Singapore’s New Inward Re-domiciliation Regime
The Companies (Amendment) Act 2017 has introduced an inward re-domiciliation regime in Singapore, to allow foreign corporate entities to transfer their registration to Singapore instead of setting up subsidiaries (e.g. foreign corporate entities that may want to relocate their regional and worldwide headquarters to Singapore and still retain their corporate history and branding). The regime is expected to be implemented by year end.
Re-domiciliation is a process whereby a foreign corporate entity transfers its registration from its original jurisdiction to a new jurisdiction, whilst maintaining its same legal identity. There can be many reasons to re-domicile. Generally, the reasons for moving to a new environment are driven by the pro-business regulatory and more favorable tax regime, political and economic stability, proximity to Asian markets, robust and sophisticated financial industry and systems.
Application requirements
Foreign entities must be corporate bodies that can adapt their legal structure to the companies limited by shares structure under the Singapore Companies Act.
In addition, they must meet certain prescribed requirements and their application will be subject to the Registrar’s approval. The criterion adopted was of a small company, as prescribed in the Companies Act. The foreign company must satisfy any two of the following criteria in the two financial years immediately preceding its application:
- Revenue for each financial year does not exceed S$10 million
- Value of its total assets at the end of each financial year does not exceed S$10 million
- No more than 50 employees at the end of each financial year.
The foreign entity must submit the following documents:
- certified copy of the charter, statute, constitution or memorandum or articles or other instrument constituting or defining its constitution (if any), in its place of incorporation;
- the constitution by which the foreign corporate entity proposes to be registered;
- such other documents as may be prescribed;
- and the prescribed fee.
Effects of re-domiciliation:
The re-domiciled company will become a Singapore company and has to comply with Singapore laws. It does not create a new legal entity, nor prejudice or affect the identity of the body corporate constituted by the foreign entity or its continuity. It also does not affect the obligations, liabilities, property rights or proceedings of the foreign corporate entity nor affect legal proceedings by or against the foreign corporate entity.
The inward re-domiciliation regime is still being finalized, and the requirements will be clearer once the legislation is fully implemented. Singapore allows only inward re-domiciliation without the option to reverse the decision; hence careful consideration must be made in case it does not meet the original purpose of the change.
Currently, Australia, Canada, New Zealand, Switzerland and Labuan (Malaysia) are some of the jurisdictions where re-domiciliation regime already exists. With the introduction of this regime, Singapore’s position as a competitive business hub is further strengthened. Foreign entities will have greater flexibility in organizing their business structures, can now re-domicile to the Asian region.
Source: ACRA website www.acra.gov.sg
For more information, you may contact Ms. Su Lee Chan, General Manager of Zetland Singapore at suleec@zetland.biz or +65 65572071
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