A foreign business organization can transfer its registration from its current jurisdiction to Singapore through a process known as “Singapore re-domiciliation.”
Re-domiciliation has the major benefit of preserving corporate history and branding after the entity changes into a Singapore entity.
Re-domiciling in Singapore does not also establish a new legal company. It does not affect the foreign corporate entity’s duties, liabilities, assets, or rights. Additionally, legal actions taken by or against the foreign business body are unaffected.
On February 28, 2017, the Companies (Amendment) Act 2017 was introduced in Parliament, and it was approved on March 10, 2017.
The establishment of an inward re-domiciliation scheme in Singapore is one of the major revisions to the Singapore Companies Act (“Companies Act”), which is intended to increase Singapore’s competitiveness as a global commercial hub.
A foreign corporate entity (or “FCE”) will be able to transfer its registration to Singapore under this framework. The FCE will be expected to abide by the Companies Act’s rules once it has been re-domiciled as a Singapore company registered with the Accounting and Corporate Regulatory Authority (“ACRA”).
ELIGIBILITY FOR RE-DOMICILIATION TO SINGAPORE
According to the provisions of the Singapore Companies Act, foreign businesses must be able to modify their legal structure to the “companies limited by shares structure” in order to be eligible for transfer of registration.
Only foreign corporate entities that are permitted to transfer their incorporation under the laws of their place of incorporation are permitted to transfer their registration. With respect to the transfer of its incorporation, it is also crucial that the entity has met with the legal requirements of its place of formation.
The application for a transfer of registration must be made in good faith and without the intent to deceive the foreign business entity’s current creditors.
In addition, the foreign corporate entity must not be in liquidation, be in the process of being wound up, or be under judicial management.
For the transfer of registration, specific size and solvency requirements must be satisfied
- the total assets of the foreign corporate entity are worth more than $10 million.
- the annual income of the foreign corporate entity is more than $10 million.
- And there are more than 50 workers working for the foreign corporate entity.
SOLVENCY REQUIREMENTS FOR SINGAPORE REDOMICILIATION
- There is no basis upon which the foreign corporate entity could be found to be unable to pay its debts.
- The foreign corporate entity is capable of paying its debts as they become due within the first 12 months following the date of the application for transfer of registration;
- The foreign corporate entity is capable of paying its debts in full within the first 12 months following the date of winding up (if it intends to wind up within the first 12 months following the application for transfer of registration);
- The value of the assets of the foreign corporate entity is equal to the value of its liabilities (including contingent liabilities).
BENEFITS OF REDOMICILIATION IN SINGAPORE
Use of the company’s current branding and identity
A corporation can relocate its registration from its home jurisdiction to another country through the procedure of re-domiciliation while keeping its corporate identity and past. Such entities can minimise operating interruptions while maintaining their corporate branding and identity by re-domiciling.
A more favourable business climate
Businesses may also decide to re-domicile from their original jurisdiction as Singapore provides a more favourable tax or regulatory environment. The availability of financial or tax incentives, better access to the financial and capital markets, or a desire to be nearer to their shareholders or operating base are some further grounds for re-domiciliation.
Singapore is located in the heart of Southeast Asia, providing access to the fast-growing markets of the region. The country also has excellent transport links, including one of the busiest ports in the world.
REQUIREMENTS FOR SINGAPORE BUSINESS REGISTRATION FOR SINGAPORE COMPANIES
There must be at least one shareholder, who may be either an individual or a corporation and may own 100% of the foreign shares.
A minimum of one local resident director, who may be either a Singaporean citizen, a Singaporean permanent resident, or the bearer of an employment pass. Director nominees are accepted for this use.
- One or more local business secretaries
- S$1.00 is the minimum first paid-up share capital.
- A regional registered office
DOCUMENTS REQUIRED FOR RE-DOMICILIATION TO SINGAPORE
For businesses looking to re-domicile to Singapore, certain documents must be prepared and submitted to the relevant authorities. In this article, we’ll outline the key documents required for re-domiciliation to Singapore.
Notice of Intention to Transfer:
The first step in the re-domiciliation process is to file a Notice of Intention to Transfer with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore. This notice should include details about the company’s current jurisdiction and the proposed date of re-domiciliation.
