|
International Business
Companies
DEFINITION
-
What is an International
Business Corporation (IBC)?
An IBC is an international
legal entity or a corporate body with its own corporate name and with a
predetermined capital divided into portions, fractions or quotas and for
whose creditors only the company’s assets are liable. It is a corporation
devoted to a specific object or purpose utilised by a natural person or
a group of persons for economic or non-economic activity, and guarantees
the shareholder’s anonymity.
-
Legal Capacity of an IBC:
The legal capacity of a
corporate body or IBC encompasses all the rights vested in natural persons,
such as, especially, the right to own property, the right to a name and
to respect, membership rights among others. They also enjoy the same protection
of personality as do natural persons, except this may be limited by restrictions
on their legal powers or legal capacity or by the nature of the circumstances.
PURPOSE / OBJECT
Singapore’s requirement
for organization of a company or operation of a business among the most
simplified in Southeast Asia and closely resembles United Kingdom Company
Law. The Government permits 100% foreign ownership of subsidiaries in many
sectors.
Potential foreign investors
who discuss a project in advance with the Economic Development Board or
Department of Trade will learn that 100% foreign equity is much more readily
and granted for ventures that promise to contribute high technology, managerial
skills, access to new markets, investment capital and offshore banking
income. The Government may also bargain for local equity for trading companies
and companies producing solely for the domestic market.
-
Transact business with residents
in Singapore.
-
Buy or own an interest in real
property situated in Singapore or lease property for use other than as
an office.
-
Act as a trustee firm registering
firms for offshore companies.
TAXES IN SINGAPORE
-
Tax Implications/Advantages.
Singapore Taxes:
Singapore has advanced to
the forefront of Far Eastern sanctuaries in recent years because of the
many advantages offered as a financial center.
Singapore does not tax interest
on bank deposits earned by non-residents so that earnings from the Asia
currency funds held within Singapore are tax free.
Income earned by non-residents
investing offshore funds in offshore markets through Singapore also are
exempt from tax.
Foreign trusts administered
by approved trustee companies are exempt from taxation. Approved venture
companies are also exempt from tax but for a limited period of ten years.
A 10% rate is levied on income of other trust companies and from managing,
servicing or underwriting foreign securities issued from Singapore if made
by non-resident.
Resident companies and non-resident
companies which do not follow the rules carefully in order to qualify for
tax free status are subject to the normal company rate of 27% on any income
accruing in or derived from Singapore or received in Singapore from outside
Singapore unless special provisions are available as a result of double
taxation treaties with foreign countries. In addition to the 27% rate,
there is a 5% increase of the amount payable after the date deadline as
a penalty tax, which is applied on all corporations and is added to the
tax overdue. The flat 27% rate levied in Singapore is assessable on branches
of companies which trade in Singapore and elsewhere on the profits of the
trade or business attributable to operations carried on inside Singapore.
Profits from offshore trading
and services dealing with offshore business as well as approved warehousing
and related activities are taxed at a concessional rate of 20% for five
years.
Offshore service income qualifies
for 90% exemption from tax for five years if certain conditions are fulfilled.
Dividends and interest received
in Singapore from Singapore-sourced income are taxed at company tax rate
of 27%. Stock dividends are exempt from tax. Individual shareholders receiving
dividends from Singapore companies which have withheld tax are allowed
a credit for the withholding tax against any tax due at personal rates.
There is a 27% withholding
tax on dividends of common and preferred shares in Singapore for both Pioneer
and non-Pioneer industries.
Any income that is nor Singapore
source income remitted into Singapore by a non-Singapore company is exempt
from Singapore tax.
Interest, royalties, management
fees, commissions and similar income deemed to be derived in Singapore
may be exempted from tax by the Minister of Finance if the payments promote
the economic or technological development of Singapore.
Real estate is taxed from
12% to 36% of the rental value. The 12% rate is applied in specifically
designated areas as part of the Government’s urban development plan.
Tax Advantages/Capital
Incentives:
Under the amended Singapore
Pioneer Industries Ordinance, certain industries may qualify for a 90%
exemption, or be subjected to a 4% tax, for an additional three years after
the first five years of 100% tax exemption permitted under the first Singapore
Pioneer Industries Ordinance. For this exemption to apply the profits must
be earned from export products from deep sea fishing or manufacturing company
registered in Singapore under local laws.
Losses may be set off against
all sources of income and may be carried forward indefinitely unless there
is a substantial change in the shareholders (a change of 50% or more) between
the last day of the year in which the losses were incurred and the first
day of the year in which the losses are set off.
Income tax exemption may
be granted for both company profits and dividends paid to shareholders
for investments in certain new industries or for expansion of plant and
equipment.
Under the 1979 Relief From
Income Tax (Amendment) Bill, incremental qualified export income of international
trading companies and warehousing, consulting, servicing, technical service,
engineering and other similar income may be exempt from income tax up to
50% depending upon the base of earnings. To qualify, the above services
must be rendered in the framework of an approved non-Singapore project.
