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Singapore Subsidiary Company: An Overview
By: Diane Paz |
| word count: 491 comments(0) views: 64 |
| Singapore is undeniably becoming to be the one of the best, if not already the best, business centers in Asia. |
Singapore is undeniably becoming to be the one of the best, if not already the best, business centers in Asia. In the recent years, it has acquired popularity in terms of excellent financial and business opportunities among international entrepreneurs.
There are three business structures that an interested businessman may choose from in order to set up his own company in Singapore: a representative company, a branch office, and a subsidiary company. Among the three, the subsidiary company has been agreed upon as the most ideal business structure to invest in by most entrepreneurs from different parts of the globe.
What is a subsidiary company? In simple terms, a subsidiary company is a company which is essentially owned or controlled by another company called the “parent company”. In Singapore, a subsidiary company is known as “private limited company”.
What are the basic features of a Singapore subsidiary company?
LIMITED LIABILITY. A Singapore subsidiary company has a separate identity and personality from its parent company. Thus, the subsidiary company could not be held liable for the debts, losses and legal suits of its parent company. In the same way, the parent company is protected from liability on the debts, losses and other financial obligations of its subsidiary company.
TAX INCENTIVES AND EXEMPTIONS. A Singapore subsidiary company is considered as “tax resident”. Being a “tax resident” the subsidiary company enjoys local tax exemptions and incentives, even if all of its shares are being owned by its foreign parent company. Within 3 years from its incorporation, a subsidiary company enjoys tax exemption (zero tax) on its first S$100,000 chargeable income and an additional 50 percent tax exemption on the succeeding S$200,000 income, provided that: there is local exercise of management and control, one shareholder must own at least a minimum of 10% shareholdings, and a maximum of 20 shareholders hold their shares under their own names.
SHAREHOLDERS. The shareholders of a subsidiary company may have 1 to 50 shareholders and may either be local citizens or foreigners, or a combination of both. Its parent company may also be the owner of 100% of its shares.
MANAGEMENT STRUCTURE. The control and management of a subsidiary company must be exercised locally. Thus, its board of directors enjoy greater control of the company.
CONFIDENTIALITY. A foreign parent company is only required to submit the audited financial statements of its subsidiary, and not necessarily its own (parent) financial statements. This way, the parent company enjoys confidentiality of its own business operations.
BUSINESS FREEDOM. A Singapore subsidiary company enjoys greater business freedom. This is because a subsidiary company may engage in a business largely different and entirely separate from the business of its parent company. With this freedom, a subsidiary company is given a wide opportunity to expand and maximize its profit-generating activities.
All of these characteristics proves that a subsidiary company will bring great benefits to every business-minded person who desires to conduct business operations in Singapore. |
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