article/Subsidiary Company

Incorporation

Singapore Subsidiary Company

A subsidiary company is a private limited company incorporated in Singapore that is partly or completely owned by the parent company, which usually holds a controlling interest (more than 50%) in the subsidiary company. A subsidiary structure is also a common form of incorporation in Singapore.

Packages & Fees

Characteristics

The subsidiary-parent company structure is a popular choice for foreign companies foraying into Singapore because subsidiaries are separate legal entities, which limit the liability and legal risk of the parent company. A subsidiary is partly or wholly owned by a parent company, which can either be a local or foreign company. In Singapore, 100% foreign ownership in a subsidiary company is permitted.

A subsidiary company is treated as a local tax-resident here, thereby allowing it to enjoy certain tax benefits and incentives offered by the authorities. It has limited liability, which means it can sue or be sued, and own property in its name. It also has its own corporate bank accounts and operating capital.

A Singapore subsidiary company is suitable for local or foreign companies that wish to expand their operations in Singapore.

Compliance Requirements

Parent Name Partly or wholly owned by a parent company, which can either be a local or foreign company.
Company Name A Company Name (in English) which can be different from its parent company, subject to the approval of the Registrar of Companies. It cannot, however, be identical or similar to another business name or existing trademark, or contain any offensive or vulgar words.
Paid-up Capital An initial paid-up capital of at least SGD1. Additional capital can be injected anytime after incorporation.
Fiscal Year A fiscal year period must be the same as that of the parent company.
Director At least one Director who is an ordinarily resident in Singapore aged 18 years and above. If a foreigner wishes to act as the local director, the person can apply for a valid work pass.

Registered Address registered office address in Singapore and cannot be a PO Box.
Secretary The subsidiary must appoint one Company Secretary within six months of the date of its incorporation.
Auditor Unless the company is a small entity , it must appoint an auditor within 3 months from the date of its incorporation.
CPF The company needs to make mandatory Central Provident Fund (CPF) contributions to local resident employees who earn more than SGD50 per month.

Pros and Cons of a Private Limited Company

A subsidiary company with one or more shareholders with at least 10% shares is entitled to prevailing tax benefits. Newly set-up companies in Singapore do not have to pay any tax on the first SGD100,000 of chargeable income for the first three consecutive years.
It has a separate legal entity, thus protecting the parent company from liabilities and legal risks.
It allows the parent company to raise additional capital by offering stocks pertaining to the subsidiary company.
As a subsidiary, the company is able to expand the brand identity of its parent company in Singapore.
The paid-up capital of the subsidiary can be in the same currency as its parent company, thus simplifying accounting procedures.
Singapore allows free repatriation of entire profits and capital of the subsidiary company.

The parent company may not have control of the subsidiary's cash flow, unless it is fully owned by the parent company.
The parent company may have to pay for the subsidiary's debts and liabilities even if it has no legal obligation to do so to protect its name and reputation.
Control and decision-making may be complicated if a subsidiary is partially owned by another company.

For more information, please visit our Singapore Statutory Compliance Requirements page and Incorporation Details page. Once the subsidiary company is incorporated, annual filings to ACRA and IRAS is required. Please visit our Annual Filings page for more information.

Note

VOPlus can advise you on the most suitable type of business entity for your business and help you convert a private limited company in Singapore promptly. Contact us today for a consultation!