General


What is Limited Liability Partnership (LLP)?

LLP is a new form of business entity created to meet the growing dynamism of today's business environment. LLP allows for the flexibility of partnership or sole proprietorship and also enjoys the limited liability of a company.

What is a Partnership?

A Partnership may have between two and twenty partners. Once there are more than twenty partners, the business entity must be registered as a company under the Companies Act, Cap.50.

What is a Sole Proprietorship?

A Sole Proprietorship is a business firm owned by one person or one company. There are no partners. The sole-proprietor has absolute say in the running of the business firm.

What is a Business?

Under the Business Registration Act, "business" includes every form of trade, commerce, craftsmanship, calling, profession and any activity carried on for the purposes of gain, but does not include any office, employment or occupation, or any of the businesses specified in Q2 above. 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. A business firm, not being a legal entity, cannot register another business firm. A foreign company also cannot register a business firm unless it has registered itself under the Companies Act.

How many types of company are there in Singapore?

1) Private Company A company where the number of shareholders (subscribers) is limited to 50 members or less and where the right to transfer shares is restricted. 2) Public Company A company where the number of shareholders (subscribers) is more than 50 members and the company increases its capital by offering shares and debentures to the public. A public company must register a prospectus with the Monetary Authority of Singapore before making any public offer of shares and debentures. 3) Branch of Foreign Company A company whose country of origin is outside Singapore.

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, can sue or be sued. It usually has the words 'Pte Ltd' or 'Ltd' as part of its name.

Incorporation of a Local Company


Can the sole director be the company secretary?

No, the director and the company secretary cannot be the same person.

How many directors must a company have?

With effect from 1 April 2004, a company can have a minimum of one director, who must be above the age of 21 years and  “ordinarily resident in Singapore” i.e. a Singapore Citizen, a Singapore Permanent Resident or a person who has been issued an Employment Pass/Approval-In-Principle letter/Dependant’s Pass. Some individuals e.g. bankrupts, are disqualified from being directors. A foreigner who wishes to act as a local director of a company can apply for an Employment Pass or Approval-In-Principle letter from the Work Pass Division of the Ministry of Manpower (MOM) under the EntrePass Scheme.

Does ACRA issue “hardcopy” certificates?

Yes. However, in an effort to reduce business costs and speed up the processing of such matters, they have removed the need for such certificates with effect of 13 January 2003. You will receive an email notification instead. If a company wishes to obtain a “hardcopy” certificate, it can apply online for the certificate to be issued.

What is the procedure for incorporation of a local company?

You will have to obtain approval for the company name before you can incorporate a company. As a professional firm we will assist you in submitting an online application on your behalf via BizFile. An application fee is payable for each approved company name. An approved company name will be reserved for 60 days. If you need more time, you can apply online for an extension of another 60 days. An application fee is applicable for each approved name. After the company name is approved, we will proceed to incorporate the company. A registration fee is payable for a company limited by shares regardless of the amount of its authorised share capital.

Registering of a Branch of a Foreign Company


Can individuals register a branch of a foreign company by themselves?

No. The registration of a branch of a foreign company must be carried out by a professional firm or service bureau.

What is the procedure for registration of a branch of a foreign company?

You will have to obtain approval for the company name before you can register a foreign company. An application fee is payable for each approved company name. An approved company name will be reserved for 60 days. If you need more time, you can apply online for an extension of another 60 days. The application fee is payable for each approved name. Application for registration of a foreign company must be submitted online via BizFile by a professional firm/company. A registration fee is payable for a company limited by shares regardless of the amount of its authorised share capital.

What is a foreign company?

A foreign company is one that is incorporated outside Singapore. It has to register a branch in Singapore under the Companies Act before it can commence business here. Any foreign company wishing to register a branch has to engage a professional firm or service bureau in Singapore e.g. law firm or accounting firm to assist in the application for registration.

Change of Name of a Local/Foreign Company


What is the procedure for change of name of a local company?

You will have to submit an online application for change of name via BizFile. The approved name will be reserved for 60 days from the date of application. If you are unable to submit the documents for the change within this period, you can apply online for an extension of another 60 days upon payment for each approved name. After the company name has been approved, you will need to submit an online application via BizFile attaching the special resolution to change the company name. A filing fee is payable.

Changes to Particulars of a Company or of Its Officers


What is the procedure for change of name of a local company?

You will have to submit an online application for change of name via BizFile. The approved name will be reserved for 60 days from the date of application. If you are unable to submit the documents for the change within this period, you can apply online for an extension of another 60 days upon payment for each approved name. After the company name has been approved, you will need to submit an online application via BizFile attaching the special resolution to change the company name. A filing fee is payable.

Other Information on Companies


Will my company be required to charge Goods and Services Tax?

If your annual turnover is expected to exceed S$1 million, you may be liable to be registered for GST.

What is an exempt private company?

