Guide to set up a Local Company in Singapore

Guide to set up a Local Company in Singapore:

 

Table of Content

 

1. Overview
2. What is ACRA?
3. Choosing and Registering Your Company Name
4. Deciding on Financial Year End
5. Determining the Company Type
6. Appointing Directors, Company Secretary and Key Company Personnel
7. Shares, Share Capital, and Shareholders
8. Registered Office Address
9. The Constitution of your Company
10. Maintaining Company Registers
11. After Incorporation of Company

 

1. Overview:

Singapore is renowned as a global financial hub, making it an attractive destination for entrepreneurs looking to start a business. If you’re considering setting up a local company, this article provides a comprehensive guide on the key steps and requirements for incorporation. Singapore’s strategic location and pro-business environment make it a great choice for establishing a local company.

 

2. What is ACRA?

 

Are you ready to establish your business in Singapore? Ensure compliance with the Accounting and Corporate Regulatory Authority (ACRA), the governing body for business registration, financial reporting, and regulation of public accountants and corporate service providers. Registration under ACRA is a crucial step in meeting Singapore’s regulatory standards, ensuring your business is positioned for success from the outset.

 

3. Choosing and Registering Your Company Name

 

The first step to starting a business in Singapore begins with choosing the right company name and submitting an application through ACRA’s online business registration portal, BizFile+. A company is a separate legal entity, meaning it can own assets and take on liabilities in its own name—a key advantage of incorporation. 

Once you’ve selected a name, ACRA will ensure that it isn’t identical to any existing business name or containing restricted or undesirable words. If the name passes the screening process, it’s approved, and you’re one step closer to incorporating your business. The fee for the name application is SGD 15.

You have 120 days from the date of approval to complete your company’s incorporation. So, once the name is approved, move fast to avoid starting over!

When submitting the company name application, you’ll need to select a Singapore Standard Industrial Classification (SSIC) Code. This code categorizes your business activities and is an essential part of your registration.

What’s an SSIC Code?

The SSIC code is a numerical system that classifies your business within Singapore’s regulatory framework, ensuring proper categorization and compliance. You can explore your SSIC code for your business via SSIC Search.

SOAS Tip:

When choosing a company name,

1. Use industry-related words (e.g. “Tech” for a tech startup).
2. Consider Singapore’s multicultural context in name selection.
3. Ensure clear branding and reduce legal risks.

 

4. Deciding on Financial Year End

 

When setting up a company, selecting the Financial Year End (FYE) is an important decision that sets the timeline for your accounting and compliance obligations. The FYE marks the final day of your company’s accounting period and can follow either a 12-month or 52-week cycle. Common FYEs in Singapore include 31st March, 30th June, 30th September, and 31st December—but choosing yours wisely is key, as it impacts your corporate filings and tax deadlines.

The FYE not only closes out your accounting period, but also dictates when you need to meet certain regulatory requirements under the Companies Act. If your business is a private limited company, you’ll need to adhere to these two key deadlines:

• Hold your Annual General Meeting (AGM) within 6 months of your FYE.
• File your annual returns within 7 months of your FYE.

These filings are critical to staying compliant and maintaining good standing with ACRA.

 

Can You Change Your FYE? Yes, But There Are Rules.

If you need to adjust your FYE, you can notify the registrar and make changes either for the current or previous financial year. However, there are situations where you’ll need approval from the Registrar, specifically if:

1. The change results in a financial year longer than 18 months.
2. You’ve already changed the FYE on or after 31 August 2018, for a financial year ending after that date, and it’s within 5 years of the previously changed FYE.

SOAS Tip: To maximise tax exemptions of your newly incorporated company – you can choose this formula to determine your FYE date

1. Add 11 months to your incorporation date.
2. Select the last day of the month FYE set to 31 December.

 

5. Determining the Company Type

There are seven types of companies that can be incorporated in Singapore. When submitting your company name application, you must specify the relevant company type. 

