Singapore’s Inward Re-Domiciliation Regime: What You Need to Know
By Dezan Shira & Associates
Posted: 30th October 2017 08:55One of the key amendments to the Singapore Companies Act, the inward re-domiciliation regime came into effect on October 11, 2017. The amendment allows foreign companies to relocate their business headquarters to Singapore instead of setting up subsidiaries, without losing their corporate history or brand identity. This means that a foreign company located outside of Singapore may become a registered Singapore private company limited by shares, domiciled in Singapore and continue its operations under the laws of Singapore; the company need not wind up its business activities and set up a new company in Singapore. Re-domiciliation in Singapore does not create a new legal entity. It also does not affect the property, rights or obligations of the foreign company, or affect any legal proceedings by or against the foreign company.
Procedure and requirements for re-domiciliation to Singapore
The procedure for transfer of registration of a foreign company to Singapore is similar to the setting up of a subsidiary in Singapore.
Prior to registration foreign companies must ensure that they meet certain prescribed requirements. For instance, re-domiciliation to Singapore requires small companies to be of a certain minimum size.
To satisfy the minimum size requirements, a foreign company must fulfill any two of the following criteria for each of the prior financial years immediately preceding its application:
- Revenue for each financial year does not exceed US$ 7.4 million (S$10 million);
- Value of its total assets at the end of each financial year does not exceed US$ 7.4 million (S$10 million); and/or
- No more than 50 employees at the end of each financial year.
Upon registration in Singapore, the re-domiciled company must de-register in its place of incorporation and update its registration details in all its business correspondence within three months as prescribed under the Singapore Companies Act.
To complete the registration process, the foreign company must register all pre-existing charges created prior to the re-domiciliation of the foreign entity within 30 days with the Singapore Company’s Registrar. Further, companies must complete and deliver appropriate share certificates to all persons registered as holders of existing shares or debentures within 60 days.
The registration is subject to the registrar’s approval. In case of revocation or refusal of registration, the applicant company may appeal to the Ministry of Finance against the registrar’s decision, within 30 days after the date of the decision.
What companies must know before re-domiciling to Singapore
Foreign companies may decide to relocate to Singapore for regulatory, strategic or organizational reasons. However, before taking the decision to re-domicile to Singapore, companies must ensure that they have a definite goal for doing so, and are aware of the legal consequences and processes of re-domiciliation.
Companies operating in countries that do not have a re-domiciliation regime cannot transfer their registration to Singapore. The inward re-domiciliation regime is only open for companies operating in jurisdictions that have re- domiciliation regimes such as Australia, Canada, and New Zealand.
Further, re-domiciling to Singapore does not allow for outward re-domiciliation to another jurisdiction. This means that once a company transfers its registration to Singapore jurisdiction, it cannot undo it.
Re-domiciling may also have tax and stamp duty implications. Before taking the final call, it is important for foreign companies to understand how the transfer will be treated for tax and stamp duty purposes in the home jurisdiction and assess whether they are prepared for the consequences, in addition to the tax implications in Singapore.
This article was first published on ASEAN Briefing.
Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll, and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India, and ASEAN, we are your reliable partner for business expansion in this region and beyond.
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