Are you an investor considering expanding your business to Singapore? Understanding the different types of business entities available in the country is important.
In this article, we’ll explore the various business entities in Singapore and identify which ones are most suitable for foreign investors and companies. Let’s find the right fit for your business in Singapore’s market.
Common Business Entities in Singapore
| Business Entity Type | Ownership |
| Private Limited Company | One or more shareholders |
| Public Limited Company | Can have an unlimited number of shareholders |
| Sole Proprietorship | Owned by one person |
| General Partnership | Two or more partners |
| Limited Partnership | One general partner with unlimited liability and limited partners |
| Limited Liability Partnership | Two or more partners |
| Branch Office | Owned by the parent company |
| Representative Office | Owned by the parent company |
Private Limited Company (Pte Ltd)
A private limited company (Pte Ltd) is the most common type of business entity in Singapore among foreign investors and entrepreneurs. It can have up to 50 shareholders and allows 100% foreign ownership.
Main Requirements for Private Limited Company
- You need at least one resident director.
- You must appoint a company secretary within six months.
- You must appoint an auditor within three months unless exempted.
- You must maintain financial records and file annual returns.
A Pte Ltd provides a structured, formal entity with limited liability for shareholders, perfect for larger businesses needing to raise capital and separate ownership from management.
Limited Liability Partnership (LLP)
Foreigners can own a Limited Liability Partnership (LLP) in Singapore. You need at least two partners, with no maximum limit. Partners are not personally liable for the LLP’s debts or losses caused by other partners.
Main requirements for Limited Liability Partnership
- You pay a one-time registration fee.
- You must make an annual declaration of solvency by a manager.
An LLP offers flexibility and simpler regulations with limited liability for partners, ideal for professional services and small businesses.
Sole Proprietorship
If you are a single person owning and running a small, low-risk business, a Sole Proprietorship is ideal. Setup is quick, easy, and inexpensive. Both locals and foreigners can own it, but if you are a foreigner, you must appoint a local manager.
You are personally liable for all business debts, and your business income is taxed at your personal tax rate with personal tax relief available.
General Partnership
If you and 1 to 19 others want to start a business together, a General Partnership is suitable. This structure works well for professional firms like consultancy, accounting, and legal practices. Furthermore, the business setup is simple and low-cost.
Both locals and foreigners can be partners, but foreign partners need a local manager.
The Partnership Agreement governs roles and responsibilities. You and your partners share personal liability for business debts, and income is taxed at your tax rates with personal tax relief.
Limited Partnership
If you want a partnership with both limited and unlimited liability, consider a Limited Partnership. You need at least one General Partner with unlimited liability and one Limited Partner with limited liability, involving 2 to 20 partners.
The setup is straightforward and affordable. Both locals and foreigners can be partners, but if all General Partners are foreign, you need a local manager.
You and your partners share personal liability for business debts. Income is taxed at your personal or corporate tax rates, with relevant tax reliefs.
A Limited Partnership provides management flexibility while limiting liability for some partners.
Types of Business Entities for Setting Up Foreign Company Offices in Singapore
Singapore Branch of a Foreign Company
For foreign companies looking to expand their business operations to Singapore, they can set up a branch office. A branch office is generally used for testing the Singapore market or initial business development without a fully operational setup.
Keep in mind that a branch office is not a separate legal entity and operates as an extension of the parent company.
The following are the requirements to open a branch office of a foreign company in Singapore:
- You need a registered office address in Singapore.
- You must appoint an authorized representative who is a Singapore resident.
- The branch name must resemble the parent company and be pre-approved.
A Singapore Branch is taxed only on Singapore-generated income, but the parent company is liable for its actions and it does not qualify for local tax exemptions.
Representative Office
If you are aiming to explore the Singaporean market, without generating any revenues, you can establish your representative office. A representative office is a liaison for the parent company.
The main objective of a representative office is to facilitate business development, research, and networking opportunities.
Restrictions on Foreign Ownership in Singapore
Singapore generally welcomes foreign investment and does not impose significant restrictions on foreign ownership. However, in specific sectors where government regulations require local participation.
You should be aware of these sector-specific regulations that may affect their business plans.
Financial Sector
For banks, finance companies, and insurance companies, there are restrictions on the level of foreign ownership. Typically, there are requirements for a certain percentage of local ownership or control to ensure stability and compliance with regulatory standards.
Media
Companies involved in newspapers, broadcasting, and magazines must be owned and controlled by Singapore citizens or corporations with significant local ownership.
Telecommunications
In the telecommunications sector, companies providing public telecommunication services must be licensed by the Info-communications Media Development Authority (IMDA), and there are requirements for local shareholding.
Legal Services
Foreign law firms are allowed to operate in Singapore only under specific conditions, such as forming a Joint Law Venture (JLV) with a local law firm or registering as a Foreign Law Practice (FLP) with the Attorney-General’s Chambers.
Real Estate
There are restrictions on foreign ownership of certain types of real estate, such as landed residential properties (e.g., bungalows, terrace houses). Foreign individuals and entities must seek approval from the Singapore Land Authority (SLA) to purchase such properties.
Education
Foreign educational institutions seeking to operate in Singapore must meet certain regulatory requirements and may need to form partnerships with local institutions.
Register Your Business in Singapore with Emerhub
If you’re planning to set up your business in Singapore, Emerhub provides services ranging from company registration to corporate bank account opening and accounting.
Our team of local experts is well-versed in Singaporean laws and regulations.
We assist in selecting the most appropriate business entity and guide you through every step of the process.
Contact us via the form below, and start setting up your company in Singapore.
