Setting Up a Subsidiary Company in Singapore

What is a Subsidiary?

In the corporate world, where types of business structures are defined by who owns them, a subsidiary is a company that belongs to another company. This “owner” company is referred to as the parent or holding company. The parent company holds a controlling interest in the subsidiary company, which means it owns or controls more than half of the subsidiary’s stocks. 

In cases where a subsidiary is 100% owned by another company, the subsidiary is referred to as a wholly owned subsidiary.

Setting up a subsidiary company is one of the ways that foreign companies looking to establish their footprint in Singapore can do just that. Find out more about the process of setting up a subsidiary and the benefits that come with it below.

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Is a subsidiary the same as a private limited company?

A Private Limited Company (Pte Ltd) is a type of business structure that has less than 50 shareholders. Shareholders in this case are pre-selected individuals, and shares cannot be given or sold to the general public. A Pte Ltd is a very flexible and scalable type of business, and a Subsidiary is a type of private limited company. It is a private limited company incorporated in Singapore, where the parent company from overseas acts as one of its shareholders, if not the only shareholder. 

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Advantages of Setting up a Subsidiary in Singapore

Foreign companies looking to take advantage of Singapore’s dynamic business environment have several ways of doing so. They can establish branch offices or representative offices in Singapore. They can also create entirely new businesses. However, establishing a subsidiary is perhaps the most common option for foreign companies.

This is because Singapore's business legislation is very favorable for foreign investors:

• Foreigners are allowed to have 100% ownership of companies, something that is not available in some other markets
• A Singapore subsidiary, even if it is wholly owned by a foreign company, is considered a separate legal entity from its parent company. Therefore, the parent company’s liabilities are limited and its assets remain protected. 
• As a subsidiary company is treated as a Singapore tax resident, it enjoys the tax benefits of Singapore as well as privileges arising out of Singapore’s tax treaties with other countries. 
• The process and expenses for incorporation in Singapore are reasonable and straightforward; applying for registration can mostly be done online.

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How to Set Up a Subsidiary

One of the great advantages of doing business in Singapore is that the country welcomes foreign investors with open arms. So much so that the process of registering your subsidiary company can generally be accomplished online and with minimal red tape. 

Here are the things you need to know about registering your subsidiary:

The Accounting and Corporate Regulatory Authority

The Accounting and Regulatory Authority or ACRA is the government body responsible for business incorporation and regulation in Singapore. Their website has comprehensive guides to the different types of business structures you can register, including of course, subsidiaries. 

Requirements

What requirements should you prepare before initiating your subsidiary’s registration process?

• Subsidiary’s business name
• A brief description of business activities
• Shareholders names and details
• Directors’ names and details
• Registered Singapore address
• Company secretary’s name and details
• Company constitution

Incorporation process

What are the steps in registering your subsidiary?

• Register your company name
• Submit your Registration Application
• Pay the Registration Fees
• Receive your Certificate of Incorporation
• Set up your Corporate Bank Account

Explore more details about the company registration process here. 

Things to keep in mind when setting up your Subsidiary

Notes for foreign company owners

• Singapore does not allow a foreign individual or entity to self-register their company, so you will have to hire a professional or 3rd party to assist you during the registration process.
• If you plan to incorporate your Singapore subsidiary without actually living in Singapore, you do not need to obtain any specific work visa. You can actually operate your company from overseas, and still visit Singapore on a regular travel visa when you need to deal with company issues. 
• Even if you are not in Singapore, you will still need to have at least 1 local Singaporean director in your company.

Legal and Compliance Reminders

After you complete the incorporation process, keep in mind these additional compliance steps that your subsidiary must abide by:

• Maintain complete accounting records - Make sure your subsidiary company keeps lawful records that can be used to calculate taxes and ensure compliance with tax laws. Failure to maintain proper records can result in penalties, fines, or legal action. 

• Annual filing of taxes and other obligations - More than keeping records of company finances, you must also remit the taxes due to the government. This allows you to maintain your legal status, as well as make claims to benefit your company where possible.

Note that in Singapore, any company is also considered a tax resident, and has a unique identification number. The primary Tax Identification Number (TIN) for Singapore tax residents (that is, citizens and permanent residents) is the National Registration Identity Card (NRIC) number. This number is used for tax-related matters and other official documentation. For foreign individuals, it’s the Foreign Identification Number (FIN). For business entities, it is the Unique Entity Number (UEN). The UEN must be obtained from the ACRA during registration. 

• Compliance with the law- Your corporate responsibilities do not end upon your incorporation. In fact, they are only beginning. Keep your paperwork, as well as your business practices, above board and compliant with legal requirements. 

In particular, familiarise yourself with the local labour and employment laws, as you will be proceeding to hiring and employment for your company after incorporation.

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Conclusion

By some estimates, over 37,000 international companies have their regional headquarters in Singapore. The SG government has made the city state an attractive place for foreign business, and it is no surprise that more and more foreign individuals and entities want to establish subsidiaries in Singapore. 

If you are considering establishing your subsidiary soon, save this article for quick reference! And when you are ready to proceed to hiring workers for your subsidiary, contact Veremark. We are also a Ministry of Manpower-accredited partner for Education Verification checks for your foreign employees’ work pass applications, and can further assist you with all types of pre-employment background screenings you may need to implement for your business.

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