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Audit and Compliance Requirements in Singapore: A Guide for Foreign Investors
  • Article, Singapore

Audit and Compliance Requirements in Singapore: A Guide for Foreign Investors

Singapore’s ease of doing business, transparent business and legal system, favourable business environment, advanced infrastructure and stable political environment have contributed to making this island nation a favourable destination for foreign investors to set-up their business. In order to maintain its dynamic business environment, the Singapore government requires all the Singapore company incorporations to abide by its audit and compliance regulations.

As per the Companies Act, it is mandatory for all the companies in Singapore to comply with the annual filing requirements of the Inland Revenue of Singapore (IRAS) and Accounting and Corporate Regulatory Agency (ACRA). If you are a foreign investor incorporating a new company in Singapore, this guide can help you understand the audit and compliance requirements with regard to Singapore company formation.

Audit Requirement

According to the Companies Act, it is mandatory for all the private limited companies to get their financial records audited by a qualified public accountant on an annual basis if the company is not qualified for Audit Exemption. Apart from this, they are also required to comply with the below-mentioned requirements.

Holding Annual General Meeting

It is obligatory for Singapore companies to hold an annual general meeting (AGM):

– The Company must hold an AGM within six months after your company’s financial year end and file the annual return within seven months after company’s financial year end.

During such AGMs, the shareholders are entitled to discuss the following Ordinary Business:

– Dividend declaration

– Auditor’s reappointment

– Director’s re-election

– Remuneration for senior executives and directors

– Adoption of the audit report

– Transact any other business

Auditor’s Appointment

It is the duty of the directors to appoint the auditor within 3 months of the incorporation of a company in Singapore. However, the appointment of auditor and audit of financial statements is exempt if

A company qualifies as a small company if:

(a) it is a private company in the financial year in question; and

(b) it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:  

The company audit can be carried out only by a public accountant who is registered with The Accounting and Corporate Regulatory Authority (ACRA). The duty of the auditor is to report if the company’s financial statements represent a true and fair view. Besides, they also have to report if they comply with the singapore financial reporting standards and give an objective analysis of the company’s financial performance.

Audit Exemptions

As per the small company concept introduced by the ACRA in 2015, the companies that qualify as ‘small’ are exempted from the requirement of appointing an auditor and conducting the audit. To qualify as a small company, a company must fulfil

Annual Filing Requirements

Companies are required to submit their financial accounts on an annual basis. It should include balance sheet, cash flow statement, comprehensive income statement and statement of changes in equity. Non-compliance to hold an AGM and late or non-filing of financial statements can attract penalties in the form of fines, summons or arrest warrants. If need be, you can outsource accounting services in Singapore.

Conclusion

In order to comply with the above regulations for company formation in Singapore, it is advisable for foreign investors to use the services of professional advisors like IMC Group who can help you stay compliant with these rules and regulations.

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Chan Chun Sing announces support packages to help businesses for the next three to six months
  • Newsletter, Singapore

Chan Chun Sing announces support packages to help businesses for the next three to six months

Mr Chan Chun Sing, the Trade and Industry Minister of Singapore, recently announced that the Government has multiple relief measures planned to be executed to support the workers and businesses in the coming 3-6 months, as the CoVID-19 outbreak continues to threaten the country.

In a recent interview, he mentioned that delivering the necessary support packages is of the utmost priority for now, and the Government is ready to dole out more aids if needed. The Government announced a support package of a whooping S$48 billion last week for shoring up support for the economy, Along with the amount of S$6.4 billion previously mentioned in the budget this year, the Government is known to be earmarking about S$55 billion, or roughly eleven per cent of the GDP

When asked about the number of businesses the supplementary budget of the Government can support and for what duration of time, Mr Chan clearly stated that the exact number of businesses that may go under is difficult to be specified right now, but the Government will make sure to try and make the maximum number of businesses stay afloat.

He further added that the current priority is to put the available budget and schemes to use for helping the businesses and workers manage the next 3-6 months. The Government is ready to launch a couple of schemes that will help businesses with their immediate financial needs.

Mr Chan cited measures like the Job Support Scheme and property tax rebates to help businesses stay afloat.

The massive support package is expected to save many jobs, and help the ones that might get displaced to get rehired to other available roles. Apart from the short term issues, the support package is also expected to address the long term problems of the country. It includes continued efforts for strengthening the abilities of local workers and businesses, like building digital capacities, such that Singapore can be the first one to rise at a time when the recovery is found. Besides, it’s all about reinstating the confidence in the nation’s economy.

Mr Chan said that the depth of the nation’s reserves and the size of the announced package would make the people confident about the ability of the nation to brave the storm, and in fact, it will also be noted keenly by other observers. So, when it comes to an investment decision in the future, the observers will definitely think of Singapore as one of the nations that they can believe in.

It was also noted by him that the workers and businesses would be relieved in knowing the fact that the Government has enough in the national reserves to give out aids.

The Minister also mentioned that supply chains had witnessed serious disruption, And the bigger question is how these businesses can maintain their capabilities and connectivity for the country. He said that the short-term challenge is a loss in the ability of selling, but the bigger concern is the loss in the ability to produce, which indicates the fall of company capabilities.

