A foreign company looking to do business in Singapore will usually find itself choosing between a Singapore subsidiary (or related) private limited company, or a Singapore branch office. While we usually extol the many benefits of setting up a private limited company, in this article we take a quick look at the features and requirements of a Branch Office.
Features of a Branch Office:
- Entity Type – A Singapore branch office is not considered a separate legal entity, but as an extension of the foreign (“parent”) company. In fact, the name of the Branch Office must be the same as its parent company. The company classification given to a Branch Office is a “Foreign Company Registered in Singapore”. Hence, the foreign parent company is liable for all the debts and liabilities of its Singapore Branch office.
The Directors of the parent company are reflected in ACRA’s public records, but not the shareholders’ – perhaps because many parent companies are listed, with too many shareholders to record!
All the activities and decisions of the Singapore Branch Office are overseen by the parent company’s directors and shareholders, but there is a requirement for a local Authorized Representative to be on board to liaise with the Singapore government and manage the day-to-operations of the branch office in Singapore, see below:
- Authorised Representative – A Singapore Branch Office is required to appoint at least one authorized representative who is a natural person and “ordinarily resident in Singapore” (i.e. the individual’s usual place of residence is in Singapore). Eligible candidates for the role of Authorised Representative include: Singapore Citizens, Singapore Permanent Residents, and foreigners holding a valid employment pass (exclusively employed by the Branch Office).
- Constitution of the Company and Governing Law – The shareholders and its activities are directed by the Constitution (or Articles of Incorporation) of the foreign company. There is no separate (or locally relevant, so to speak) Constitution for the Singapore Branch Office.
Having said this, the Branch Office’s activities in Singapore must comply with, and are governed by, Singapore laws.
- Tax Status – Broadly speaking, a Singapore Branch Office is deemed a “non-tax resident” in Singapore, except where the Management and Control of the Singapore business is exercised in Singapore. (In this case, the portion of revenues derived – or ‘sourced from’ – Singapore will be taxable in Singapore). The Branch Office is required to have its accounts audited, as well as the account of the parent company, and to present these at the AGM of the parent company, followed by Annual Return filing of the same, with ACRA in Singapore.
- Registered Address – A Singapore Branch Office must have its registered office address in Singapore. It is a mandatory requirement to state the Branch Office’s name and place of incorporation on all business correspondence, as well as the address of its main place of business overseas.
To compare the benefits of setting up a Singapore Branch Office versus a Singapore private limited company, check out our Singapore company setup comparison chart.