Establish a Trust or Company In Singapore

Trust And Company Formations In Singapore

Singapore is gaining more attraction as a trust jurisdiction internationally. A range of factors have contributed to achieving a reputable offshore trust status, including but not limited to the following reasons:

  1. Singapore is home to many local and foreign financial institutions. Many firms provide accounting, legal and tax advisory services.
  2. Well defined legal framework and robust regulatory framework. Provides a comprehensive legislation that ensures an attractive tax regime and strong framework for trust arrangements.
  3. The country has open, sound and stable economic policies this is Singapore’s greatest competitive advantage compared to other countries.
  4. The wealth management industry in Singapore continues to be an exciting phase of growth, notwithstanding the current global climate.

What is a trust?

A trust is a legal arrangement whereby a donor or settlor transfers property to the trustees who hold and deal with it on behalf of the third parties (the beneficiaries).

The owner of the property who creates the trust arrangement (the settlor) would enter into the arrangement in order to allow the trustee to have control over the property and any economic benefits from the property will accrue to the beneficiary. The settlor and beneficiary can be the same person.

Types of trust

There are various kinds of trusts available in Singapore which have different purposes associated with them.

  • Private family trust: used by financially sound families for managing their assets.
  • Statutory trust: meant for establishing statutory compliance.
  • Charitable trust: an irrevocable trust established for charitable purposes.
  • Collective investment trusts: examples of such trust are unit trust, business trust and real estate investment trusts.
  • Foreign trusts: qualify for tax benefits, including tax exemption on a wide range of incomes as well as the exemption of tax on the distribution to beneficiaries of such trusts.

Singapore trust law

Settlors of trusts are seeking solution for asset protection, confidentiality, estate planning and family circumstances. Their concerns will be addressed if they are guaranteed of an effective legal and regulatory framework.

Singapore operates with a common law legal system based substantially upon English Trust principles. Trusts in Singapore are regulated predominantly by the Trustees Actwhich is administered by the ministry of law.

In addition, the Trust Companies Act(TCA) governs trust businesses in Singapore. The Monetary Authority of Singapore(“MAS”) is the regulator of trust companies under the TCA. The conduct of trust businesses are subject to strict anti-money laundering requirements. MAS grants licenses only to those trust companies that meet their high standard  in terms of qualifying, financial reporting, controls and the experience of the professionals that are employed to manage the business.

Singapore has a territorial tax system. There is no capital gains tax and estate duty was abolished in 2008. There is no exchange controls and funds may be remitted to and from Singapore. Since 2006, foreigners setting up Qualifying Foreign Trust(“QFTs”) and Singapore residents setting up Qualifying Domestic Trust(“QDT”) enjoy tax exemptions.

Both QFTs and QDTs must be administered by a Singaporean licensed trust company. Singapore also has an extensive double tax treaty network with over 50 countries across the world. This entails interesting tax planning opportunities.

Benefits that Singapore’s trust framework provides

Asset protection

Assets are protected from any risks such as any potential future liabilities of a settlor. Assets can also be safeguarded against being taken away or attacked by the state of the settlor’s country of residence, nationality or domicile.

Tax planning

As mentioned earlier if the settlors and beneficiaries are non-residents, the trust will be exempt from income tax. There will be no withholding tax, deduction of Singapore income tax, no inheritance, wealth, gift or capital gains taxes levied in Singapore.

Avoid the expense and delay of probate

The establishment of trust removes any assets present in the estate and avoids the need to obtain a grant of representation.

Confidentiality

There is strict confidentiality and banking secrecy laws. There is no public register of trusts in Singapore. The ownership of trust assets can remain entirely confidential in most circumstances.

Avoid forced hiership

Settlors are protected from forced heirship claims.

Estate planning

A trust is a convenient and flexible method of making complex arrangements for distribution of the assets.

Protecting the vulnerable

A trust enables people to manage their own affairs such as infant children, disabled relatives, the aged or persons suffering from certain illness.

Finally, Singapore offers economic and political stability, tax neutrality, access to a broad range of financial services and top quality financial institutions, a strong judicial system, sound regulation and overall integrity. The statutory and tax environment for trusts in Singapore continues to evolve and grow and simultaneously so does the trust jurisdiction’s magnetism for wealthy individuals and wealth-management professionals alike.

Singapore is gaining more attraction as a trust jurisdiction internationally. A range of factors have contributed to achieving a reputable offshore trust status, including but not limited to the following reasons:

  1. Singapore is home to many local and foreign financial institutions. Many firms provide accounting, legal and tax advisory services.
  2. Well defined legal framework and robust regulatory framework. Provides a comprehensive legislation that ensures an attractive tax regime and strong framework for trust arrangements.
  3. The country has open, sound and stable economic policies this is Singapore’s greatest competitive advantage compared to other countries.
  4. The wealth management industry in Singapore continues to be an exciting phase of growth, notwithstanding the current global climate.

 

Establishing a Holding Company in Singapore

 

The requirements for establishing a local business presence in Singapore are minimal and, according to the World Bank, setting up a business takes only two and a half days on average.