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Tax rebates and incentives announced in the Singapore Budget for aiding business growth
  • Newsletter, Singapore

Tax rebates and incentives announced in the Singapore Budget for aiding business growth

With Singapore still tackling COVID-19, the Budget Statement was delivered in the Parliament by Finance Minister and Deputy Prime Minister, Mr. Heng Swee Keat, on February 18, 2020.

The changes in the tax structure seen this year are nothing groundbreaking, but it still reflects the values held by Singapore during these times of global structural shift and economic uncertainties. Because of the headwinds being faced by the country, several tax measures introduced this year aim at stabilizing the economy and supporting the businesses. In the international front, the country is well-poised to benefit from the geopolitical changes. There have been several refinements, enhancements, and extensions of tax schemes to make Singapore one of the prime financial hubs all over the world. However, the basic tax structure remains the same as the government believes it to be competitive enough and well-suited for Doing Business in Singapore.

Some of the notable highlights, regarding taxes, in the current budget are given below.

1. Corporate Tax benefits offered to the companies for stabilizing the economy

  • Twenty-five percent income tax rebate per company, within the limit of S$15,000, for the year of assessment 2020
  • Improvements in the carry back relief schemes for the year of assessment 2020
  • Greater relief for renovation and refurbishments, plants & machinery for the year of assessment 2021

2. GST remains unchanged for now, but there might be some changes in GST for the cross-border activities of a company.

  • No GST hikes from seven percent to nine percent for the year 2021, but it might be implemented before 2025
  • GST levied on digital payments and imported services

3. The Mergers & Acquisitions scheme to be extended till 31 December 2025, with conditions applied

  • No stamp duty reliefs for the tools executed after or on April 1, 2020
  • No waiver application allowed for the foreign holdings of Singaporean subsidiaries for the acquisition they made after or on April 1, 2020

4. Promoting venture capitalism and maintaining a competitive market by refining, enhancing, and extending tax incentive schemes

  • Extending the ‘safe harbor’ clause for disposing of ordinary shares till December 31, 2027
  • Tax benefits for fun management businesses and venture capital businesses enhanced and extended
  • Refining, enhancing and extending tax incentives for different industries, which include particular financial markets, maritime businesses, and insurance firms.


Twenty-five percent income tax rebates will be given to the corporate ventures, within the limit of S$15,000, for the year of assessment 2020. The small and medium enterprises will benefit considerably from it, and so will the companies facing minor cash crunches.

Mergers & Acquisitions Schemes Extended, but with certain limitations

The Mergers & Acquisitions scheme, introduced in the year 2010, was meant to foster growth and restructuring of the companies through the scheme. This scheme states that a Singaporean company legally acquiring the shares of another company might be entitled to certain tax rebates.

To qualify for this scheme, the main holding company of the acquiring company needs to be a legal tax resident in the country. This condition was waivered in 2012 for particular companies, including foreign MNCs that have headquarters in the country under the Headquarters Tax Incentive Program.

There will be an extension of the Mergers & Acquisitions scheme for qualifying acquisitions made before or on December 31, 2025. But, there will be certain limitations on the scheme, such as:

  • The stamp duty reliefs under the scheme will end up lapsing for Singapore company incorporation after or on April 1, 2020
  • Lapse of waiver for share acquisitions made after April 1, 2020. The MNCs that incorporate Singaporean subsidiaries might not be able to fulfill the conditions of the scheme under this clause.


The present tax benefits under the Mergers & Acquisitions scheme incorporate, an allowance based on purchase considerations that are limited at S$10 million for all the qualifying acquisitions in the year of assessment, and a double-tax reduction on the transaction costs spent for acquiring the qualified shares that are limited at S$100,000. The limits on double-tax reduction and Mergers & Acquisitions rebates are aimed to benefit the growth and development of small and medium enterprises. The other conditions and limitations of the Mergers & Acquisitions scheme continue to remain the same.

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Summary and Highlights from Singapore Budget 2020
  • Article, Singapore

Summary and Highlights from Singapore Budget 2020

Deputy Prime Minister and Minister for Finance, Mr Heng Swee Keat, delivered Singapore’s Financial Year 2020 Budget Statement on 18 February 2020.

GST TO REMAIN AT 7% FOR 2021

The 2% increase in GST will not be implemented in 2021 keeping in mind the current state of the economy. However, the GST increase will still be needed by 2025, and the government will assess the appropriate time to announce it.

When the GST is raised, Singaporeans will be provided a S$6 billion Assurance Package. This S$6 billion will be set aside to cushion the impact of the GST increase. Households will receive offsets equivalent of 5 years’ worth of additional GST expenses incurred. Low-income households will receive offsets equivalent of 10 years’ worth of additional GST expenses incurred.

Singaporeans living in 1 to 3 room HDB flats will receive offsets equivalent to about 10 years’ worth of additional GST expenses incurred.