Company Type	Liability Description	Legal Name Ending	Shareholder Limit
Exempt Private Company	Liability limited to the capital invested.	Pte Ltd	Maximum of 20 shareholders; no corporations as shareholders.
Private Company Limited by Shares	Liability limited to the capital invested.	Pte Ltd	Maximum of 50 shareholders; corporations can be shareholders.
Public Company Limited by Shares	Liability limited to the capital invested.	Ltd	More than 50 shareholders; corporations can be shareholders.
Public Company Limited by Guarantee	Liability limited to the amount undertaken to contribute upon winding up.	Ltd	No share capital; non-profit activities.
Unlimited Private Company	Liability of shareholders/members is not limited.	Unlimited	No limit; usually has “Unlimited” in the name.
Unlimited Exempt Private Company	Liability of shareholders/members is not limited.	Unlimited	Maximum of 20 shareholders; no corporations as shareholders.

6. Appointing Directors, Company Secretary and Key Company Personnel

 

Once you’ve decided on your company name and Financial Year End (FYE), the next crucial step in setting up your business in Singapore is appointing your key officers—Directors and a Company Secretary. Every company must have at least one director and one company secretary to ensure smooth operations and full compliance with the law. Here’s what you need to know to get it right.

A company director plays a pivotal role in managing the company’s affairs and steering its strategic direction. 

A director must be:

1. At least 18 years old.
2. Of full legal capacity.
3. A Singapore citizen, Singapore permanent resident, or hold an EntrePass or Employment Pass (EP).
4. Not disqualified from being a director, such as being an undischarged bankrupt.

It’s important to note that there is no such thing as an “inactive,” “nominee,” or “sleeping” director. All directors are equally responsible for the company’s actions under the Companies Act (CA). 

Every business also needs a Company Secretary, who plays a critical role in maintaining statutory compliance. The law requires that you appoint a company secretary within six months of incorporation, and this position cannot remain vacant for more than six months, or the directors could face a penalty of up to SGD 1,000.

A company secretary must be:

1. A natural person (no corporate entities).
2. Locally resident in Singapore.

A director and company secretary cannot be the same person.

Unless your company qualifies for an audit exemption under the Companies Act, you are required to appoint an auditor within three months of incorporation.

Once you’ve decided on your directors and company secretary, the final step is simple. All proposed company directors and the company secretary must endorse their appointments online via ACRA’s BizFile+ portal, ensuring your company is officially ready to operate within 60 days from the date of email. The fee for registering a company is SGD 300.

By assembling the right leadership team and ensuring compliance from day one, you’re setting your business up for success in Singapore’s highly regulated and dynamic market.

SOAS TIPS: Please refer to the link to understand more about the statutory duties and responsibilities – Directors’ Online Trading.

 

7. Shares, Share Capital, and Shareholders

When you invest in a company, you’re essentially buying a piece of the pie—this piece is called a share. A share represents a portion of the company that belongs to a shareholder in exchange for their financial contribution to the company’s share capital. 

By purchasing shares, you become a shareholder—a part-owner of the company. Shareholders can be individuals, companies, or limited liability partnerships. In return for their investment, shareholders gain rights like voting on company decisions and receiving dividends.

Share capital is the total value that shareholders have committed to the company. Importantly, this can be issued with or without full payment upfront. Most of the companies use SGD or USD as the Capital Currency based on the nature of business and operation. The minimum issued share capital when you incorporate a company in Singapore is just SGD 1, making it easy to get started.

SOAS Tip: Companies usually set their price per share as S$1/ share. For ease of computation, we suggest setting it as either S$1/ share, S$0.10/ share or S$0.01/ share.

Paid-up capital refers to the amount shareholders have actually paid for their shares. If your company has a paid-up capital of SGD 500,000 or more, you’ll automatically become a member of the Singapore Business Federation (SBF).

 

Ordinary vs. Preference Shares: What’s the Difference?

