The How and Why: Redomiciling your Business in Singapore
Contributed by SFM Offshore
30 April, 2018
Political stability, attractive tax policy and strong trading links both across Asia and beyond it are just some of the reasons many businesses redomicile to Singapore. Here, we go into further detail about why should consider this smart move and how to go about doing it.
Explaining What "Redomiciliation" Is
Simply, this is registering a corporate entity in a new jurisdiction. This differs from establishing a foreign branch or subsidiary because neither of these things includes a change of jurisdiction. Under "redomiciling", liabilities and operating rights move from the previous country of domicile to Singapore.
Singapore Redomiciliation Eligibility
The first step is to ensure that your company is eligible to redomicile in Singapore. Duplicate names are not permitted and if yours is already in use, it won't be allowed. The following criteria apply:
- Company size should meet two of the following three tests (all in Singapore dollars): Total assets must be greater than $10 million, annual revenue must exceed $10 million, the entity must employ 50 employees minimum
- Solvency: The entity must be able to pay existing debts when due for a minimum period of 12 months. Application will be refused if the entity is in receivership, liquidation or subject to winding up
- Liabilities must not exceed assets
- Redomiciling must not be for illegal purposes such as defrauding creditors
Finally, the country of present domicile must have legal procedure and permission for your entity to redomicile in another jurisdiction.
Why Should Any Business Redomicile to Singapore?
Firstly, it permits continuity of the organisation's operations when undergoing a major change. The organisation will keep their international credit rating. Track records remain intact - ideal when seeking investment, banking credit, or licensing.
Secondly, Singapore is known for having one of the lowest tax rates anywhere in the developed world. Moving operations to the country has, in the past, allowed such privileges, but that could change in future with new laws on tax avoidance and profit shifting.
Third, particularly attractive is that your entity will be able to take advantage of Free Trade Agreement memberships in Singapore and indicate that your company is committed to operating out of Singapore.
How To Redomicile to Singapore
Any entity wishing to redomicile must fill out the Application for Transfer of Registration document to ACRA the Accounting and Corporate Regulatory Authority (ACRA). Such information will require an original copy of the Memorandum of Association or Articles of Association, or whatever the equivalent is in the current country of domicile. Also required is a copy of the constitution the organisation intends to use once domiciled in Singapore. Your existing constitution may require revision to adapt to Singapore law (such as an Objects Clause).
You will also require a foreign certificate of incorporation, a written declaration from all directors stating solvency. Each director, in turn, must also individually send consent for redomicilliation, statement to the fact that they are not disqualified for directing a corporate entity in Singapore, and their intent regarding shares (number of).
Finally, each of the secretaries must declare their consent to act as a secretary and that they have not been refused permission to act as a secretary in the past, and their qualification to act as such. Alternatively, documents from a lawyer stating all the above may be permissible.
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