I get asked by so many aspiring founders and entrepreneurs what they should know before setting up a company in Singapore.
The usual place that gets named all the time in South East Asia is Singapore of course. Known as the ‘Switzerland of Asia’ it is the place to be serious about growing a unicorn in South East Asia since so many venture capitals and investors are based there.
Get a good company secretary
The first thing you need to do is to find a good company secretary. Like in Malaysia, a company formed in Singapore needs to have a company secretary all the times. A company secretary’s duties are the same as in Malaysia. A company secretary plays a statutory obligation to ensure that all the necessary paperwork and filing gets done as needed under the companies law. They are some excellent ‘digital company secretary’ that you can use as well. Do ask around your Singapore local entrepreneurs for some good referrals.
A local domicile director
Most jurisdictions will require at least one local domicile director with a local address including Singapore and Malaysia. In other words, you need to have at least one person already physically based in Singapore to help you form an entity. Alternatively, you can consider a “friendly party” like a corporate secretarial firm that may offer such nominee services. The latter’s challenge is that their fees can be significant, given the legal risks involved in being a nominee director.
Recently I have helped a client who was an entrepreneur that has received an investment offer in Singapore. The two usual funding conditions are to have a Singapore entity receive the funding. Later, a shares swap from the Malaysian entity to follow and reflect the new holding company structure owning 100% entire equity interest in the Malaysian entity. He needed help to source for “friendly party” to act as a local director to assist with the formation. I linked up with another client, who is a founder based in Singapore. To give comfort to the Singapore founder, I have drafted a simple indemnity and waiver letter so that any legal risks involved in the formation will be the Malaysian founders’ responsibilities.
Get a local legal counsel
I know so many startups do not bother getting legal advice, and this advice gets neglected. But it is a good idea to seek legal counsel advice on what other legal stuff you should know before setting up a company in Singapore. Many good ‘startup law firms’ or corporate law firms offer ‘startup-friendly’ rates so you can ask around for good referrals from your local Singapore contacts.
Some of the usual questions to ask to include checking whether your business or business model may fall within Singapore’s regulated space (which means you may not operate unless you get the necessary regulatory approvals).
Another critical reason to get a legal counsel is when you may already have several shareholders, including cofounders in the Malaysian company’s shareholding structure. You may need to prepare a shares swap agreement and a shareholders’ agreements for the new Singapore entity. If you ask a startup lawyer, they may also tell you if the company is structured correctly. A good structure can also help you be ready to apply for local grants or funding opportunities available in Singapore (they are so many to know better on what may be suitable for you).
Know the costs involved
There’s a cost in everything, and of course, this goes without saying! So you need to look carefully on the maintenance required costs on running a Singapore entity. Usually, they are two types of fees that the company secretary will charge you. The first is the usual monthly retainer fees paid semi-annually or annually, which vary depending on the company secretary that gets onboarded (usually their physical office address can help you identify the costs needed).
The second fees can be entirely subjective as they relate to the kind of corporate work that you need to instruct the company secretary from time to time. This can add up as and when you do more transactions like preparing board and shareholders resolutions for fundraising or even appointing new directors and so on. For example, if you need to open a bank account, most banks will require the company secretarial firms to provide statutory documents like the company’s incorporation certificate. Many corporate secretarial firms charges for affirming documents as ‘certified true copy’ and so on.
Before you appoint a company secretary, make sure you get an upfront fee quote to know what the charges for specific paperwork and filing are needed. I know some digital company secretaries like Sleek, Lanturn, LOL Corporate etc. may have online services and even linked up with local banks so you may want to take a look at that as well too.