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A company is deemed as a subsidiary if 51% of its shares are owned by another company, either in Singapore or abroad. In most cases, shareholders of subsidiaries are foreign entities. A subsidiary and its parent company are separate legal entities.
Incorporating a subsidiary in Singapore can be accomplished online through the ACRA’s BizFile+ portal. Read on as we will be enumerating all the required documents for this process.
Singapore authorities are fundamentally eager to identify the decision-makers behind every company. A company is evidently a legal person, but it cannot decide for its own. Being a legal person, a company does not have its own mind or thoughts. The decision making of the company essentially happens through directors and shareholders of the company.
When the shareholding of a company is being held by a foreign entity, then its requirements will become more prominent. Questions on who the decision-makers of a parent company are will then arise. Consequently, their details must be recorded to ACRA either in the form of Ultimate Beneficial Owner (UBO) or Register of Controllers. Through this compliance, the Singapore government will become aware of the decision-making structure of a company.
According to the general rule, people who constitute at least 75% of the decision-making in a company need to be identified.
To understand why there is such a requirement, lets take an example. Lets say, a subsidiary company is being held by a parent company that belongs to another jurisdiction. Chances are, its shareholding structure may be significantly complex. Needless to say, it is possible that a subsidiary can create an extremely complex corporate structure in which the identity of its true owners remains hidden. This instance is exactly what Singapore authorities are trying to deal with.
As much as our experience as a corporate services provider (CSP) is concerned, the majority of subsidiaries have not adopted a complex structure like that. What we have dealt with so far are subsidiaries getting incorporated in Singapore and being held by a foreign parent company, which is typically owned by two or three individuals who are carrying out normal business operations within their jurisdictions.
But occasionally we come across situations, where a company in Singapore will be owned by a company in BVI. And the BVI company is in turn owned by 3 separate companies in Panama, Dubai and Mauritius. So in these cases correct identification of UBO is necessary.
UBO refers to a person who makes the call for a company. This is the person who ultimately have control on the affairs of the company. This person maybe shareholder or a Director of the company. Or such a person may have contractual rights to the decision making of the company. So when we incorporate a company, which has complex corporate shareholding, we need to identify all the UBO’s (Which hold together 75% ownership of the company + also those who has decision making authority on the company).
Now having understood this concept of UBO, it is time to take a look at what documents will be required when registering a subsidiary in Singapore.
The documents and information that are required to register a subsidiary are:
The required documents for subsidiary incorporation in Singapore must be submitted in the following forms:
New Company Setup
New Company Setup
New Branch Setup
Singapore Bank Account