How to set up a Representative Office in Singapore – A guide for Foreign Investors

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How to set up a Representative Office in Singapore – A guide for Foreign Investors
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How to set up a Representative Office in Singapore – A guide for Foreign Investors

Singapore is a hub for business opportunities in Asia Pacific Region and is one of the top financial centres in the world. The strategic location, ease of doing business, attractive tax regime, availability of skilled workforce, world class infrastructure, technology driven, robust IP Protection & trademarks registry and sound banking system contribute to the growth of Singapore. Considering all the factors, many foreign entities want to explore opportunities in Singapore by establishing its presence. Right before taking the decision to open a company in Singapore, a foreign entity can evaluate the viability of running its operations by establishing Representative Office in Singapore.

Representative Office is a means by which foreign businesses can venture and explore the feasibility of their business in Singapore without going through the procedure of the registration of the business organization, hence minimizing risks and providing foreign businesses with a closer grip and orientation of their prospective business in Singapore. A Representative Office can be utilized but for limited purposes only, for a maximum duration of 3 years.

A representative office in Singapore is a legal entity enabling foreign companies to conduct some activities without conducting direct selling or profit-making business. A representative office is not a juristic person and may conduct no business activity. Foreign companies will hence tend to utilize a representative office as a stepping stone for entry into Singapore before it opens a branch office or a subsidiary company.

Purpose & Objective of Representative Office

Singapore Representative office is not an organization of a business company because it relies totally on its organization. Moreover, the organization cannot participate in any profit-making activity. As it is not entitled to receive the same value as a company, hence representative office is not able to:

  1. Entering into contracts;
  2. Negotiate or applying for bank credits/loans;
  3. Trade, leasing business, etc.

Then the question arises, what type of activities are permitted to perform as a Representative office in Singapore. Such office activities are limited to only market research and feasibility studies such as:

  1. Gather data on markets, competitors or customers.
  2. Research the product or service demand; needs and price expectation of potential customers.
  3. Collect information on regulatory requirement for setting up of permanent entity in Singapore.
  4. Develop trade contacts and manage product enquiries.
  5. Exhibitions and attend trade shows.

The RO shall not undertake any direct or indirect revenue generation activities on behalf of its foreign company or shall not engage in provision of service.

Eligibility Criteria to set up a representative office in Singapore

Any foreign company must meet these requirements to set up a representative office in Singapore:

  1. Sales turnover: >USD 250,000.
  2. Minimum no. of years of establishment: >=3 years
  3. Proposed no. of staff in the representative office: >5
  4. It should possess a Corppass Account prior to RO application.
  5. A foreign company can engage the services of local third party proxy to make an application of RO in case such company does not have staff holding a NRIC/FIN.

Procedure of Registration

Generally, businesses of foreign register a Representative Office with IE Singapore (International Enterprise Singapore). The registration is done online. Once the application has been filed, the foreign company has to make a $200 registration fee payment. IE usually processes the application in 14 working days. IE would issue a Letter of Approval once approved to justify registration.

Foreign businesses tend to use services of a corporate service provider. The provider may help facilitation of registration ranging from preparation of documents at the front end to approval at the back end; compliance requirements at any given time can also be aided by the service provider in the case of the representative office.

Documents required for Singapore Representative office

A foreign entity desires to establish a Representative Office must possess the following documents:

  1. Softcopy of English version of Certificate of incorporation or registration certificate of the foreign company
  2. Latest audited financial statements of the foreign company.
  3. Write up on the purpose of setting up of the office on the letter head of the foreign company duly stamped & signed.

Other Compliance

The following laws should be complied with by a representative office in order to be compliant:

  1. The representative office shall carry same name as the Parent company. Where a change of name of the parent company is affected, the representative office shall give notice to IE and provide a certificate of change of name not later than 1 month from the date on which the change of name has effect.
  2. All communication materials must clearly state: “Representative Office in Singapore”.
  3. A representative office shall give notice to IE within 1 month of change in office address, telephone number or fax number.
  4. A representative office shall give notice to IE within 1 month of terminating business or becoming branch office or subsidiary company.
  5. But due to lack of legal personality, a representative office is not subject to filing annual financial accounts with ACRA or annual income tax returns with IRAS.

Procedure for renewal

Upon verification, a representative office is allowed to work for 1 year and be renewed annually in order to keep working. According to regulation, IE shall send renewal notice 2 months before a representative office renewal expiry date. Additionally, the representative office shall also renew atleast 7 days before the expiry date of current approval.

Similar to initial registration, renewal by the RO is achieved through application submission from IE's website. Audited accounts are not usually required at renewal. However, the company can be asked for recent statements by IE even in renewal of a representative office.

Representative office is allowed to continue business in Singapore for 3 years’ time. To continue business after 3 years' time, representative office needs to be converted into branch office or subsidiary company.

Conversion into Company

Representative office may be converted into Singapore-registered company by registering subsidiary company or branch office with Singapore Accounting and Corporate Regulatory Authority (ACRA).

Under branch office or subsidiary company registration in Singapore, foreign companies are obliged to hire the services of an appointed registered filing agent, i.e., a corporate service provider. A corporate service provider will arrange for collection and assembly of all documents and submit the process to ACRA.

How SKMC can help you?

At SKMC Global, we understand that establishing representative office in Singapore enables foreign companies to make a seamless and successful entry into the Singapore market. If you already had your mind set on opening up rep office Singapore in behalf of your foreign company, we are here to help you. We have a dedicated team of experts who understand starting business Singapore, provide guidance and technical knowledge of Singapore Laws. We provide end to end services from collating the documents to establishment of representative office & post compliance.

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