• Ordinary Shares: The backbone of most companies, these shares carry voting rights and dividend payouts, although they are paid out only after preference shareholders receive theirs. Companies can even classify their ordinary shares into different classes—such as “A” or “B” shares—with each class offering different rights.
• Preference Shares: These shares often come with fixed dividends and have priority over ordinary shares when it comes to dividend payouts. However, preference shareholders usually don’t have voting rights, but their guaranteed dividends make them a more stable investment option.

 

8. Registered Office Address

When incorporating a company in Singapore, one of the essential steps is providing a registered office address. This address serves as the official point of contact for all communications and notices, and is also where your company’s records and registers are kept.

It’s important to ensure that your office address is accessible, as Singapore law requires all registered offices to be open to the public for at least three hours during regular business hours, on each business day (excluding Saturdays, Sundays, and public holidays).

If you’re running a small-scale business from home, Singapore’s Home Office Scheme makes it easy for you to use your residential address as your registered office. Managed by the Housing Development Board (HDB)for public housing and Urban Redevelopment Authority (URA) for private properties, this scheme allows entrepreneurs to start small without the need for separate office space.

If there are any changes to your registered office address, you must notify ACRA within 14 days of the change. Failing to comply with this requirement could lead to penalties, including fines of up to SGD 5,000. 

 

9. The Constitution of your Company

Every successful business begins with a solid foundation, and for a company, that foundation is its constitution. This vital legal document outlines the rules and regulations that govern your company’s operations and ensures that everyone is on the same page.

The constitution acts as a blueprint for your company, detailing the essential aspects of its governance. It must include:

• Company Name and Registered Office Address.
• Business Activities.
• Liabilities of Members.
• Share Capital Details.
• Governance Rules.

When you incorporate your company, it’s mandatory to submit a copy of your constitution. This document, signed by the shareholders (also known as subscribers), must be kept at your registered office address, ensuring that it is readily accessible. Should you need to make any alterations to your constitution, a special resolution must be passed at a general meeting and notify ACRA within 14 days.

If drafting your own constitution feels difficult, you have the option to adopt a Model Constitution provided by the Companies (Model Constitutions) Regulations 2015.

 

10. Maintaining Company Registers

Running a company involves more than just daily operation. It also requires diligent record-keeping. The  Companies Act (CA)  in Singapore mandates that all companies maintain accurate and up-to-date registers for key individuals in important roles, such as shareholders, directors, secretaries, auditors, CEOs, and controllers (also known as beneficial owners). Most of these registers are maintained electronically by ACRA.

Most company registers (except for the Register of Registrable Controllers) are accessible to the public. 

Whenever there are changes—whether it’s a new appointment or updated particulars for directors, secretaries, auditors, or CEOs—you must update this information with ACRA via  BizFile+ within 14 days of the change. 

 

11. After Incorporation of Company:

• Unique Entity Number (UEN):

Once incorporated, ACRA will issue your company a Unique Entity Number (UEN). This 9 or 10-digit identification number is assigned by the government and is required for all businesses—whether it’s a company, sole proprietorship, partnership, or limited liability partnership.

Why Is Your UEN Important?

Your company’s Legal Name and UEN Number must appear on all official business correspondence as mandated by the Companies Act (CA). The UEN acts as your business’s unique identifier across all governmental interactions, ensuring clarity and recognition.

• Letter from ACRA:

Directors and Company will receive a congratulations letter from ACRA once the company is registered. The letter will explain in brief the responsibilities as a director of the company and remind you of future ACRA compliance matters that will need to be fulfilled by the Company.

• Letter from IRAS (Inland Revenue Authority of Singapore):

e-Service Authorisation System allows a company to authorise yourself, your employees or a third party to access e-Services on behalf of the company. Without appointment, no one is able to perform e-filing for tax matters for your Company. Submission of Estimated Chargeable Income (ECI) and Submission of Form C or From C-S are the key annual compliance requirements under IRAS.

• Opening of Bank Account :

Corporate bank account is opened under the name of the company to facilitate transactions between your customers and suppliers. Opening an account takes about 1- 4 weeks.