeable Income (ECI) Singapore companies are required to declare the revenue amount and Estimated Chargeable Income (ECI) by filing ECI form with Inland Revenue Authority of Singapore (IRAS) within 3 months of the Financial Year End for the company. Even if the company estimates its chargeable income as zero, it still has to file a Nil ECI. Audit of Financial Accounts Once the financial accounts are ready, your company may be required to have its accounts audited if the company falls under one of the following: Entity is a Singapore company with corporate shareholding; or Entity is a Singapore company with annual revenue exceeding S$5 million. Annual General Meeting (AGM) Filing of Annual Tax Return with IRAS Each Singapore company must file its annual tax return with IRAS by November 30. Singapore adopts the preceding year basis for taxation. The profits for the financial year ending in the preceding year will form the basis for filing the tax return in the current year. Note that the directors the company are responsible and accountable for complying with the annual filing requirements. Failure to comply with the statutory compliance requirements is an offence and may result in fines or prosecution.