The period of relief extends over five years.
Insurance company earnings
derived from offshore reinsurance operations (other than life insurance
activities) are subject to a reduced rate of 10%.
The normal rebate of 30%
on the 23% property tax is for industrial and commercial properties and
land, vacant residential land owned by development companies and various
development agencies.
Gains derived from sale of
shares and securities realized by unit trusts resident in Singapore are
subject to the normal 27% corporate tax rate on 10% of the gains. There
is no tax on the remaining 90% of the gains if derived by unit trust holders
who are individuals or foreign investors.
Non-residents are not subject
to a withholding tax on dividends. Branch profits are not subject to withholding
tax on repatriation of profits.
INCORPORATION OF
AN IBC
FORMATION
When 21 or more individuals
in Singapore are allied in an organization, association or partnership
to realize profits or gains, they are obligated to form a company.
It can be established on
a limited liability basis, with its liability limited to share capital
(business venture) or guarantee (amount of members undertake to contribute
to the company’s assets in the event of liquidation) or shares and guarantee;
or it can be formed with unlimited liability.
Trade associations and professional
organizations seeking corporate status are virtually the only entities
using the latter two types.
COMPANY NAME
The incorporators (2) must
apply to the Registrar of Companies for approval of the Company name.
-
How long does it take to
confirm a corporate name?
The name of an IBC corporation
can be approved if reserved beforehand, after two months.
-
How long does it take to
register a Corporation?
A private limited liability
company can start its business immediately after receiving its certificate
of incorporation, while a public company must file additional statements
with the Registrar according to whether or not it is inviting the public
to subscribe to shares and whether or not it is inviting the public to
subscribe to shares and whether or not it is seeking a listing on the Singapore
Stock Exchange.
-
What resolutions or amendments
shall be filed in the Registry office?
They must file a Memorandum
of Association, Articles of Association, a statutory declaration of compliance
with the Company Act, names of directors (with their consent to act) and
names of one or more resident secretaries.
The Memorandum must state
the goals of the company and supply information about its authorized capital,
while the Articles of Association regulate the relationship between the
company and its shareholders and deal with its internal arrangements of
the company, including share transfers, general meetings, voting rights
keeping accounts, declaration of dividends and audits.
CAPITAL AND MEMBERS
-
What is the minimum authorised
capital for an IBC?
In general, authorized
share capital must be a minimum of 25,000 Singapore dollars ($15,923.)
but no minimum capital or resources are set for manufacturers and other
non-financial which wish to register either a public or private company
in Singapore.
Minimum issued capital is
two shares; non cash contributions are permissible.
Registration fees imposed
on share capital are fixed at 1,200 Singapore dollars ($764.33) up to 100,000
Singapore dollars ($636,900). An additional fee of 300 Singapore dollars
($191.08) for each 1,000,000 Singapore dollars ($636,900). If there is
no share capital, the minimum is 600 Singapore dollars ($382.16) for a
Singapore company and 1,200 Singapore dollars ($764.33) for a foreign company.
Maximum fee is 35,000 Singapore dollars ($22,293) for a Singapore company.
-
What type of shares can be
issued by an IBC?
-
A company may issue various
classes of stock without restriction, including ordinary, preferred or
preference, and redeemable preference shares. Shares must be registered
and must have a par value. They are frequently valued at 10 Singapore dollars
($6.37). Shares may be issued at premium and, if court approved at a discount.
Each equity share issued by a public company entitles the holder to one
vote for each Singapore dollar ($0.6369) or part of the dollar if the share
is paid-up.
-
Companies must not deal in their
own shares and cannot own shares of their holding companies.
A 51% vote is sufficient to
carry a motion except that a 75% vote is necessary for a reduction in share
capital or a change in either the Memorandum or Articles of Association.
A special register must be kept listing shareholders owning more than 10%
of capital.
-
Can any of the shares be
issued on behalf of local residents?
-
No, shares can not be issued
on behalf of local residents. They may be issued to foreign persons only.
-
Is confidentiality of the
Shareholders available in the Singapore?
-
Information regarding shareholders
is confidential. Identities are not recorded publicly, nor do Government
or tax authorities have access to such information. The shareholder register
need not be registered with the Registrar of the Singapore.
DIRECTORS AND OFFICERS
-
What is the minimum number
of Directors and Officers/ Shareholders an IBC can have?
There are no nationality
or residence requirements for the founders (minimum of two).
After the company has been
registered, the number of shareholders in a public company can drop to
one.
Directors minimum two, can
be of any nationality but one must be a Singapore resident.
The Secretary of the company
must be a Singapore citizen and resident.
-
How are the Directors and
Officers appointed?
