Being eligible for the Singapore redomiciliation regime requires meeting certain criteria for size & solvency. A foreign company’s legal structure may need to be changed to LLC; its owners’ liability must be limited to the number of shares owned by them.
Changing the place of a foreign enterprise’s registration doesn’t require creating a new legal entity, nor does it require adoption of a new organizational & legal form. The obligations, liability, property or legal proceedings under which liability is borne also remain unchanged.
Relocating a business to Singapore may require notifying its partners about the change of an incorporation status. Bank accounts may remain unchanged; however banks are likely to require documents confirming the re-domiciliation to Singapore.
There’s tax privileges for companies that successfully re-domicile to Singapore; however, being eligible for them requires getting approval from the Finance Ministry. There’s also a special tax regime for companies that have never been involved in trading or commercial activities in Singapore. Foreign enterprises will only be able to re-domicile to Singapore if the jurisdictions in which they’re incorporated have an external re-domiciliation regime. Great Britain & Hong Kong don’t permit redomiciliation of domestic companies to other countries. Jurisdictions in which external re-domiciliation is allowed include Australia, Canada and New Zealand.
Regime
Owners of foreign enterprises that aren’t eligible for redomiciliation due to the lack of respective laws in the country of incorporation can create a new legal entity & transfer their old company’s liabilities/assets to it. There’s 2 methods for carrying out the transfer process. Regardless of which of them is chosen, consent of a company’s shareholders must be obtained prior to initiating the process:
- registering a new company in Singapore & transferring a foreign company’s assets to it via an asset purchase agreement.
- prior to the transfer of stocks, shareholder(s) must register a company in Singapore, conclude a share swap deal & transfer the newly formed company’s shares to the shareholder(s); after the swapping of shares, a foreign firm will become a Singaporean company’s subsidiary.
A foreign company’s owners will need to review their existing contracts to decide which ones of them should be transferred to a Singaporean firm. Assignment of contract in Singapore must be done as per the terms of the transferred contracts & governing law. The transferring of contractual rights & obligations requires obtaining counterparties’ consent. In particular, these contracts may contain no-assignment clauses prohibiting assignment of rights & transfer of their contractual obligations without counterparties’ consent.
Transfer of Stocks
Transferring a foreign company’s operating expenses requires keeping mind:
- concluded agreements (e.g. contracts for the provision of premises, lease agreements, etc.);
- terms of business licenses.
Transferring operating expenditure may also require sending notifications to or getting consent from a foreign company’s counterparties. This is necessary to minimize any disruption to business in Singapore. Consent is unlikely to be refused given that the proposed transfer is part of an internal restructuring process.
A foreign company’s owners will have to consider which workers will be laid off & which employment contracts will be concluded with a new Singaporean firm. It’s also worth making a decision about which employees should be physically transferred to Singapore. There’s a limit on the maximum number of foreign workers that a Singaporean employer can employ. Foreign workers can only work in the country if they have obtained a work permit issued by the Labor Ministry. Each Singaporean employer has a specific quota for a specific type of work permit.
Licenses
Depending on the type of business a Singaporean company is going to conduct, obtaining a license in Singapore may be required. Applications for such licenses must be made in advance.
Considering redomiciling a company to Singapore? Need advice on redomiciliation regulation in Singapore? Please consider contacting YB Case.
