We are all aware of the fact that Company Registration in India is a little tedious process than compared to lot of other countries. The reason why I am discussing the incorporation of company in Singapore is because Singapore is rated as no.1 country by the World Bank for ease of doing business. Also Singapore has been ranked as the thirst most globalized economy among 60 of the world's largest economies released by Ernst and Young 2011 Globalization Index. When we go through the entire incorporation process of Singapore we will realize that Singapore's incorporation rules and procedures are much simpler and effective and less time consuming. It is because of the ease of registration process that Singapore is a hub for business activities and its economic growth is exponential.
In Singapore most of the companies are registered as private limited liability companies (commonly known as Private Limited Company). A Private Limited Company established in India is similar to the same established in Singapore which has a separate legal entity and shareholders of the company are not liable for the company's debts beyond the amount of capital they have contributed in the company. Any Individual of foreign nationality or local (foreign or local) above the age of 18 can register a company in Singapore as per the Singapore Companies Act. The private limited company is the most common type of business enterprise registered in Singapore.
PRE REGISTRATION REQUIREMENTS:
Points to be noted before Registration of A Company in Singapore:
Company Name. The name of the company must be approved by the registrar of the companies prior to its incorporation. The similar requirement is for Registration of a company in India you need to get it approved from the Registrar.
Directors. One resident director is the minimum requirement (a resident defined shall be a Singapore Citizen, he should have a Singaporean Permanent Resident, or an individual who has been issued an EntrePass, Employment Pass, or Dependent Pass) and is mandatory. No upper or lower limit on the foreign or additional directors that a company can appoint. Directors must at least have attained a minimum age 18 years of age and is not declared a bankrupt or has any kind of history of conviction for any kind of malpractice. A non-shareholder of the company can also be a director of the company being a shareholder is no requirement per se. In India every company is required to two directors out of which one director should have stayed in India For a period of 182 days in the previous calendar year.
A Singaporean company shall have a minimum of 1 shareholder and the maximum can be up to 50 directors. A director and shareholder may or may not be a same person. A person or another legal entity or another company or trust can be a shareholder. A percentage of100% shareholding cannot be given to local or foreign shareholders. Issue of new shares or transfer of existing shares can be done at anytime once a company is being incorporated in Singapore. In India a Private Limited Company can have a maximum of 15 directors. More than 15 can be appointed by passing a special resolution.
Company Secretary. As per Section 171 of the Singapore Companies Act, every company must have a company secretary who is a qualified company secretary within 6 months from the date of its incorporation. An important point to note is that if the company has a sole director or shareholder then that same person cannot act as a company secretary. A natural person and a resident of Singapore shall only act as the company secretary. In India every Listed Company and every other Public Company having paid-up share capital of Rs 10 Crore or more should appoint a Company Secretary for full time employment.
Paid-up Capital. For registering a company in Singapore the minimum paid up capital should be 1 Singaporean dollar. The same paid-up capital can be increased at any given point of time after the incorporation of a company. There is no concept such as Authorized Capital for companies incorporated in Singapore. In India the requirement of minimum paid-up capital has been done away with i.e. no minimum paid-up capital for incorporating a Company.
Registered Address. A local Singapore address must be provided as the registered address of the company. The address provided must be a physical existing address and cannot be a P.O Box. In India as well local address should be registered address and it should be physically present at the time of registration.
A very attractive taxation scheme which includes exemptions and incentives is enjoyed by a company registered in Singapore. A tax of less than 9% is being paid for the company having the first annual profit of 300,000 Singaporean dollar and flat 17% subsequently. No taxes on dividend and capital gains. The reason why Singapore is a preferable hub for most entrepreneurs is because of its business reputation and extraordinary taxing schemes. In India there is certain kind of leverage given to the newly registered Companies but extraordinary taxation schemes are yet not available. The taxing scheme for new companies is not that lucrative.
CONSIDERATIONS FOR FOREIGNORS:
Foreigners wishing to open a Singapore company must take into consideration the following points:
- A professional firm must be engaged to register a company in Singapore. A completely foreign individual or entity cannot self-register a company; it is prohibited by Singapore law.
- No requirement per se of any kind of special visa if the objective is merely to incorporate a private limited company but there is no plan as such to relocate it to Singapore. Operations of the company maybe done from overseas also and the individual can visit Singapore on visitor's visa also to attend to the meetings of the company or for any other company related work for a short span of time.
- Employment pass or Entrepreneur pass needs to be obtained in case there is any kind of plan of relocation. Once this pass is obtained, you can portray yourself as the local resident director of the company.
- The best part about registering a company in Singapore is that all formalities of incorporation can be done without the individual having to visit Singapore.
When we talk about Foreigners opening a company in India the procedure for incorporation for a foreign national is similar to that of incorporation of an Indian Company with Indian Directors. The additional step is the notarization of foreign identity proof, address proof and other documents of foreign origin. One cannot get his company registered in India without visiting India. He needs to visit India for complying with all the statutory requirements. The ease that we see in Singapore is not available in India for the foreign nationals.
The documents required by the registrar for registering a company in Singapore are as follows:
- Company Name: The name of the company shall be registered with the registrar of companies.
- Brief Description of Business Activities: The kind of business that the company will be carrying out and its details shall be mentioned.
- Shareholders Particulars: The detail of all the shareholders, their names, addresses etc. everything needs to be mentioned.
- Directors Particulars: The director's name, address, age etc. need s to be mentioned with the registrar of the companies.
- Registered Address: The place from where the business will be operating i.e. registered office details needs to be given.
- Company Secretary Particulars: The details of the company secretary regarding his qualifications and other details need to be mentioned.
- Constitution: Everything regarding the constitution of the company needs to be mentioned.
All these documents will be collected in order to start with the incorporation paperwork.
For non-residents: The documents necessary for a non- resident are as follows:
- Copy of passport,
- Overseas residential address proof, and other Know-Your-Client (KYC) information such as a bank reference letter,
- Personal and business profile, etc.
For Singapore residents: The identity card given by the Singaporean government is necessary.
Shareholder is a corporate entity: When the shareholder is a corporate entity then he has to produce documents such as Copy of registration such as Certificate of Incorporation and Constitution.
In India Ministry of Corporate Affairs has recently introduced Form INC-32 which is a Simplified Proforma for Incorporating Company Electronically. Now a single application needs to be filed for getting a company registered in India. The Documents which are required while filing this form is as follows:
- Memorandum of Association- Required only to be submitted by Section 8 companies and companies with foreign nationals not having DIN ( Director's Identification Number).
- Articles of Association- Required only to be submitted by Section 8 companies and companies with foreign nationals not having DIN ( Director's Identification Number).
- Affidavit and Declarations by first Subscribers and Directors- Mandatory for all categories of companies.
- Address Proof of Registered office.
- Utility Bills- Copies of the same shall not be older than two months.
- NOC is required to be submitted by the sole proprietors/ partners/ other associates/ existing company.
- Proof if Identity and Residential address of the Subscribers and Directors.