Foreign Company Re-domiciliation to Singapore
Since the Companies Act 1967 was enacted, it has undergone several changes to ensure it plays a key role in supporting Singapore’s growth as a global hub for businesses and investors. In this latest review – The Companies (Amendment) Act 2017, the Ministry of Finance and the Accounting and Corporate Regulatory Authority (ACRA) have introduced an inward re-domiciliation regime in Singapore. Following the changes, foreign corporate entities will be allowed to transfer their registration to Singapore instead of setting up subsidiaries.
The changes aim to reduce regulatory burdens on companies and limited liability partnerships (LLPs), improve the ease of doing business in Singapore and improve the transparency of the ownership and control of companies and LLPs. A corporation may choose to re-domicile for regulatory, strategic or organisational reasons, while retaining its identity and history in the various regulatory jurisdictions it has presence in, and minimising operational disruptions. Other jurisdictions that currently have re-domiciliation regimes include Australia, Canada and New Zealand. Re-domiciliation will not affect the obligations, liabilities, properties or rights of the foreign corporate entities.
A company may want to seek re-domiciliation for a variety of reasons, the most common being that the new host jurisdiction offers a preferable tax or regulatory environment. Alternatively, a company may wish to obtain financial or fiscal benefits and improved access to financial and capital markets associated with the new host jurisdiction. Foreign entities must be corporate bodies that can adapt their legal structure to the companies limited by shares structure under the Companies Act.
In addition, they must meet certain prescribed requirements and their application will be subject to the Registrar’s approval. There are certain requirements for re-domiciliation, among which require that the foreign entity must be of a certain minimum size. At the company level, the criteria is that a company is a small company if it is a private company throughout the relevant financial year and satisfies any two of the following:
– Revenue for each financial year does not exceed S$10 million
– Value of its total assets at the end of each financial year does not exceed S$10 million
– No more than 50 employees at the end of each financial year.
The foreign entity must also submit a certified copy of the charter, statute, constitution or memorandum or articles or other instrument constituting or defining its constitution (if any), in its place of incorporation; the constitution by which the foreign corporate entity proposes to be registered; such other documents as may be prescribed; and the prescribed fee. After the transfer of registration, the re-domiciled foreign entity must de-register in its place of incorporation and update its registration details in all its business correspondence within three months. The company will also be required to register pre-existing charges which have been created prior to the re-domiciliation of the foreign entity within 30 days and complete and have ready for delivery share certificates to all persons registered as holders of existing shares or debentures within 60 days.
Re-domiciliation does not create a new legal entity nor prejudice or affect the identity of the corporate body constituted by the foreign entity or its continuity as a corporate body. It also does not affect the obligations, liabilities, property rights or proceedings of the foreign corporate entity, nor affect legal proceedings by or against the foreign corporate entity. Through these updates to the Singapore regulatory framework for corporations, MOF and ACRA seek to ensure Singapore’s corporate regulatory regime remains internationally competitive and robust. Feel free to contact 3E Accounting for more information.