Company types in Singapore play an important part for every foreign company who wish to expand into Singapore. The Accounting and Corporate Regulatory Authority (ACRA) is the governing body that regulates all company registration, financial reporting, and more.
With that said, there are a few different types of business structures that business owners can choose from, namely:
To start off, we need to first understand the differences among the 4 company types in Singapore.
What is a Branch?
A branch is an extension of the foreign head office company, and it can engage in core activities like sales and contracts.
Branch office can carry out the same activities performed by the head office company
However, it is not a separate legal entity from head office company. This means that the foreign company’s head office bears the ultimate responsibility for any liabilities arising due to the acts of commission or omission of the Singapore branch office.
Parent company of a branch office entity is completely accountable for the welfare of the branch office.
It is set up in a location separate from that of head office, in various locations around the world.
What is a Subsidiary?
A Singapore subsidiary company is a private limited company whose majority shareholder is a foreign company.
After the subsidiary is formed, the parent company controls its subsidiary in terms of the influence and direct the financial and operating policies of the subsidiary.
A Singapore Subsidiary Company can have the full ownership of the foreign company and is considered as a separate legal entity.
The subsidiary company doesn’t have any liability to the foreign company as its liability is limited to the share capital it has subscribed.
What is a Representative Office?
A Representative Office (RO) is a temporary set-up with no legal status so it cannot engage in any trading or business activities which yield a profit. Generally, the purpose of the representative office is to perform liaison services and establish business contacts, often as a precursor to the commencement of full-scale business activities in Singapore.
What is a Related Company?
This is the most common type of structure for sole business owners. For example, Jane can be the sole director and shareholder of her company in Singapore. In expanding to Malaysia, she can decide to set up a related company which is a separate legal entity whereby she is also the director and shareholder.
Both companies can operate under the same brand and services as per the sole owner’s discretion.
This set up allows more flexibility for change in individual entities. For example, if there were new investors for the Singapore company, the shareholdings of the Singapore company would change, and the Malaysia company would not be affected.