Appointment of a director
over 70 years of age must be approved by three-quarters of shareholders
at the annual meeting. A Managing Director and Chairman may be elected
by directors from their own ranks. Every foreign subsidiary must designate
a local manager, a Singapore resident, who agrees to be personally responsible
for the subsidiary’s business.
-
What information can be revealed
about the Directors and Officers?
-
None. The information regarding
the directors and officers shall not be revealed, since this information
is confidential and is not a matter of public knowledge.
MEETINGS
-
Is it necessary to hold annual
meetings of Shareholders and/or Director?
-
It is not required to have an
annual meeting of the Shareholders or Directors. However, upon written
request of the shareholder who owns more than 50% of the shares of the
company, the director can request a meeting of the Shareholders. Less than
50% shareholding may be sufficient to call a Shareholders’ Meeting, where
the Memorandum and Articles of Association so specify.
-
Where can these meetings
be held?
-
Annual and extraordinary shareholders’
meetings, which can take place anywhere in the world, shareholders usually
have one vote for every share of common stock.
-
Can proxy (substitute) represent
a member/shareholder?
-
A proxy can represent an individual
shareholder in a meeting of the shareholders. This person is authorised
to speak and vote on behalf of the member.
-
Can resolutions of the Directors
and/or Shareholders be adopted by consent?
-
Subject to any limitations in
the Memorandum or Articles of Association, a director can consent in writing,
or by telex, facsimile, cable or any other written electronic vehicle,
to any resolution that could otherwise be adopted by the directors or a
committee of the directors in a meeting, without the need for notice. The
same applies for the Shareholders’ resolutions or resolutions of a committee
of directors.
BOOKS AND REGISTERS
-
Is it necessary to prepare or
file accounts?
-
A public company must file an
annual profit loss-and-loss statement and balance sheet with the Registrar
of Companies and, if it gets incentives, with the Economic Development
Board. A private limited company, which is the form of organization chosen
by many foreign investors, limits the number of shareholders to 50 exclusive
employees and ex-employees and cannot sell its shares and debentures publicly.
If the private company does qualify as an exempt company it does not have
to file financial statements with the Registrar of the Companies.
-
What books or registers are
requisite for the Company?
-
An IBC must keep at all times,
in the Registered Office of the company:
-
Minutes of each meeting of:
-
Board of Directors,
-
Shareholders,
-
Director’s committee, and
-
Officers and Members.
-
Resolutions of meetings of the
-
Directors,
-
Shareholders,
-
Director’s committee, and
-
Officers and Members.
What information about the
Company is available to the public?
These records are open
to inspection by shareholders but not the public. If the private company
doeos qualify as an exempt company it does not have to file financial statements
with the Registrar of the Companies and is not required to disclose information
to the public for examination. Shareholders holding 10% or more of the
voting stock must make details of other corporate holdings available for
public inspection.
-
What resolutions or amendments
shall be filed in the Registry office?
-
A copy of all resolutions amending
the Memorandum and/or Articles of Association needs to be filed in the
Registry. The Registrar shall retain and file said copies.
RE-DOMICILIATION
DEFINITION
-
What is re-domiciliation?
-
Re-domiciliation is where a
Company changes its jurisdiction of domicile. This involves transferring
a corporation without dissolving nor liquidating it, to another jurisdiction,
being protected under its laws, without extinguishing the obligations and
rights obtained and subject to the old jurisdiction. It operates bilaterally
between both jurisdictions, in that the jurisdiction being left cannot
have laws which automatically terminate the existence of the corporation
upon a change of domicile, and the new domicile must have legislation which
allows a corporation to continue from another jurisdiction. Generally,
such legislation exists only in tax havens.
-
How does re-domicile apply
in Singapore?
SINGAPORE
Statutory Fees
& Services Charges for IBCs
|
Item
|
Authorised Capital
|
Government Fee
|
Fees
|
| Incorporation |
Up to $
Up to $
Over $
|
$ |
|
| Continuation |
Up to $ (foreign cos.)
Up to $ (Co. Acts)
Over $ (foreign cos.)
|
$
$
$ |
|
| Annual License Fee |
Up to $
Up to $
No capital or par value
Over $
|
$
$
$
$ |
|
| Merger/Consolidation |
Over $
|
$ |
|
| Arrangements |
Over $
|
$ |
|
| Articles of Merger or Cons. |
Registration
|
$ |
|
| Articles of Memorandum |
Amendment
|
$ |
|
| Articles of Dissolution |
Registration
|
$ |
|
| Resolution of Rescinding Articles
of Diss. |
Registration
|
$ |
|
| Incorp./Merger/Consol./
Documents |
Copies of Extract
|
$ |
|
| Documents |
Inspection
|
$ |
|
| Company Name |
Restoration
|
$ - $ |
|
| Each Entry |
Inspection
|
$ |
|
For Information
on how to utilize Singapore in your investment program Click
Here
|
