Legal Tips: Starting an Online Business in Singapore

Rental and manpower costs comprise the biggest obstacles for budding entrepreneurs. Online businesses provide a much cheaper platform for business owners to reach consumers and market their products. The following article briefly describes the various legal considerations a business owner must bear in mind over the course of operating an online business.

Copyright

Copyright law is especially pertinent for content generation businesses, which include food and travel review sites. Copyright encompasses most forms of expression such as text, photographs, and videos. Copyright arises as soon as the work is created – registration is unnecessary and the copyright owner enjoys copyright protection without the need for additional formalities. The use of the © symbol is largely cosmetic.

Copyright is essentially a negative right against other persons from copying or reproducing your work. Copyright only protects expressions. There is no copyright in ideas, information, principles and facts as such.

Generally, the copyright owner is the creator of the work, unless the work was created by an employee, in which case copyright vests in the employer. See our other article for more information on copyright law in Singapore.

Disclaimer

A disclaimer policy or statement excludes liability, enabling the online business to disclaim legal responsibility for losses caused to the user. However, disclaimers remain subject to law, such as the Unfair Contract Terms Act, which restricts the use of disclaimers in certain circumstances.

An online business can use disclaimers to distance itself from user feedback or reviews which may contain defamatory or inaccurate statements. Disclaimers can also be used to disclaim trademark ownership when trademarks of third party entities are displayed on the website. Where advertising or links of third party services is hosted on the website, the website owner can use disclaimers to disclaim liability for the wrongdoings of the third party service provider.

Terms of Service or Use

Terms of service or use are contracts entered into between the user and the website owner or operator. These terms invariably stipulate that use of the particular website constitutes acceptance of the terms of service or use.

These terms may comprise a number of matters, such as account password and cookies policy, privacy policy, user conduct and banning policy, indemnities and disclaimers of warranties, limitation of liability, and intellectual property rights.

Most users do not bother to read the terms of service. In any case, many free resources are available on the web to help you craft the terms of service for your website.

Privacy Policy / Data Protection Policy

A privacy policy is usually contained within the terms of service. The privacy policy notifies the user about the data that would be collected from the user, and the subsequent usages of this collected data. With the advent of the Personal Data Protection Act (PDPA), the privacy policy of an online business must necessarily comply with the 9 main PDPA obligations.

For more information, see our article on drafting a privacy policy in Singapore.

Personal Data Protection Act

The PDPA establishes a data protection law that comprises various rules governing the collection, use, disclosure and care of personal data. For a comprehensive overview of the requirements of the PDPA, please see our essential PDPA compliance guide.

Email and Phone Marketing

All electronic messages, including marketing emails, must be labelled with the <ADV> tag and contain unsubscribe functions enabling the recipient to unsubscribe. See our other article for more information on your business’ legal obligations when sending email newsletters.

The Do-Not-Call Registry allows individuals to register their Singapore telephone numbers to opt out of receiving marketing phone calls, mobile text messages such as SMS or MMS, and faxes from organisations. Businesses which transgress this restriction will be subject to sanction.

Crowdfunding

Most crowdfunding platforms in Singapore prohibit equity-based crowdfunding, whereby the fund recipient promises or transfers equity (shares) in exchange for donations. This is because equity crowdfunding may constitute a securities offer and violate the requirements of the Securities and Futures Act. For more information, refer to our article on crowdfunding and crowdlending in Singapore.

If you need legal advice on setting up an online business in Singapore, please consult one of our experienced corporate lawyers.