What is a business firm?
A business firm is either a sole-proprietorship or a partnership. Individuals and companies, being “legal persons”, may set up and own a business firm.
What is a sole-proprietorship?
A sole-proprietorship is a business firm owned by one person or one locally incorporated company. The sole-proprietor has absolute say in the running of the business firm.
What is a partnership?
A partnership is made up of more than one person or company but not more than 20 partners.
What is a company?
A company is a business entity registered under the Companies Act, Chapter 50. It has a legal personality i.e. it has rights to own properties and it can sue or be sued.
Can a foreigner register a business firm or company in Singapore?
Yes. To register a sole-proprietorship, a foreigner is required to appoint a locally resident manager whilst he continues to reside outside Singapore. For partnership, there must be at least a locally resident partner in the business firm. If all partners are foreigners, a locally resident manager needs to be appointed.
MOM will not issue an EntrePass to a foreigner who wishes to register and run a business firm. Foreigner who wishes to set up a business and be present in Singapore to manage its operations is strongly advised to seek approval from MOM before registration.
You may apply for an Entrepass and fulfil some of the requirements as listed below to start and operate a business:
- The company must be registered as a Private Limited Company
- Applicant to hold at least 30% shares
- Company at least have S$50,000 paid-up capital and a bank statement of at least S$50,000 for verification
- Company must not be registered for more than 6 months at the point of application
For more information, you may refer to here.
What is the life span of a business?
With effect from 13 January 2003, the lifespan of a newly registered business firm is one year. All the renewals effected after this date will also be valid for a one-year period.
What will happen if I do not renew my business after the one-year validity?
ACRA will send a cancellation notice and proceed with the cancellation if the registration is still not renewed. Carrying on the business after expiry date is an offence under which the defaulter is liable for – upon conviction, a fine not exceeding S$5,000, or imprisonment for a term not exceeding 12 months, or both.
If I convert my sole-proprietorship to a private limited company, when should the date of termination be?
Technically, a registered business cannot be converted to company. A registered business is a separate legal entity from a company and the law does not provide any process for conversion. Instead, you can terminate the registered business, inform ACRA of the cessation of business and incorporate a new company.
What is the difference between business and company?
As a business, all your personal assets are at risk in the event of a failure. On the other hand, a limited company is a legally separate entity in its own right. The directors and shareholders have limited liability. As long as the business is operated legally and within the terms of the Companies Act, their personal assets are not at risk in the event of a winding up or receivership, so long as all shares have been issued and paid up.
What is an exempt private company?
An Exempt Private Company (EPC) is a private company which has at most 20 shareholders. No corporation holds (directly or indirectly) any beneficial interest in the EPC's shares. It can also be a company the Minister has gazetted as an EPC.
What is a foreign company?
A foreign company is one that is incorporated outside of Singapore. It has to register a branch in Singapore before it can carry out business here. Any foreign company wishing to register a branch has to engage a professional firm in Singapore e.g. a law firm or an accounting firm to assist in the application for registration.
How many agents are required and who can be an agent of a foreign company?
Every foreign company must have at least 2 local agents acting on its behalf in Singapore. The agents are required to be Singapore Citizens, Singapore Permanent Residents, Singapore Employment Pass Holders, Approval-In-Principal Employment Pass Holders or Dependant Pass Holders.
When must a company hold its Annual General Meeting and file its Annual Return?
The first AGM of a company must be held within 18 months of its incorporation. After that, an AGM must be held once in every calendar year and not more than 15 months after the last AGM.
Is a dormant local company required to prepare audited accounts?
If there are no other accounting transactions other than exceptions set out in Section 205B(3) of Companies Act (e.g. Maintenance of registered office), dormant companies need not submit audited accounts.
A dormant company is generally defined as a company that has no accounting transactions throughout the financial year, or has not commenced operations since the date of its incorporation. A dormant non-listed company will be exempt from the requirement to prepare financial statements if:
- the company fulfils the substantial assets test; and
- the company has been dormant from the time of formation or since the end of the previous financial year.
The substantial assets test is that the total assets of the company at any time within the financial year must not exceed $500,000. For a parent company, the consolidated total assets of group at any time within the financial year must not exceed $500,000.
Dormant listed companies and their subsidiaries, and dormant unlisted companies which do not fulfil the substantial asset test must prepare financial statements but are exempt from audit. This remains unchanged from the current position.
The dormant companies are still required to file their annual returns under the Companies Act within 30 days of holding the AGM or the passing of written resolutions in place of the AGM.
XBRL Filing Requirements in Singapore
The Accounting and Corporate Regulatory Authority (ACRA) has announced revised XBRL filing requirements for companies required to file their financial statements with ACRA. The revision includes expanding the taxonomy used for XBRL filing. ACRA's stated objective is to improve the quality of financial statements by increasing the breadth and depth of financial data submitted to ACRA. The revised filing requirements took effect on 3 March 2014.
Who needs to file
With a few exceptions, all Singapore incorporated companies who are not Exempt Private Companies or dormant (Exempt Private Companies are those with no corporate shareholder and no more than 20 individual shareholders) will be required to file a full set of financial statements in XBRL format.
Who is exempted?
Solvent Exempt Private Companies are exempted from XBRL filling.
Insolvent Exempt Private Companies will have the following options to file their financial statements with ACRA:
- A full set of financial statements in XBRL format; or
- A full set of financial statements in PDF with Financial Statements Highlights in XBRL format.