Helping Businesses With Their Cash Flow
  • Corporate income tax rebate – A corporate income tax rebate at the rate of 25 per cent of tax payable, capped at $15,000 per company, will be granted for the tax year of assessment 2020.
  • To put more cash in the hands of enterprises, several tax treatments under the corporate tax system will also be enhanced for year of assessment 2021. For instance, firms will be given a faster write-down of their investments in plants and machinery, and renovation and refurbishment.
  • Working capital loan under enterprise financing scheme: The maximum loan quantum will be raised from S$300,000 to S$600,000, and the Government’s risk-share will be increased to 80 per cent from between 50 per cent to 70 per cent.
  • Flexible rental payments: Tenants and lessees of Government-managed properties can approach the relevant agencies “to discuss options for more flexible rental payments such as instalment plans”, which will be assessed according to the firm’s individual circumstances, said Mr Heng.
  • Property tax rebate: A 30 per cent rebate will be given for the accommodation and function room components of hotels, serviced apartments and meetings, incentives, conventions and exhibitions (MICE) venues.
  • International cruise and regional ferry terminals will receive a 15 per cent rebate, and the rebate for the integrated resorts will be 10 per cent.

S$8.3 Billion To Enable Transformation And Growth Efforts
A total of $8.3 billion will be set aside over the next 3 years to help Singapore enable in its transformation and growth efforts. There are three main areas for this:
  • Enabling stronger partnerships
  • Deepening enterprise capabilities
  • Developing our people

Our start-up ecosystem is ranked in the top 15 for the global start-up ecosystem report. As part of deepening enterprise capabilities, the government will set aside an additional $300 million under the StartupSG equity.

The government expects to draw in more than $800 million of private funding in the next 10 years.

There are two packages as part of this transformation and growth efforts to help businesses:

Enterprise Grow Package
  • Grow business platform
  • Greater adoption of digital technology. Extend the SME Go Digital Program
  • Help more enterprises enter new markets and enhance market readiness grant by expanding the support coverage
 
Enterprise Transform Package
  • Enterprise Development Grant to expand reach with the government expecting to support around 3,000 projects.
  • Enterprise Singapore to launch the Enterprise Leadership For Transformation programme that aims to support business leaders of small and medium-sized enterprises to help them achieve the next bound of growth.

Supporting Lifelong Learning With Skills Future Enhancements
Budget 2020 will help support Singaporeans acquire new skills in the midst of structural changes in the global economy. This will be done through the Next Bound SkillsFuture. The 3 key elements of this are:
  • Special focus on mid-career workers
  • Enabling the individual
  • Enhancing the role of enterprises in developing their staff

(Individual) SkillsFuture credit top up of $500
All Singaporeans aged 25 years old and above will receive a SkillsFuture Credit top up of $500. This top up will be available from October 2020 and will expire by the end of 2025. This is to encourage Singaporeans to take action earlier to learn new skills and make the best use of this period of economic slowdown.
 

(Enterprises) SkillsFuture Enterprise credit at $10,000 per enterprise
To encourage employers to embark on the upskilling of workforce. This will help companies defray up to 90% of transformation costs. Most of the companies that stand to benefit from this will be SMEs. The Productivity Solutions Grant will also be expanded.

(Mid-Career Workers) SkillsFuture Mid-Career Support Package
This focuses on mid-career workers in their 40s and 50s to help them stay employable and move on to new jobs and new roles. The aim is to double annual job placements of people in their 40s and 50s.


The government plans to achieve this by: 

  • Giving peer-level support and career guidance through a group of volunteer Career Advisors.
  • Increasing the capacity of reskilling programmes
  • Providing hiring incentives to enterprises that hire those aged 40 and above through a reskilling programme. Government will provide 20% salary support for employers for 6 months, capped at $6,000 in total.

Stabilisation And Support Package Of $4 Billion
The aim of this package is to help our workers stay employed in this time of slow growth.

A new cash grant will offset 8% of local workers’ wages for 3 months to help them stay employed amid the COVID-19 crisis. This will cost the government $1.3 billion and benefit all enterprises and their employees and will be given by the end of July 2020.

To help enterprises with cash flow, there will be a corporate income tax rebate for the year of assessment (YA 2020) at 25% of tax payable, capped at $15,000 per company. This is to benefit all tax paying companies, costing the government $4 million. The wage credit scheme will also be enhanced to support wage increases for Singaporean workers.

S$800 Million Support For Covid-19
A total of $800 million has been aside to help the economy recover from COVID-19, even as the severity and duration of COVID-19 remains unclear. The bulk of this will go to the Ministry of Health. This is on top of what’s already committed to public health every year.

Singapore’s economy grew by 0.7% in 2019 — recording the weakest growth since the 2008 financial crisis. Tourism and aviation are most directly affected by COVID including visitor arrivals and hotel occupancy. Affected supply chain created ripple effects on other sectors. The Ministry of Trade and Industry has downgraded GDP from 0.5-2.5% to -0.5-1.5%. Deputy Prime Minister and Minister for Finance Heng Swee Keat stated that Singapore must be prepared that the economic impact may be worse than predicted.