It is a private company:
  • which has not more than 20 shareholders and none of them is a corporation; or
  • that is wholly owned by the Government, which the Minister, in the national interest, declares by notification in the Gazette to be an exempt private company.
Such a company can choose to file a Certificate of an Exempt Private Company instead of its accounts at the time of filing its annual return.

Starting and Maintenance of Private Companies


What are the requirements relating to Meeting, Written Resolutions and AGMs?

The notice period for shareholders meetings is 14 days. The law allows members to pass a resolution without a physical meeting provided that at least 75% of the members approve (for special resolution) or at least 51% of the members approve (for ordinary resolutions). These written resolutions may be passed via electronic channels, e.g. email. All companies in Singapore must hold an Annual General Meeting (AGM) every year unless they are private companies and the shareholders unanimously agree in a general meeting that an AGM is not required and agree to dispense with it. However, even without holding an AGM, matters to be decided at an AGM have to be resolved via written means.

Are private companies required to appoint a Company Secretary?

Private Companies need to appoint a company secretary.

Do Dormant and Small Exempt Private Companies require their books to be audited?

The law does not require dormant companies and small exempt private companies with their annual turnover less than S$ 5 million to have their accounts audited by an external auditor. This applies to a company whose financial year begins on or after 15th May 2003. Exempt private companies (EPC) are companies which have no more than 20 shareholders, and none of the shareholders are corporations. A small EPC are those that have an annual turnover of $5 million or less. EPC does not need to file its annual financial statements as long as it is solvent.

What are the types of Company names that can be used

A Company name will be approved unless the name is: a) Undesirable b) Identical to that of another corporation, company or business name c) A name which the Minister has directed the Registrar not to accept An undesirable name is a name that is obscene, vulgar or offensive. A name which the Minister has directed the Registrar not to accept is one that has to be protected. There are additional rules that explain how "identical" names are considered. When determining if the name of one company or business is identical to another, the following are disregarded: a) "The", where it is the first word of the name. b) "Private", "Pte", "Sendirian", "Sdn", "Limited", "Ltd", "Berhad", and "Bhd" or any word or expression which, in the Registrar’s opinion, intends to represent the same. c) The following words and expressions where they appear at the end of the name: - "Company", "and Company”, “Corporation”, “Incorporated”, “Asia”, “Asia Pacific”, “International”, “Singapore”, “South Asia”, “South East Asia” and “Worldwide”. d) The plural version of the name. e) The type and case of the letters, spacing between the letters and punctuation marks. f) The symbol “&” shall have the same meaning as the word “and”. In the event that the name approved and used is:
  • undesirable
  • identical to other names
  • a name which the Minister has directed the Registrar not to accept
the entity that has been registered first may lodge a name complaint against the latter. If it is a valid name complaint, the Registrar may direct the company which was incorporated on the later date to change its name within six weeks from the date of direction. We can run a search for you to check if identical or similar names have been used and advise you accordingly.

Audit and Assurance


Can all small companies take advantage of audit exemption?

Only dormant companies and exempt private companies with annual turnover of less than $5 million are exempted from audit. Companies that are not entitled to take advantage of audit exemption include the following:  
Public companies, banks, insurance companies, companies regulated under the financial services legislation, trade unions and employers associations.
Certain charitable companies (and other charitable entities).
The constitutions of many small companies and entities, including clubs and societies, also require the production of an auditors’ report.
  It is recommended that, in view of the amended provision of the Companies Act Cap 50 i.e. S 205A to S 205C), companies continue to have their accounts audited.

Why should smaller companies invest in a voluntary audit?

Audits add value. Smaller companies invest in audits for the same reasons as larger companies, but there are particular issues facing smaller companies that make investment in an audit worthwhile:  
The cost of the audit is often marginal for very small companies, particularly where the auditor is involved in the preparation of the statutory accounts.  
Small companies who prepare their own accounts often need help in arriving at adjustments, such as those for obsolete stocks, bad debts and other provisions.  
Small companies grow, and may find themselves subject to a statutory audit requirement - the first year and the subsequent years of an audit can be very trying if the accounts are not in good order.  
An audit is essential in financing negotiations, take-over and buy-out.
The close involvement of the auditor provides companies with comfort when faced with tax and regulatory investigations.    
Directors of smaller companies may believe, for example, that because there is no longer any statutory audit requirement, there will no longer be any external ‘checking’ of the books and records. The power and resources of the Inland Revenue Authority of Singapore and the Department of Customs and Excise are not to be underestimated and are increasing all the time. This means that there are likely to be more investigations in the future, and that they are liable to be more thorough.

Can I do a review instead of an audit?

