Singapore Company Incorporation Pricing Guide & Cost (2018 Update)
If you are new to Singapore business ecosystem and have been researching about setting up Singapore companies, chances are you have come across numerous details on what’s needed and a wide variety of price range. Here, we aim to break down all details, procedures, and costs (hidden) for your reference.
Minimum requirement for setting up Singapore Companies
Before you setup a company (private limited) in Singapore, you have to take note of the minimum requirements – Namely the requirements for minimum one director, one secretary, one shareholder, one registered address and minimum paid-up capital of $1. We have a detailed guide here including more details such as taxes, foreigners considerations and documents required but we focus on the five here:
- Appointment of Directors - For your Singapore company setup, you will need a minimum of one resident director, who is either a local citizen, a Singapore permanent resident, or a person who has a valid employment pass. If you are a foreign firm without any local people to appoint as resident director, you could engage a nominee, or appoint your own Singapore-hired staff as your firm’s Director should that fit your needs.
- Company Secretary - As specified under Section 171 of the Singapore Companies Act, you will need to appoint a qualified company secretary within 6 months of your company formation. If your firm has only a sole director or shareholder, then you will need to appoint a separate natural person to be the firm’s company secretary.
- Shareholders - Singapore private limited companies may have a minimum of 1 and a maximum of 50 shareholders. Shareholders can be an individual, another legal entity such as your BVI company or a trust. 100% foreign shareholding is allowed for Singapore private limited companies.
- Registered Address - A local Singapore address is needed as the company’s registered address.
- Paid-up Capital - The minimum paid-up or share capital is $1, meaning you need minimal investment to start up a company in Singapore. You always have the option to start with $1, and increase it any time after incorporation.
Detailed breakdown of secretarial costs by types
Now we are clear that a corporate secretary is required for your company. If you know a contact who has the professional knowledge to perform all relevant duties of secretary for your business, you may appoint him or her with consent. For the majority of us, we might not have the option and have to engage a professional firm.
In aggregate, there are 3 main factors driving costs of professional service firms, namely - Compliance, Servicing and Administration:
1. Ongoing compliance costs for secretarial firms
The Companies Act stipulate that corporate secretaries do up pre-screening for Directors and Shareholders before your firm is setup. Every year, depending on the company’s risk profile, your corporate secretary is responsible for performing regular ongoing monitoring on the company’s key personnel’s to help prevent money laundering and combat terrorist financing. For instance, a Reuters world check module would cost anywhere from $8,000 to $10,000+ per annum.
To ensure professionalism of secretarial firms in Singapore, ACRA requires firms to be registered as “Registered Filing Agents”, where they have to adhere to statutory guidelines and be re-qualified every two years. Professional firms would need to pay for licensing that costs $200 per annum, be externally audited of their KYC (i.e. client onboarding) processes, and attend regular exams to ensure compliance.
With a typical small to medium sized firm having 3-5 directors or shareholders, you could reasonably assess the compliance cost to be about $200 per annum per company inclusive of licensing and professional exams.
2. Cost of professional knowledge or servicing
Similar to other professionals like doctors, lawyers or dentists, your fees for corporate secretaries may vary depending on your needs (e.g. advisory of best corporate structure to save tax, regular change of shareholding structure, among others) and qualification of the service provider.
In Singapore, corporate secretaries may be chartered with the SAICSA after fulfilling required years of experience and taking professional exams. The median salary of a mid-level corporate secretary possessing enough knowledge to handle annual compliance is around $3,500 per month. For senior level, chartered secretaries salaries would hit $5,000 - $7,000 a monthly depending on size of firm. If we assume each secretary could serve 100 clients (without forgetting your filing deadline!) a year, it would be reasonable to estimate the ‘cost’ of professional knowledge adds up to about $500 per annum.
3. Administrative costs
This is most straight forward. These are typically disbursement costs of filing annual returns, EGM, special resolutions, change of Directors or shareholders, etc, that would cost anything from $50-200. Other usual services provided by corporate secretaries including provision of company chop and seal, which would typically range from $100-200.
What range of prices should you expect in Singapore?
By now, you should have a decent idea what adds up to secretarial costs! Taking into account of the minimal necessary costs of a proper secretarial firm that does the job, you could expect breakeven cost to range from $600-700 per company per annum.
If you have shopped around enough, we are sure you have seen a good range of prices, from as low as $300 to as high as $3,000. (Trust us we know how much our competitors charge!) There are multi-national, well specialised firms like a multi-national legal firm incorporating a Singapore subsidiary for a US-listed company that could justify the higher end of the range. On the other hand of the spectrum, there are numerous small but less organized firms out there which are cutting corners on service delivery, customer experience, or even outsource your work to unfamiliar jurisdiction like Malaysia or India. Ultimately, it is a decision on what you are after, equally important how comfortable you are with the firm you engage.
Balancing reliability and costs to you as a customer, we would recommend a range of $800-1,000 being a good start for firms looking for good service and sound advice. This range sits just slightly above the breakeven cost of $700 – On one hand it doesn’t break the bank, on the other hand it is better assurance of the quality of work delivered.
Do-It-Yourself or Engage a Professional Firm?
Finally - Is it worth to setup your company with a professional firm? We have business owner friends who ask this honest question.
Our recommendation is consistent – If you are a first-time business owner dipping your toes into the business world, you shall play more cautious and try to DIY on everything. For most others, this is probably not good advice.
While engaging a professional firm would cost you $800-1,000 per annum, you are better off engaging one as the time-cost saved, peace of mind of meeting statutory deadlines (In Singapore, a late filing of annual returns would cost you fines ranging from $200-500 depending on how long you are late for), and having professional help of drafting corporate resolutions far outweigh the cost.