FOR FOREIGN COMPANIES, FOLLOWING OPTIONS ARE AVAILABLE
- Representative Office
- Branch Office
- Subsidiary
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REPRESENTATIVE OFFICE
If a foreign company intends to have a local presence in Singapore without the legal proceedings involved in registering a corporation, it can do so by setting up a representative office (RO). An RO is an administrative arrangement and making one does not give the business any legal identity. An RO is generally made to establish a non-commercial office with no revenue generating activities.
Through an RO, a foreign company is allowed to conduct market research and prepare feasibility studies, provide customer support or use the RO as a liaison office. The RO cannot, however, enter into any legal contract, nor can it provide repair services. The foreign company cannot ship its product to the RO for storage and sale in Singapore without having a local contractor already designated. It may provide oversight to its local contractors and provide them with guidance on implementation of its main business as a foreign company.
Any facilities the RO owns in Singapore cannot be leased to other organizations. Similarly, the RO cannot issue, receive or open invoices, receipts and letter of credits.
To set up an RO, an application is sent to the International Enterprise (IE) along with the certified copies of the incorporation certificate of the foreign company, the latest annual report and audited financial statements and an undertaking that the foreign company agrees to follow the rules promulgated in Singapore for regulation of the RO. Once the authorities have gone through the application and not found any objections, they would issue a Letter of Approval that shall confirm the registration of the RO.
If the foreign company has not issued annual account for the reason that it is a newly registered company, the required information can be self-declared and be submitted with supporting information – such as company’s promotional literature.
If the primary business of the foreign organization or the RO is in banking and insurance, another application is sent to the Monetary Authority of Singapore (MAS).
Since an RO is thought of as a temporary place until the business expands to a branch office or to a subsidiary company, an RO must be dissolved after a maximum of 3 years with the right to delist any time before that being with the foreign company. Furthermore, if the foreign company goes dormant, the RO must be deregistered.
The RO must have staff members from the head office resident in Singapore to overlook the operations. The RO is allowed to have local employees in the role of support staff.
Representatives of the foreign company in Singapore must use the term ‘Representative’ to describe themselves. They cannot use any other term (such as ‘manager’ or ‘sales representative’), which may indicate that the foreign company has an established presence in Singapore through a branch office or subsidiary.
Furthermore, the RO must represent in its printed name, visiting cards, business listings, stationery, notices, adverts, documents and communication material that it is a representative office of the foreign company duly registered in Singapore.
Since the RO does not have a legal identity, requirement for corporate filing does not apply to it. Similarly, since the RO is not allowed to operate a revenue generating business, it is not taxed.
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