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Foreign Business Organizations Guide to Forming a Company in Singapore
By: Diane Paz |
| word count: 361 comments(0) views: 75 |
| In Singapore a foreign business organization can choose three business structures namely representative office, branch office, and subsidiary company. |
In Singapore a foreign business organization can choose three business structures namely representative office, branch office, and subsidiary company. Each of these structures has its objective, benefits as well as drawbacks.
This structure is designed for conducting market research and feasibility studies that determines whether the business is viable in Singapore. Furthermore, the said office can also carry out non-commercial ventures like supervising local distributors and agents' activities of its parent company; being a liaison office in a deal that includes negotiations; and accommodating assistance to costumers not pertaining to repair and inquiries in technical aspect.
It is important to take note that this set up is prohibited to implement any activities that is commercial in nature such as rendering services that cost a fee, leasing warehouse facilities, storing and shipping goods or products in Singapore and entering in a contract involving business.The representative office structure is best only as a temporary setup due to its stated limitations.
A Singapore branch office is allowed to conduct commercial activities as long as these are also performed by its parent foreign company.
In legal perspective, a branch office is an extension of its parent company which means that the latter does not enjoy limited liability from the financial losses, debts, and legal claims of its Singapore-based office.
Conversely, a branch office is not entitled for the local tax benefits and exemptions for it is considered as a foreign entity.
A subsidiary company is essentially a locally incorporated private limited company which makes it eligible for all the local tax incentives and exemptions even if this is 100 percent owned by its foreign parent company.
According to the Singapore Companies Act, a subsidiary company can accommodate up to 50 shareholders whether it be a Singapore resident or a foreign individual.
A subsidiary setup can survive on its own as a legal venture from its parent company, in effect, parent company have restricted obligations such as being protected from bankruptcy and other financial drawbacks incurred by a subsidiary company in Singapore.
Because of the notable advantages of a Singapore subsidiary company, most business professionals believe that this structure is the most ideal to foreign companies that are planning to stay longer in the country. |
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