Setting up a business in Singapore

Any activity which is carried out on a continual basis for the purpose of gain is required to be registered with the Accounting and Corporate Regulatory Authority (ACRA). Every person, before carrying on business in Singapore, must register with ACRA, except for those who are exempted under the Business Names Registration Act 2014. There are several types of business entities that can be set up in Singapore:

Sole Proprietorship
A sole proprietorship is a business owned by one person or one company. It is not a separate legal entity from its owner, the sole proprietor. The sole proprietor has absolute say in the running of the business, but he is also personally liable for the debts and losses of the business. The sole proprietorship must be registered under the Business Names Registration Act 2014. An individual who wishes to register a sole proprietorship in Singapore must either be a Singapore citizen, Singapore permanent resident or an EntrePass holder. If the sole proprietor is not resident in Singapore, he or she must appoint an authorised representative who is resident in Singapore.

Partnership
A partnership is a business firm formed by two to 20 partners. Once there are more than 20 members, the business must be registered as a company under the Companies Act 1967. A partnership (unlike a company) does not have separate legal personality. The partners have unlimited liability and each partner is personally liable for the partnership’s debts and losses, including those incurred by other partners. An individual who wishes to register a partnership in Singapore must either be a Singapore citizen, Singapore permanent resident or an EntrePass holder. If the owners are not resident in Singapore, they must appoint an authorised representative who is resident in Singapore.

Company
A company is a business entity registered under the Companies Act 1967. It has a legal personality separate from that of its shareholders and directors, and may own property in its own name, and may sue or be sued in its own name. The members of a company are not personally liable for the debts and losses of a company. Because of these advantages, a company usually has less flexibility than the other forms of business organisations and must comply with more formalities, including the rules and procedures in the Companies Act.

In Singapore, there are broadly three types of companies: (1) Exempt Private Companies which have 20 or less shareholders, with no corporation holding any beneficial interest in the company’s shares; (2) Private Companies with more than 20 but less than 50 shareholders; and (3) Public Companies which may have more than 50 shareholders. Public Companies may raise capital by offering shares and debentures to the public.

A company must have at least one shareholder and at least one director ordinarily resident in Singapore. If a foreigner wishes to act as a local director of a company, he must apply for an EntrePass from the Ministry of Manpower.

Limited Partnership
A limited partnership (“LP”) is a special type of partnership that consists of a minimum of two partners, with at least one general partner and at least one limited partner. As their labels suggest, the general partner has unlimited liability while the limited partner has limited liability. This means the general partner is responsible for the actions of the LP and is liable for its debts and obligations, while the limited partner is not liable and obligations of the LP beyond his agreed contribution, provided that he does not take part in its management. The LP itself does not have separate legal personality.

Limited Liability Partnership
A limited liability partnership (“LLP”) is a partnership between at least two partners where the individual partner’s own liability is generally limited. A partner within an LLP may either be an individual or a body corporate. The LLP is a halfway-point between a partnership and a company. It gives the business the flexibility afforded to a partnership but having the separate legal personality of a company. This means that all partners cannot generally be held personally liable for the LLP’s debts. (A partner may, however, be held personally liable for claims from losses resulting from his own wrongful act or omission, but will not be held personally liable for such wrongful acts or omissions of any other partner of the LLP.) An LLP can sue or be sued in its own name and may own property in its own name.