Board Resolution and Shareholder Resolution:
The company’s board of directors and shareholders must pass a resolution approving the re-domiciliation to Singapore. The board resolution should include details about the reasons for the transfer and the proposed date of transfer. The shareholder resolution should include details about the number of votes in favour of the transfer and any dissenting votes.
The company’s constitution is a legal document that outlines the rules and regulations governing the company’s operations. If the company’s constitution is not compatible with Singapore’s legal requirements, it may need to be amended before the re-domiciliation can take place.
Certificate of Good Standing:
The company must obtain a Certificate of Good Standing from the relevant authorities in its current jurisdiction. This certificate confirms that the company is in good standing, has complied with all relevant laws and regulations, and is authorized to do business.
The company must provide financial statements for the last three years, prepared per the International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP).
The company must provide an auditor’s report on its financial statements for the last three years.
Statement of Solvency:
The company must provide a statement of solvency, which confirms that the company will be able to pay its debts as they fall due for 12 months after the re-domiciliation.
Consent to Act as Director:
Each proposed director of the re-domiciled company must provide written consent to act as a director in Singapore.
Registered Office Address:
The company must provide a registered office address in Singapore where all official correspondence will be sent.
Note: Companies considering re-domiciliation to Singapore should seek professional advice and ensure that they comply with all relevant laws and regulations. Reach out to us at Relin Consultants for more information.
ALTERNATIVE OPTIONS FOR RE-DOMICILING TO SINGAPORE:
Some of the alternative options for re-domiciling to Singapore are as follows.
Subsidiary Company: One of the most common alternatives to re-domiciling a company to Singapore is to establish a subsidiary company in Singapore. This involves setting up a Pte Ltd, with its share capital and governance structure, to carry out business operations in Singapore. This option provides greater flexibility and ease of operation, as the subsidiary can be managed independently and can benefit from Singapore’s tax incentives and regulatory environment.
Branch Office: Another option for companies looking to establish a presence in Singapore is to set up a branch office. A branch office is an extension of the parent company and operates under the same legal entity. However, it is subject to the same regulations and taxes as a local company. This option is best suited for companies looking to test the market in Singapore before making a more substantial commitment.
Representative Office: A representative office is another alternative to re-domiciling to Singapore. It is essentially an office established by a foreign company to conduct non-commercial activities, such as market research or networking. This option is suitable for companies looking to establish a presence in Singapore without committing to a full-scale operation.
Partnership: Another option is to establish a partnership with a local company. This can be in the form of a joint venture or a strategic alliance. This option provides access to local expertise, networks, and resources, and can be beneficial in navigating the local regulatory environment.
Mergers and Acquisitions: Finally, another alternative for re-domiciling to Singapore is through mergers and acquisitions. This involves acquiring or merging with an existing company in Singapore. This option provides immediate access to the local market, as well as an established customer base and workforce.
What kinds of entities may submit a transfer of registration application?
According to the Companies Act, foreign organizations must be bodies corporate with the ability to change their legal structures. Additionally, they must fulfill specific standards that have been set, and the Registrar must approve their application.
What is the cost of the registration transfer application?
There is a $1,000 non-refundable application fee.
How long is the processing time for the application for the transfer?
The processing of the application for the transfer of registration may take up to two months from the moment all needed evidence is submitted. This includes the time needed for a referral to be approved or reviewed by a different government department. For instance, the application will be sent to the Ministry of Education (MOE) if the company intends to carry out operations concerning the establishment of a private school.
How do the size criteria apply to an applicant which is a subsidiary?
A subsidiary is considered to be a single entity for the purposes of the size criteria. Instead, a subsidiary satisfies the size requirements of the parent, which must be
Singapore-incorporated or registered in Singapore via a transfer of registration does. Both the parent and the subsidiary may submit a single registration transfer application. When the parent’s application has been evaluated, the subsidiary’s application will be evaluated.
What are the effects of transfer of registration?
The re-domiciled firm will acquire Singaporean legal status and be subject to Singaporean regulations. Relocation has no effect on:
- Affect the obligations, liabilities, property rights, or legal proceedings of the foreign corporate entity;
- Create a new legal entity;
- Prejudice or affect the identity of the body corporate established by the foreign entity or its continuity as a body corporate;
- And affect legal proceedings brought by or against the foreign corporate entity.