In the first place, the regulations in Singapore require that every business must be registered with the Accounting and Corporate Regulatory Authority (ACRA), which is the government body that regulates, among other things, business activity. Partnerships and sole proprietorships are registered under the Business Registration Act while bodies corporate are registered under the Companies Act. In terms of the Business Registration Act a business in Singapore is defined as “every form of trade, commerce, craftsmanship, calling, profession and any activity carried on for the purposes of gain “. This definition excludes any of the offices or employment or any of the exempted businesses or individuals specifically mentioned in the First Schedule which is a list of exempted individuals/entities.
Other than the exempted categories under section 4, every other person must register with the Accounting and Corporate Regulatory Authority (ACRA) before carrying on business. Because individuals and companies are legal entities in their own right, they may set up and own sole proprietorship but, because it does not meet these conditions, a sole proprietorship may not register another sole proprietorship. A foreign company cannot register a sole proprietorship unless it is itself registered under the provisions of the Companies Act. Carrying on a business implies some form of continuity in the business activity and failure to register is an offence that is punishable with a fine of up to $5,000 or imprisonment up to a maximum of 12 months or both. The concept of continuity is important because if you are making a one-off sale of your personal effects on eBay, there is no continuity and therefore no registration requirement.
Further, if a business does not register itself, it loses the right to enforce any of its rights under a contract unless it applies to the courts for relief or permission to enforce these rights. It is therefore in the interest of all businesses to register themselves. Another major advantage of registration is that if you choose the right business entity in which to operate your business, you can eliminate personal liability for all the liabilities of the business and the financial consequences. Sole proprietorships and partnerships have unlimited liability for all the debts of the business but, in the case of a Limited Liability Partnership or a limited company, you can your exposure for the debts of the business to the amount committed as your investment.
A foreign company planning to operate in Singapore is expected to hire the services of a professional such as a lawyer or an accountant to handle the application for registration. Self registration is not allowed. At least one director should be resident in Singapore either as a citizen of Singapore for a foreigner who has been granted a work permit. A private limited company must have a minimum of one shareholder and a maximum of 50 shareholders. Normally, registration is a speedy process and business can commence as soon as the registration is complete. However the process can take from two weeks to two months if the permission of other government departments is required. For instance, if a company wishes to operate a private school, a reference will be made to the Ministry of Education.