Review engagements are becoming more common. Many companies see a review as a cost-effective alternative to an audit.   There is a significant difference between an audit and a review; the level of assurance provided by a review engagement is substantially lower than the level of assurance provided by an audit engagement.   A review engagement differs from an audit engagement in the following         aspects:  
Audit engagements provide a high level of positive assurance, often expressed in ‘true and fair” terms; review engagements only provide a moderate level of assurance, often expressed as ‘negative’ assurance and reviewers commonly state that nothing has come to their attention to indicate that the information reported on has not been ‘properly prepared’.  
Audit engagements require the auditor to assess the accounting and internal control systems, to perform detailed tests of control and substantive procedures, and to corroborate explanations received; review engagements rely substantially on analytical procedures and reviewers are not required to assess the accounting and internal control system or to corroborate explanations received.  
The level of assurance provided by a review engagement depends on the amount of work performed by the reviewer, which may not be clear to those seeking to rely on the review. And review engagements are less likely to detect material fraud and error than audit engagements.   It is important that practitioners ensure that directors understand the limitations of review engagements, particularly when they are seeking review services, and whereby previously, an audit was conducted.

My company’s transactions are few (or none). Is there a need for an annual audit?

Under the Companies Act, dormant and small exempt private companies that have an annual turnover of S$5 million or less need not have their accounts audited annually. However, you may note that audit fees are generally lower for companies that have fewer transactions.

Must my company adhere to certain accounting standards for compliance purposes?

Generally, any company incorporated in Singapore must follow the Singapore Financial Reporting Standards. Auditors have a set of accounting standards to adhere to in any set of accounts. However, depending on the nature of the company’s trade, not every standard need be adhered to.

Why do companies have audits?

Companies invest in an audit for a number of reasons. Larger companies are required to do so by law, but many would do so anyway even if there were no statutory obligation – as in the USA. An independent audit is crucial to good corporate governance and essential to an effective internal financial control function. Above all, an audit adds credibility to information provided to shareholders. It provides assurance to investors and other providers of finance who are able to make their decisions in a safe environment, with confidence. Safety and confidence reduce the cost of capital and make companies competitive and profitable. Companies invest in an audit in order to:  
Satisfy stakeholders such as employees, customers, suppliers and pressure group, as well as the investing community, as to the credibility of published information
Facilitate the payment of corporate tax, good and services tax, and other taxes on time and accurately, thereby avoiding interest, penalties and investigations
Enable them to comply with banking covenants
Help deter and detect material fraud and error
Facilitate the purchase and sale of businesses
Take advantage of the spin-off benefits such as advice on the structure and operations of systems
Demonstrate good corporate governance and citizenship

Does my company require an annual audit?

Under the amended law it is not mandatory for dormant companies and small exempt private companies whose annual turnover is S$5 million and below to have their accounts audited. However, all companies must continue to maintain proper accounting records and prepare “true and fair” financial statements that comply with the Financial Reporting Standards (FRS) that are prescribed by the Council on Corporate Disclosure and Governance (CCDG). Additionally, under Section 205C of the Singapore Companies Act, the Registry of Companies and Business may require a company exempt from audit requirements to lodge audited accounts.

Corporate Tax


If I am objecting the grounds, do I still need to pay taxes?

Yes, you are required to pay.

What is a Notice of Assessment?

A Notice of Assessment is a statement showing the company's income assessed and the amount of tax payable or repayable. Hence, it is advisable to forward any correspondences from IRAS to your respective tax agent.

What will happen if I didn’t e-file my ECI within three months?

In that case, the deadline to submit the tax return will be 31 July for that Year of Assessment. If a company's ECI is not furnished within the stipulated period, the Comptroller may issue a Notice of Assessment based on an estimation of the company's income. If the company does not agree with IRAS’ estimated assessment, it has to object in writing within 30 days from the date of service of the Notice of Assessment. Otherwise, the estimated assessment will be treated as final even if the Form C submitted subsequently shows a lower taxable amount.

What is the benefit of e-filing the ECI?

The benefit of e-filing the ECI is that if you e-file within three months after the accounting period, your company is able to enjoy the auto-extension of time till 31 December for that Year of Assessment  instead of 31 July. Hence, it is advisable for the company to e-file the ECI within the stipulated period of time.

What is an Estimated Chargeable Income (ECI)?

ECI is an estimate of a company’s chargeable income for an accounting period (Section 63 of the Income Tax Act).

Individual Income Tax


What happens if I don’t receive anything from IRAS?

If you do not receive an income tax form/IRAS PIN mailer/SingPass invitation letter and (i) your annual income in Singapore in the year 2005 is $22,000 or more; or (ii) you are in receipt of Singapore dividend income in the year 2005 and wish to claim for the tax deducted at source, you are also required to file an income tax return. Contact IRAS to obtain a filing form.

How will I know whether I have to file an income tax this year?

IRAS will send you an income tax form/ IRAS PIN mailer/ SingPass invitation letter. This is regardless of your income level.

Goods and Services Tax


When do I need to register for GST?

You must register: At the end of a quarter if your taxable supplies exceed S$1 million for a quarter and the immediate past three quarters. Quarter refers to March, June. September or December (or) At any time if your taxable supplies are expected to exceed S$1 million for the next 12 months.