Helping Workers Stay Employed
To help workers stay employed, the Government will support businesses by defraying their wage cost through two schemes, as well as redeployment programmes for selected sectors.
  • Wage credit scheme: The existing scheme, which supports wage increases for Singaporean employees earning a gross monthly wage of up to S$4,000, will be expanded to workers earning up to S$5,000 a month.
  • Jobs support scheme: The Government will offset 8 per cent of every local worker’s wage, up to a monthly cap of S$3,600 for three months. This will support more than 1.9 million local employees in Singapore and will be paid out to employers by the end of July 2020.


The proportion of wages co-funded by the Government will also be increased by five percentage points to 20 per cent and 15 per cent, for 2019 and 2020 respectively.

  •  Redeployment programmes: Employees in tourism, aviation, retail and food services sectors will receive enhanced support under the adapt and grow initiative, specifically through redeployment programmes, with the funding period for reskilling extended from three months to a maximum of six months.


Together with the Jobs Support Scheme, this will support employers in these sectors retain and train more than 330,000 local workers.


Tax Rebates For Aviation
Changi Airport will receive a 15 per cent property tax rebate. Rebates will also be given on aircraft landing and parking charges.

There will also be assistance for ground-handling agents and rental rebates for shops and cargo agents at Changi Airport.

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Technology Transformation Brings About an Ocean of Opportunities in South East Asia
  • Newsletter, Singapore

Technology Transformation Brings About an Ocean of Opportunities in South East Asia

As more and more organizations are turning to technology to enhance their operational efficiency and serve their customers better, South-east Asia comes up with new opportunities for Singapore companies who are looking at expanding in the region or doing company formation in Singapore.

According to a recent survey, 76 percent of organizations who wanted to expand were wishing to enter in the Asean region. The top three destinations for doing business as per the survey were Vietnam, Malaysia and Indonesia. Meanwhile, another report showed that Singapore companies opted for Indonesia as the second most significant growth market globally (16 percent), after China, in the coming three to five years, whereas Malaysia (15 percent) ranked third.

Growing interest in the region can be seen amid fast technological advancement which is rapidly changing the way consumers behave.

In the last four years, the number of people using Internet in South-east Asia has gone up by 100 million — out of which most are aged 15 to 19. “As more of these young, digital-savvy and mobile-first South-east Asians come of age over the next 15 years, they will further fuel the growth of the region’s Internet economy,” stated a survey report in 2019.

The report also projected that the region’s Internet economy is going to triple by 2025, reaching almost US$300 billion, with Indonesia and Vietnam as top players.

Fostering digital transformation

Riding this trend, regional companies are driving digital transformation to further enhance their operational efficiency and serve digital-first customers in a better way.

“Companies in retail, e-commerce, logistics and transportation have really felt the push to provide the best online experience for customers in comparison to other alternative services, and that has been a great impetus for them to change,” said Evan Tan, chief of staff, Holistics Software.

Holistics offers a data analytics platform for firms to prepare and manage their databases, said that more than 50 percent of its existing customers are from South-east Asia. It has assisted an Indonesian Artificial Intelligence (AI) chatbot company to get access to internal big data sources without needing a technical team, and thus, improving the organization’s operational efficiency.

This keenness to try new technologies by regional firms was not common few years ago.

Indonesia in particular is quite open to try new technologies and also has improved digital infrastructure and huge e-commerce potential. Being the biggest in the region, Indonesia’s Internet economy was projected at US$40 billion at its gross merchandise value in 2019.  It is likely to further go up to US$133 billion in the year 2025.

“Singapore is a good place for us to do initial research and development, and prototyping,” ViSenze’s Mr Tan said. “But when you need to scale very quickly, you need big consumer markets.”

ViSenze announced a partnership with Samsung Electronics in February 2019 in South-east Asia and Oceania, which would enable Samsung consumers to find products online along with real-life images or current pictures via Bixby Vision Shopping.

Shobhit Shukla, who is the chief revenue officer and co-founder of Near, was quite surprised by the huge technological transformation in the region.

“South-east Asia actually completely skipped an entire generational development,” said Mr Shukla. “Connectivity by 4G and 5G and smartphones help them bypass the broadband (stage) into the smartphone (stage). Who would have thought that companies like Gojek would emerge in a developing economy?”

Near is a Singapore-based AI platform which is tasked with analyzing data to comprehend the real world behavior of consumers. Fascinatingly, though more brick and mortar firms in South-east Asia are beginning to start their journey into e-commerce, all established e-commerce players are also now building their offline capabilities.

These firms are eager to better gauge their consumers, and thus there is a growing requirement for data to join the dots between the consumers’ online and offline behaviour and to offer a 360 degree outlook of the consumers.

Available opportunities for logistics players

The logistics sector is also vigorously planning to utilize technology in its operations. Demand for new technology solutions have risen as Southeast Asia strives to enhance its connectivity to foster the mobility of manpower, other resources and technology, even as it is weighed down by an infrastructure gap.

Regional governments have also announced projects to enhance infrastructure and trade, for example, Thailand’s Eastern Economic Corridor (EEC) and the China-led Southern Transport Corridor that connects China to Asean.

