Last March, the Singapore Government amended the Singapore Companies Act 2017 which introduced an inward re-domicile (or relocation) regime in an effort to boost Singapore’s attractiveness as a business hub.
One of the key changes to the act was the introduction of a new framework that allows foreign companies and entities to transfer their registration from their original jurisdiction to Singapore, rather than setting up a new subsidiary company as per the previous legislation. Once re-domiciled, the foreign company will become a Singapore company registered under ACRA and as such will be required to report to and comply with requirements under the Singapore Companies Act.
Why is inward re-domiciliation so valuable to foreign companies?
There are many benefits for foreign holding companies to transfer their registration & not have to set up a new subsidiary, namely:
- Singapore is known for its international reputation as a sound and fully regulated jurisdiction; foreign companies will also benefit greatly from closer proximity to the continually growing Asian market.
- Re-domiciliation to Singapore provides substantial reduction in operational disruption to the company in terms of corporate history, identity and the company’s brand in general. Some highly regulated industries require a proven credit history and track record (e.g. in order to obtain a license similar to the benefits of obtaining a shelf company).
- The foreign company’s responsibilities, liabilities, rights and property will remain unaffected by the re-domiciliation; which is typically what companies have to prepare for when setting up a new subsidiary company.
- The change provides greater flexibility in the reorganisation of corporate groups for strategic, regulatory and operational purposes.
Application Criteria for re-domiciliation
In order for a foreign entity to successfully apply for re-domiciliation, it must be a corporate entity that can adapt its legal structure to companies limited by shares under the Singapore Companies Act.
In order to qualify, the foreign company must meet any 2 of the following criteria:
- The value of the company’s total assets meets or exceeds SGD $10million.
- The company’s annual revenue meets or exceeds SGD $10 million.
- The company has over 50 employees at the end of the fiscal year.
How to apply for successful re-domiciliation
The foreign company has to reserve its proposed name (which can be the name used in its original jurisdiction) but rules on name reservations will apply.
To apply for transfer of registration, a foreign company must submit an application together with all the necessary supporting documentation, specifically:
- A certified copy of the agreement, statute, constitution or memorandum of association; articles or any other document that details the company’s constitution in its official location of incorporation.
- The constitution by which the foreign company proposes to be registered in Singapore.
- A certified copy of the certificate of incorporation for the foreign corporate entity in its official location of incorporation.
- The applicable declarations.
Once the application has been approved, the foreign company will be registered as a company limited by shares in Singapore.
Restrictions & important considerations
There are a number of factors that need to be considered by foreign companies looking to re-domicile:
The company may not be able to be transferred to Singapore if the holding company’s jurisdiction of original registration does not have a re-domiciliation regime in place, or does not allow for outward re-domiciliation to another jurisdiction (for example, Hong Kong and the UK).
Jurisdictions which allow for outward re-domiciliation include:
- The Marshall Islands.
- New Zealand.
Singapore does not currently allow for outward re-domiciliation so there would be no option to reverse the move if the company no longer wishes to be based in Singapore. Consequently, the foreign company should thoroughly consider the legal implications of re-domiciliation and its reasons for breaking into the Asian market.
It can take 2 months or longer from the date of first submission of all required documentation, to complete the registration of transferal. This includes any time that may be required for ACRA to refer the application to other agencies for review or approval (for example, any companies not regulated by governmental bodies other than ACRA).
How Eltoma Corporate Services can assist
- Re-domiciliation allows companies to take advantage of Singapore’s stable political, economic and legal infrastructure, its business friendly legislation; competitive tax regime and highly skilled workforce.
- The benefits of the new framework provide an alternative option for foreign companies to relocate their businesses without disrupting the key operations of their companies.
- The Registrar of Companies may refuse to register a foreign company. In these circumstances, the company may submit an appeal to the Minister for Finance within a certain timeline.
- To avoid any unnecessary delays or incorrect submissions that may affect your application, we strongly recommend enlist a knowledgeable Singapore based Service Provider that is familiar with ACRAs guidelines and requirements.
Eltoma Corporate Services have Singapore based taxation and legal experts who can oversee the entire process of re-domiciliation and take care of all the requirements and implications that surround the new framework. Eltoma Singapore can lay the groundwork for a successful re-domiciliation application, for more information, contact us.