Companies look for chances to broaden their horizons and investigate new areas in today’s dynamic global business environment. Re-domiciliation of a company is one such option, which entails moving the domicile or place of establishment of a company from one country to another. Singapore has become a popular choice for businesses wishing to re-domicile because of its pro-business climate and strong regulatory structure.

Inward re-domiciliation was made possible by the 2017 Amendment to the Singapore Companies Act, which was designed to stimulate the nation’s economy and establish Singapore as a globally competitive commercial hub. A foreign corporate entity must register with the Accounting and Corporate Regulatory Authority (“ACRA”), which has a number of rules and procedures that it must follow.

WHAT IS RE-DOMICILIATION?

Re-domiciliation to Singapore is the process by which a foreign corporate entity transfers its registration from its original jurisdiction to Singapore, effectively turning it into a Singapore company. The business is legally regarded as a local business and is subject to the same laws and guidelines outlined in the Companies Act as any other Singapore-incorporated business. With little impact on the company’s ongoing operations and identity, re-domiciliation is a method for foreign corporate bodies to establish as a Singapore corporation. Re-domiciliation is an alternative to opening a branch or subsidiary office of the parent company in Singapore without giving the foreign company a new legal identity.

ELIGIBILITY CRITERIA FOR RE-DOMICILE IN SINGAPORE

In order for a foreign corporate entity to successfully register for re-domiciliation in Singapore, it must adhere to a set of specific requirements. Firstly, the original jurisdiction of the foreign entity should permit the outward transfer of registration to Singapore. This is applicable to certain jurisdictions such as Australia, New Zealand, and Delaware in the United States. Once eligibility is established, the entity must satisfy certain minimum criteria for the transfer process. These include meeting at least two out of three size-related benchmarks which includes having total assets valued over SGD 10 million, annual revenues surpassing SGD 10 million, or maintaining a workforce of over 50 full-time employees. Moreover, the foreign entity needs to meet solvency criteria, confirming its ability to meet debt obligations.

Moreover, the company must not be in a position of indicating an inability to repay debts and should demonstrate the capacity to settle debts within the first year following the application for re-domiciliation. Special provisions apply if the entity plans to wind up within a year, requiring it to settle all debts within that timeframe. Compliance with legal requirements in the entity’s original jurisdiction and demonstrating good faith in the application process are also essential.

Importantly, the intention to re-domicile should not be aimed at defrauding existing creditors or shareholders. Various additional conditions, such as not being in liquidation, winding up or judicial management, further contribute to the comprehensive set of prerequisites for a successful re-domiciliation to Singapore.

SINGAPORE’S ATTRACTIVE PROPOSITION

Singapore’s allure as a business hub stems from its well-established financial infrastructure, political stability, skilled workforce, and business-friendly policies. The regulatory framework supporting re-domiciliation reinforces the country’s commitment to fostering a conducive environment for companies seeking to thrive.

The REGULATORY FRAMEWORK

• Companies Act: The Companies Act is at the core of Singapore’s regulatory framework for re-domiciliation. It provides the legal framework for companies looking to transfer their domicile to Singapore. Section 353B of the Act outlines the procedures and requirements for foreign companies seeking re-domiciliation in Singapore.
• Eligibility Criteria: To be eligible for re-domiciliation, a foreign company must meet specific criteria, including being solvent, having the approval of shareholders and complying with the laws of its original jurisdiction.
• Application Process: The re-domiciliation process involves submitting an application to the Accounting and Corporate Regulatory Authority (“ACRA”) of Singapore. The application should include a host of documents, such as the company’s constitution, financial statements and a statement of solvency.
• Tax Implications: Singapore’s tax regime is a key consideration for companies looking to re-domicile. To encourage re-domiciliation, Singapore offers tax exemptions for certain types of income, provided certain conditions are met.
• Regulatory Oversight: The Monetary Authority of Singapore (“MAS”) oversees financial institutions, while other sectors may have specific regulators. Companies must ensure compliance with sector-specific regulations relevant to their industry.
• Employee Considerations: Re-domiciliation can impact employees, including potential relocation. Companies must be prepared to address employee concerns and comply with relevant employment laws.
• Benefits of Re-Domiciliation to Singapore: Singapore’s strategic location offers easy access to fast-growing markets in Asia, making it an ideal base for companies eyeing regional expansion.
• Financial Hub: As a global financial hub, Singapore provides companies with access to a diverse range of financial services and capital markets.
• Tax Efficiency: Singapore’s attractive tax incentives and treaties can lead to substantial tax savings for re-domiciled companies.
• Ease of Doing Business: Singapore’s efficient bureaucracy, transparent regulations and robust intellectual property protection simplify business operations.

CONCLUSION

Singapore’s regulatory framework governing re-domiciliation underscores its commitment to supporting businesses in their growth endeavors. By providing a seamless and transparent process, along with benefits, Singapore has positioned itself as a preferred destination for companies seeking to re-domicile. As always, companies considering this strategic move should engage legal and financial advisors to navigate the regulatory landscape effectively and make informed decisions for a successful transition.

HOW WE CAN HELP?

1. Our team can assist by understanding business aspirations and goals and help with optimal business structure that aligns with long-term vision.
2. Our professionals can guide in re-domiciliation process from one jurisdiction to another by assisting in regulatory compliances of that particular country, paperwork, compliance requirements and regulatory processes.
3. Our team of professionals can navigate through visa processes of the employees transferring from one jurisdiction to another and help in complying with local regulations.