These initiatives offer golden opportunities for various Singapore’s investment and logistics firms to back new establishments and manufacturing activities in this region and go for Singapore company incorporation.

The Vietnamese government is also encouraging investors to offer their technical expertise and experience in project management particularly in infrastructure projects for helping to speed up their development.

Indeed, YCH, a Singapore-based logistics giant, mentioned that after a memorandum of understanding was signed in 2018, it is collaborating with T&T Group, a Vietnamese multi-industry conglomerate, for building Superports in Hanoi, Ho Chi Minh City, and may be also in the Philippines this year.

These Superports, which would be connected to all major rail, road, and freight networks, are likely to use new technology for coordinating cargo movements and to build an effective network for distribution inside the cities and beyond.

The Superport project by YCH and T&T would enable promoting infrastructure development and in addressing the requirement for a chain of distribution centers located in the Southern Transport Corridor.

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Understanding the Singapore Variable Capital Company
  • Article, Singapore

Understanding the Singapore Variable Capital Company

Background:

The Ministry of Finance announced in the 2018 Singapore Budget Statement that a VCC would be treated as a company and a single entity for tax purposes. On 10 September 2018, a draft bill for the VCC was presented for the first reading in the parliament, and the bill was subsequently passed in the parliament on 1 October 2018. The VCC Act will come into effect in end of 2019.

Originally it was named as Open-End Investment Company (OEIC), it came to be known as Singapore Variable Capital Company (“S-VACC”). Now, it has been renamed again, as the Variable Capital Company.

The VCC framework incorporates several key features of open-ended/flexible capital vehicles that are already available in jurisdictions such as Luxembourg, Ireland, the UK, and the USA and allows for investment funds to issue shares and debt instruments.

What is the Variable Capital Company?

A Variable Capital Company is an alternative form of corporate vehicle that will soon become available for Collective Investment Schemes (CIS). Presently, the organisational structures available to CIS are the company, limited partnerships, and the unit trust structures. The VCC can be used for both open-ended and closed-ended alternative and traditional fund strategies. As a corporate vehicle with flexible capital, shares are created when investments are made, and the shares are readily redeemable by the shareholders. This kind of flexibility was lacking in the existing vehicle of corporations available under The Companies Act that has several restrictions when it comes to capital reduction and dividend distribution. This new vehicle, exclusively designed for the fund management industry, will strengthen Singapore’s position as a fund management hub in the region.

What are the Benefits of Variable Capital Company?
  • Solvency Test and Resolutions – There is no need for solvency tests and corporate resolutions for issue and redemption of shares. Relief from such conditions ensures seamless movement of capital.
  • Easy entry and exit for Shareholders – Shareholders have greater freedom and flexibility to enter and exit a fund through easy subscription and redemption of shares. Such fluidity and flexibility are very critical for the efficiency of investment funds.
  • Distribution of Dividends – the Company under the Companies Act that requires dividends to be distributed from the profits only, VCCs can distribute dividends from the capital itself.
  • Register of Members – Although VCCs are required to maintain a register of shareholders, they need not disclose the register publicly.
  • Umbrella Fund – The VCCs can be constituted as umbrella funds with several sub-funds that have different investment objectives, investors, and asset classes. The sub-funds could share a board of directors and have the same fund manager, custodian, auditor and administrative agent.
  • Financial Statements – The Financial statements are not required to be made public.
  • Variety of Investment – The VCC can be used for different types of investment strategies namely – traditional, hedge funds, private equity, and real estate funds
Basic Requirements of Variable Capital Company
  • Capital of VCC – The capital of a VCC will always be equal to its net assets, thereby providing flexibility in the distribution and reduction of capital.
  • Licenses Fund Managers – It will require a Singapore based licensed or regulated fund manager (unless exempted under the regulations)
  • Securities and Futures Act – The VCCs are required to follow Securities and Futures Act (SFA) requirements for investment funds.
  • Directorship – It must have at least one Singapore resident director for non-authorised schemes and at least three directors for authorised schemes.
  • Secretary and Registered Office Address – It must have its registered office in Singapore and must appoint a Singapore based company secretary.
  • Auditors – It must be subject to audit by a Singapore-based auditor and must present its financial statements as per IFRS, Singapore FRS, or US GAAP.

 