Holding companies in Singapore are typically registered as private limited companies (or “subsidiaries”), and this company structure is by far the preferred business arrangement for small and medium-sized foreign companies operating in the city-state. While navigating business establishment procedures in Singapore is relatively simple, investors should seek the advice of a professional services firm to consider the legal and tax implications that inevitably accompany the establishment of a local business presence.

Self-incorporation without the assistance of a professional services firm is only permitted if all directors, the company secretary, and initial shareholders are Singapore National Registration Identity Card (NRIC), Employment Pass, or Dependant Pass holders. Otherwise, a professional services firm must be engaged to register on the company’s behalf.

Requirements for Incorporation

Individuals and business entities seeking to establish a holding company as a private limited company must meet the following basic requirements:

At least one shareholder

  • A Singaporean private limited company should have at least one shareholder, but no more than 50.
  • The shareholder can be a person or another legal entity, and 100 percent foreign shareholding is permitted.
  • New shares can be issued or transferred at any time after the Singaporean company has completed the incorporation process.

At least one director that is a Singaporean resident

  • A “resident” is defined as a Singaporean Citizen, Permanent Resident, or individual who has been issued an Entrepass, Employment Pass, or Dependent Pass.
  • There is no limit on the number of additional foreign or local directors that can be appointed, but most companies will have at least two directors to fulfil requirements from banks and other financial institutions in the country.
  • The shareholder and director are permitted to be the same person, and non-shareholders can also be appointed as directors.
  • Directors must be at least 18 years old, and have no criminal record.

A company secretary who is a Singaporean Resident

  • Within six months of incorporation, a company secretary must be appointed.
  • For companies with a single director/shareholder, the same person is not permitted to also act as the company secretary.

Paid-Up Capital

  • The minimum paid-up capital (share capital) for the registration of a Singaporean company is S$1.
  • Paid-up capital can be increased at any time after incorporation, and there is no concept of authorised share capital for Singaporean companies.

A Registered Address

A physical (residential or commercial) local address must be provided as the registered address of the company. The address may not be a Post Office Box, and must be approved by the Urban Redevelopment Authority. Residential properties can only be used under the Home Office Scheme.

The Incorporation Process

As mentioned previously, the incorporation process for a private limited company can typically be completed in less than three days.

Once the decision has been made to move ahead with self-incorporation, the following steps should be taken to register a private limited company:

1. Name Registration

The first step in the registration process involves reserving the company’s name. The name must not conflict with an existing name or contain any sensitive or offensive words, and can typically be approved in less than an hour. Existing company names can be searched on the UEN website. The following guidelines should also be kept in mind to expedite the name registration process:

  • A private limited company name should have the word “Private” (or “Pte.”) or Sendirian (or Sdn.”), its Malay translation, as part of the name, inserted immediately before the word “Limited” or “Berhad” (“Ltd.” or “Bhd.”).
  • Names including certain words (such as bank, finance, law, etc.) may require review by a relevant government authority and prolong the approval process.

After a name has been approved, it will be reserved for 60 days from the date of application. This period can be extended by filing an extension request.

2. Company Registration

After a company’s name has been approved, a formal incorporation request can be filed on ACRA’s BizFile with the following:

  • SingPass
  • Name application number or approved company name
  • Company type
  • Particulars of additional directors/shareholders/members
  • Registered place of business
  • Share capital details
  • PDF of Memorandum and Articles of Association

Companies can typically be incorporated within 15 minutes after the registration fee has been paid (between S$50 and S$600 for locals, and S$300 to S$1,200 for foreigners). For companies that require approval or review, the process can take between 14 days and 2 months.

Official Certificate of Incorporation and Company Business Profile

The Company Registrar will send an official email after successful incorporation that includes the company registration number, and can be treated as the official Certificate of Incorporation. In order to receive a hard copy of the certificate, an online request can be made along with a fee of S$50. A business profile that contains the company’s particulars can also be obtained for a small application fee. This and the Certificate of Incorporation are often sufficient for all legal and contractual interactions, including opening a corporate bank account, signing an office lease, and subscribing to telephone/internet services.

The holding company (in the form of a private limited company) is permitted to begin operations after these documents have been successfully obtained, and a Unique Entity Number (UEN) has been issued.

Annual Compliance: General Meetings and Annual Returns

Annual compliance requirements for private limited companies are also relatively minimal and include holding an annual general meeting and filing of annual returns.

Within 18 months of incorporation, the first annual general meeting of the company must be held with no more than 15 months elapsing between subsequent annual general meetings without Registrar approval. If a resolution calling for the disposal of annual general meetings is passed by all members with voting rights, however, this requirement can be avoided. Within one month of the company’s annual general meeting, an annual return must be made containing the particulars of the company officers, registered address, and auditors. Typically, companies engage a professional services firm like Haskew Law to file an annual return on their behalf.

 

 

Life Without Limitations

Global Citizenship

Changing The Way People Emigrate

Powerful project management solution

Legal expertise

Maximising opportunities

Stay in control of your case

On the move & on your desktop

Fully supported by immigration lawyers and migration experts 24/7

Secure your visa in a timeframe that suits you

Our Vision: To be the best global boutique immigration specialist firm delivering exceptional value and trusted world-class service.