Singapore Representative Office: How Can a Foreign Company Set Up?
What is a Representative Office (RO)?
A Representative Office (RO) is essentially a temporary administrative office set up as a liaison to coordinate and manage non-commercial activities, for a foreign company.
An RO has no legal status and is not a separate legal entity from its parent company.
Why Set Up an RO in Singapore?
When a foreign company intends to enter Singapore, the form of entry chosen is likely to be determined by its commercial purpose.
An RO is usually set up because the foreign company wishes to explore potential opportunities in Singapore or the surrounding region in Asia.
The foreign company will not have to commit to any substantial financial investment as yet and will be able to conduct certain non-commercial activities to evaluate its future commercial prospects in Singapore and the region.
When might a company prefer to set up a subsidiary, branch office or choose redomiciliation instead of an RO?
Since the RO can only operate in Singapore for a maximum of 3 years, the foreign company may choose to extend its business in Singapore by setting up a subsidiary, a branch office or redomiciliation.
The following explains the differences between an RO and a subsidiary, a branch office and redomiciliation:
- A branch office is an extension of the parent company which is not a separate legal entity. Unlike an RO, branch offices can conduct commercial business activities but can only conduct the same business activities as the parent company. This is a non-resident option for a foreign company looking to capture market share in the short-term.
- A subsidiary company is a locally incorporated company that is majority-owned or controlled by its parent company. Unlike an RO, a subsidiary may conduct all business activities, even those of a different scope than their parent companies. This is often the most ideal option when foreign companies are looking to establish themselves in Singapore for the long-term.
- Redomiciliation is a process by which a company would transfer its registration from one country to another. This would mean that the foreign company would become a Singapore-registered company. This is chosen if the foreign company decides that its prospects would be the best if it relocates to Singapore instead.
Requirements to Set Up a Singapore RO
Scope of activities which an RO is allowed and not allowed to conduct
As a temporary administrative office without a legal status, it cannot engage in trading or profit-yielding business activities. This means that the RO cannot conclude contracts, open Letters of Credit, negotiate and trade.
ROs can only perform activities like market research and feasibility studies. For instance, the RO may participate in trade exhibitions, gather information about markets and clients, research product demand and handle product inquiries.
An RO failing to comply with these requirements may be de-registered.
Can the RO operate under a different name?
The RO must operate under the same name as the parent company but include the term “Representative Office”. This should be reflected on the name plaque, staff name cards and other communication materials.
A foreign company that wishes to establish an RO in Singapore:
- Must have been established for 3 years or more; and
- Have incurred a sales turnover of more than US$250,000 (S$338,010).
Furthermore, the RO must appoint a Chief Representative Officer (CRO) who will relocate from the parent company’s head office to Singapore and oversee the RO’s activities.
Additionally, it must only hire a maximum headcount of 4 employees as support staff.
How to Set Up a Singapore RO
A foreign company may engage a professional corporate secretarial firm in Singapore for assistance with the application. Alternatively, setting up a RO can be done through emails and document couriering.
There is no need for the foreign company to send a representative to Singapore to set up the RO.
An RO application via the Monetary Authority of Singapore (MAS)
If the RO’s operation is in the finance, banking or insurance industry, the RO has to be registered with the Monetary Authority of Singapore (MAS).
Before registration, applicants are encouraged to contact the Banking Department at MAS to discuss their plans prior to submitting a formal application. This is to ensure that your company has significant bearing on the proposed application.
The documents required for the formal approval process with MAS include:
- A completed application form (found at MAS’ website);
- Original letter from the foreign country’s supervisory authority approving the establishment of the office in Singapore;
- Certified copy of the company’s Memorandum and Article of Association;
- Annual reports of the company for the last 2 years, and a Balance Sheet, and Profit and Loss Account dated up to 3 months prior to the date of application; and
- Annual Reports of your bank’s holding company or shareholders with controlling interests for the latest financial year.
An RO application via Enterprise Singapore
For ROs in other industries, the registration will instead be done with Enterprise Singapore. The documents required for the approval process with Enterprise Singapore include:
- A completed application form (via Enterprise Singapore’s online portal);
- A copy of the parent company’s Registration Certificate or Certificate of Incorporation; and
- Copies of the parent company’s latest annual report and audited accounts
For any documents not in English, an official English translation must be submitted to the online portal pursuant to the application.
The processing fee for setting up an RO and renewing the RO each year is S$200. This fee is non-refundable for unsuccessful or withdrawn applications.
Payment may be made through:
- Cheque (must be crossed and payable to Enterprise Singapore);
- Credit card (Master or Visa Card) on the online portal; or
- Bank Draft (made payable to Enterprise Singapore in Singapore dollars).
How Long Will the Registration Take?
Following the filing of the application, it normally takes about a week for the authorities to issue a Letter of Approval to confirm the registration.
If the authorities require additional clarifications, the process may be delayed by another 1-2 weeks.
Is the application subject to approval?
The application is subject to approval.
However, if the foreign company meets the requirements and the intended activities fall within the scope of activities it is permitted to carry out (as mentioned above), the approval process should generally be successful.
A Letter of Approval will then be issued, confirming the registration of the RO, for successful applications.
What Happens After Setting Up the RO?
How long can the RO operate for?
The RO can only operate in Singapore for a maximum of 3 years. Hence, its RO status must be renewed annually during this 3-year period.
The authorities will usually send a renewal notice 2 months before the expiry. If there is no response, the RO will be de-registered.
Following this period, the foreign company will be advised to register a subsidiary company or a branch office should it wish to continue operations in Singapore.
Applying for an Employment Pass for foreign staff
For a foreign staff (i.e the CRO) to work in Singapore, an application must be made by the foreign company’s head office for an Employment Pass (EP).
The EP is a work visa that allows the foreign staff to live and work in Singapore. It will be valid for 1-2 years and must be renewed thereafter.
You are required to provide the following documents for the application:
- Copy of the approval letter from Enterprise Singapore or MAS for setting up a Singapore RO
- A letter from the RO’s head office stating:
- The purpose of the application
- Duration of the foreign staff’s assignment
- Guarantee for the maintenance and repatriation of the foreign staff
For more information on the application procedure for an EP, please refer to the Ministry of Manpower’s (MOM) website.
Is the RO liable to corporate tax?
The RO is not liable for any corporate tax in Singapore because it cannot generate income.
Can the RO open a corporate bank account?
A RO can open a corporate bank account in Singapore to run its cost centre operations. This can be done within 2-10 working days.
However, opening a corporate bank account may require a visit to Singapore if the bank requires an interview with the stakeholders to do due diligence (a comprehensive appraisal of the financials of the foreign company’s business).
In what other situations is the RO subject to de-registration?
Should the RO become dormant (no activity carried out for a certain period of time), it will be de-registered.
ROs must also be de-registered if their parent foreign companies become dormant (the parent company does not have any income or revenue in a given financial period).
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