Entities

Variable Capital CompanyCompany
Legal Form
  • Body corporate incorporated under the VCC Act for investment funds and having a separate legal personality.
  • It can be set up as a stand-alone entity or an umbrella entity with multiple sub-funds. VCC will be a single legal entity, with its sub-funds operating as separate cells (each without legal personality)
A business form which is a legal entity separate and distinct from its shareholders and directors
Legislative Framework
  • Variable Capital Companies Act 2018 for the incorporation, operation and regulation of the structure (with certain provisions ‘borrowed’ from the Companies Act i.e. registration of charges etc)
  • The Securities and Futures Act will govern the offering of shares in a VCC and all other aspects concerning the VCC as a fund.
Companies Act, Chapter 50
Administering authority
  • Accounting and Corporate Regulatory Authority (ACRA) will administer the VCC Act.
  • The Monetary Authority of Singapore (MAS) will oversee its anti-money laundering and countering the financing of terrorism obligations.
Accounting and Corporate Regulatory Authority (ACRA)
Owned ByThe subscribers to the constitution of the VCC and every other person who agrees to become a member of the VCC and whose name is entered in the register of members.
  • Exempt Private Company – 20 members or less and no corporation holds beneficial interest in the company’s shares
  • Private Company – 50 members or less
  • Public Company – more than 50 members
Legal StatusFor VCC, a sub-fund of an umbrella VCC is not a legal person separate from the VCC, but the VCC may sue or be sued in respect of a sub-fund. The property of a sub-fund is subject to orders of a court as it would have been if the sub-fund were a separate legal person.It is a separate legal entity from its members and directors, entity can sue or be sued in own name and also own property in own name.
Liability
  • The liability of a member of the VCC is limited to the amount, (if any) unpaid on the shares held by the member.
  • Members are not personally liable for debts and losses of Company
Members of the Companies have limited liability.
Yearly statutory obligationsAnnual returns must be filed after its AGM and within 7 months after the end of its financial yearAnnual returns must be filed after its AGM (a) in the case of a listed company, within 5 months after the end of its financial year; and (b) in any other case, within 7 months after the end of its financial year
Accounting and governanceThe wider scope of accounting standards to be used in preparing a VCC’s financial statements thus allowing more flexibility in financial reporting:

 

  • Apart from Singapore accounting standards and recommended accounting principles, the use of International Financial Reporting Standards and US Generally Accepted Accounting Principles would also be permitted.
  • Audit by a Singapore based auditor
  • Accounting standards should be consistently applied across all the sub-funds
  • Umbrella VCC must also keep separate accounting and other records for each sub-fund that sufficiently explains the transactions and financial position of each sub-fund.
Singapore accounting standards and recommended accounting principles for companies which are consistent with Singapore Financial Reporting Standards
Re-domiciliation
  • Foreign corporate fund structures can re-domicile as VCCs in Singapore.
  • This will encourage fund managers with funds domiciled in offshore jurisdictions such as Cayman Islands, to shift fund domiciliation with their fund management activities to Singapore.
Foreign corporate entity can re-domicile to Singapore and become a Singapore entity (provided the host country recognises or authorises re-domiciliation)
Appointment of company secretary and auditorsCompany Secretary: Must appoint at least 1 company secretary within 6 months of incorporation.
Auditor: Must appoint an auditor within 3 months after incorporation, unless the company is exempt from audit requirements
Requirement for fund manager
  • VCC must appoint a fund manager that is regulated by MAS to manage its investments.
  • This will enable supervisory oversight on the use of the VCC, including to prevent a VCC from being abused for unlawful purposes and to help ensure that it is not used as an offshore vehicle without actual investment management activities in Singapore
No such requirement for fund manager.
Number of ShareholdersAt least one shareholder. (Note: s16 and s17 VCC Act states that any person may incorporate a VCC and the subscribers to the constitution of a VCC are considered to have agreed to become members of the VCC)At least one shareholder
Number of Directors
  • At least one director of the VCC must be a Director of the Fund Manager or must be at least a Qualified Representative.
  • Directors of a VCC must also be “fit and proper persons”.
  • At least one Singapore resident director for non-authorised schemes and at least 3 directors for authorised schemes.
Must have at least one director who is ordinarily resident in Singapore
Registration requirementsThe registering party must submit to ACRA:

 

  • the constitution of the proposed VCC and other prescribed documents;
  • the name of the manager of the proposed VCC;
  • the names of the director(s) of the proposed VCC;
  • provide ACRA the last day of the first financial year of the proposed VCC and such other information as may be prescribed; and
  • pay ACRA the prescribed fee.
  • Declaration by either a registered qualified individual or a director or secretary of the proposed that all requirements for formation of company have been complied with and identities of subscribers and officers of the VCC have been verified.
The registering party shall submit to ACRA:

 

  • the constitution of the proposed company (unless the company use model constitution) and such other documents as may be prescribed;
  • furnish ACRA with the last day of the proposed company’s first financial year and such other information as may be prescribed; and
  • pay ACRA the prescribed fee.
  • Declaration by either a registered qualified individual engaged in the formation of the proposed company or a director or secretary of the proposed that all requirements for formation of company have been complied with and identities of subscribers and officers of the proposed company have been verified.
Taxes
  •  VCC will be treated as company and a single tax entity under ITA, subject to such modification and rules made under the ITA.
  • Tax exemption schemes under s13R and s13x (i.e the Resident Fund Scheme and Enhanced Fund Scheme respectively, which are two main tax exemption schemes for fund management available for Singapore based funds.
  • The tax residency will be determined at umbrella level for an umbrella VCC
  • Profit taxed at Corporate Tax Rates
  • New company can avail Start-up tax exemption subject to fulfilment of exemption conditions
  • Other companies are applicable for partial tax exemption
Continuity in lawA VCC has perpetual succession until it is wound upA company has perpetual succession until it is wound up or struck off
Closing the business
  • Winding up- voluntarily by members or creditors, or compulsorily by the High Court. When winding up a sub-fund, all shareholders of a sub-fund should redeem their shares (where appropriate) and the VCC shall be required to apply to the MAS to be de-authorised.
  • No striking off for VCC unlike for companies under the CA
  • Winding up-voluntarily by members or creditors or compulsorily by High Court.
  • Striking off

 

Variable Capital Company can be used Standalone Fund or Umbrella Fund

Umbrella Fund
  • Standalone Fund comprises of single investment portfolio.
  • The tax treatment of a stand-alone VCC will remain the same as that of a Singapore company.
  • The Enhanced Tier Fund (“ETF”) Scheme and Singapore Resident Fund (“SRF”) Scheme under the Income Tax Act will apply to a stand-alone VCC similar to how it would apply to a Singapore company

Stand Alone Fund
  • An umbrella fund consist of multiple sub-funds;
  • All sub-funds can share the same directors and service providers;
  • Each sub-funds acts as a separate legal entity;
  • If need be, each sub-fund should be wounded up seperatly to ensure ring-fencing of each fund’s assests and liabilities

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How a Private Limited Company Can Qualify for Audit Exemptions in Singapore
  • Article, Singapore

How a Private Limited Company Can Qualify for Audit Exemptions in Singapore?

Singapore is one of the most attractive destinations in the world to set up a business. A private limited company is the most suitable option for incorporating a business in Singapore. Private limited companies in Singapore receive various benefits in the form of tax savings, limited liability and minimum compliance obligations. However, the Companies Act in Singapore has introduced the “small company” concept. The private companies in Singapore get audit exemption if they fulfil “small company” criteria. This is done so as to reduce the overall compliance cost and regulatory burden on private companies.

Small Company

First understand the meaning of a small company to the Companies Act in Singapore, a company is considered a small company if it fulfils two out of the following three conditions:

  • The annual revenue of the company is up to S$10 million.
  • The total value of the company’s asset is up to S$10 million, or
  • The number of full-time employees in the company at the end of the financial year do not exceed 50.


A company that qualifies to be a small company is not required to have its accounts audited and appoint an auditor. Besides the private companies or small companies, group companies i.e. holding or subsidiary of private companies also get audit exemption if they qualify as a small group company.

Group Company Audit Rule

A group company is a holding company and its subsidiaries that together are a part of a group and has a common source of control. A group company can avail the exemption of annual audit if the holding and subsidiary companies individually;

  • Belong to a small group and
  • Fulfil at least two of the small company qualifying conditions.

To qualify as a “small company”, all the companies comprising the group must fulfil at least two out of the following three conditions in the immediate two preceding financial years;

  • The group’s consolidated revenue must not exceed S$ 10 million
  • The value of the group’s consolidated assets must not exceed S$ 10 million
  • The total number of employees of the group must not exceed 50

Therefore, if the company wants to avail the audit exemption, the subsidiarity and holding company as a group must fulfil the above mentioned criteria.

Change in Company Status

When a company acquires the status of a “small company”, it will continue to enjoy the audit exemptions until it is disqualified. Disqualification of a small company occurs when;

  • The company is no more operating as a private company in the financial year, or
  • The company does not qualify the criteria of “small company” for the two immediately preceding financial years.

If you are looking to avail audit exemptions for private companies in Singapore, you may get in touch with IMC Group.

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  • Article, Singapore

Singapore: The perfect place for start-ups and expansion

Singapore is one of the world’s most attractive destinations for start-ups looking to spread their wings. In fact, Singapore now has overtaken Silicon Valley to become the number one place across the globe for start-up talent. In the year 2016, the World Bank Group ranked

Singapore as the best place for “Doing Business” in the world. This article will help you in learning some of the key factors that make Singapore an attractive place for start-ups and expansion of business.

Business Friendly Policies

The business-friendly policies are the top factor for start-ups to grow in the country. The Singapore government ensures maximum support for the companies. The attractive tax-friendly rates, efficient transport system, well-functioning court system, public safety and minimal bureaucratic red-tape make it easy for the start-ups to access the assistance provided by the government. The easy to follow rules and kind of environment created by government makes it simple for start-ups to survive, grow and innovate.

Access to Resources

To become a successful start-up, assistance from various stakeholders is required. The market participants like investors, service providers, government organizations, research institutes, accelerators and co-working spaces give the start-ups an ecosystem to grow. Singapore government is very supportive towards start-ups. It provides them with necessary resources required for setting up the business. The type of help depends on the type of start-up you are incorporating in Singapore.

Access to Skilled Workforce

A company needs skilled workforce in order to expand its business or grow a start-up. Without skilled, knowledgeable and efficient workforce, the start-ups cannot survive. Therefore, entrepreneurs are always looking for countries where they can get skilled workforce at affordable rates. Singapore perfectly fulfils the need for skilled workforce for businesses. Therefore, for companies looking to expand their business, Singapore is an ideal destination.

Laws of the Land

A start-up while setting up its business would want an assurance that their intellectual capital and contracts with different countries would not be taken away arbitrarily. Singapore gives them this assurance with well-defined and robust laws. The corruption-free governance, accountability, stability and equal justice to all give the start-ups in Singapore the confidence to flourish their business.

Taxes

The taxation policy is one of the main criteria for start-ups before establishing their business in a country. Singapore is one of the best places for start-ups when it comes to taxation policies. The start-ups in the country attract tax exemptions for the first three years of the operations subject to conditions for start-up tax exemptions. Besides, the corporate tax rate is capped at 17%. Moreover, the businesses can carry forward their losses in order to reduce their future tax liability. Also, the corporate dividend is exempt from tax in the hands of the shareholders. What further makes Singapore more appealing for start-ups is that it has signed Avoidance of Double Taxation Agreements (DTAs) with more than 50 countries.

Protection of Intellectual Property

Intellectual property is a critical asset for any start-up. Investors invest in companies with a strong intellectual property portfolio as they have good future potential. The government of Singapore supports and encourages the protection of intellectual property. The government’s Intellectual Property Hub Master Plan protects the intellectual property rights of the companies in Singapore with modern legal framework. It covers trademark laws, copyright, patent, industrial design protection and trade secrets protections.

Ease of Global Expansion

Start-ups and other companies look to establish themselves in countries where they can easily expand their business globally. Singapore is located in the heart of Southeast Asia. Its location has many geographical advantages. Some of the largest economies of the world are a short flight away from Singapore. This gives businesses an opportunity to easily trade with big countries across the globe. Singapore also provides assistance programmes to help start-ups expand their business world-wide. The assistance is in the form of grants that can be used for hiring marketing staff, conduct market research or carrying out contractual negotiations.

Singapore, despite being a small country has achieved huge economic growth by focusing on its core proficiencies. The excellent infrastructure, highly advanced industrial sector, pro-growth reforms and pro-business policies have made it an excellent place for start-ups and expansion.

If you are keen to know how to start a business in Singapore, you can get in touch with IMC Group. We assist the start-ups in the process of company formation in Singapore. You can avoid the pile of paperwork and take our assistance at affordable rates. Our streamlined process will help you in starting a company quickly. If you require any more information or have a query, you contact us by dropping an email.

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TPCI Collaborates with Singapore’s Monetary Authority for Supporting SMEs
  • Newsletter, Singapore

TPCI Collaborates with Singapore’s Monetary Authority for Supporting SMEs

TPCI Chairman Mohit Singla mentioned, “We are ready with its digital infrastructure and are eager… for leveraging the idea of export promotion using the new-age fintech system”.  It will also help businesses in uploading their data related to demand and supply of their goods. In addition, the platform would accept a trade whenever the demand and supply match between two businesses.

Trade Promotion Council of India (TPCI) recently joined hands with Singapore’s Monetary Authority for hand-holding local SMEs for encouraging their exports. There is a plan to create a new platform to offer various services to small and medium enterprises (SMEs); for example connecting the buyers and sellers from different countries, assisting exporters in tasks like custom clearances, options of financing, and custom advisory.

“It will complete the transaction for the matched trade and includes an applications store for the recommendation and listing of applications providing generic services,” he added.

Singla also said that the platform in the pilot phase would be launched during the upcoming edition of its flagship mega show named Indusfood 2020. Earlier in 2019, the business chambers from India and Singapore started a joint venture through micro, small and medium enterprises (MSMEs) to go to the bigger Southeast Asian markets by finalising this MoU which was signed last week. The MoU inked by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Singapore Indian Chamber of Commerce and Industry (SICCI) would offer training, assistance and facilitation to MSMEs of both countries, along with other businesses to aid in establishing bases and joint collaborations . This will not only promote Singapore company incorporation but entrepreneurs are expected to leverage business startup schemes and grants in Singapore. On the occasion of the MoU signing ceremony held following the India 101: Internationalisation Conference, Jawed Ashraf, India’s High Commissioner to Singapore, mentioned, “Singapore has always been a gateway for India into Southeast Asia, and just think of the opportunities that Singapore’s SMEs can have by being a bridge for Indian companies into Southeast Asia.”

Ashraf also said that India, along with the Monetary Authority of Singapore (MAS) is in the process of creating a new platform named, ‘Business Sans Borders’ that would connect Indian companies through Singapore to the ASEAN.

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How to Establish a Shipping Company in Singapore
  • Article, Singapore

How to Establish a Shipping Company in Singapore

Singapore is one of the world’s leading International Maritime Centre. Therefore, Singapore is a preferred choice of many companies across the globe for setting up shipping or maritime business operations. Singapore is an international maritime hub with more than 5,000 shipping companies that contribute to 7 percent of the country’s GDP. The country ships to more than 600 ports across 120 countries.

Small and medium-sized enterprises (SMEs) may find it difficult to set up a shipping company in Singapore. Therefore, it becomes important for them to understand what legal basics govern the shipping or maritime business in Singapore. Some of the important things to know are:

  • Operation of vessels in and out of port from Singapore
  • Hiring of crew members to work on your vessels abroad
  • Handling of dangerous cargo
  • Use of communication equipment on the ship

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