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Opening a Financial Company in Singapore

Opening a Financial Company in Singapore

The financial industry is one of the most prolific economic sectors of Singapore, especially when considering the latest development in the fintech sectors which has led to the opening of a large number of businesses in this sub-sector.

Those who want to open financial companies in Singapore need to comply with various laws, depending on the field they want to operate in. Below, our Singapore company formation specialists explain how to set up a financial company here. We can also assist those who want to open a company in Singapore and operate in the financial industry.

Legislation on financial companies in Singapore

The Monetary Authority of Singapore or MAS is the main authority providing for the licenses which need to be obtained when opening a financial company, while the Ministry for Finance provides for the legal framework governing the activities of companies operating in this industry.

Depending on the type of financial company one will open in Singapore in 2024, the following laws must be respected:

  1. the Monetary Authority of Singapore Act which provides for the opening of banks in Singapore;
  2. the Banking Law which also provides for the regulations to be respected by banking institutions;
  3. the Securities and Future Act, the Trust Companies Act and the Financial Advisers Act which cover the opening of businesses operating on the capital markets in the city-state;
  4. the Insurance Act which covers the activities and licensing requirements for insurance and reinsurance companies;
  5. the Payment Services Act and the Money-Charging and Remittance Act which provide for the opening of payment institutions;
  6. the Anti-Money Laundering Act which covers the activities of all companies operating in the financial industry in Singapore.

The above-mentioned laws provide for the share capital requirements and other requisites related to starting a Singapore financial business.

If you want to open a company in Singapore and need information on the rules you need to respect, our local consultants can advise you.

Financial companies in Singapore in 2024

Financial companies fall under the regulations of the Finance Companies Act in Singapore. Financial companies provide fixed and savings deposits to Singapore citizens. Financial companies also provide credit facilities to Singapore corporations. Banks and other types of financial companies in Singapore are not allowed to deal in foreign currencies or gold, nor are they allowed to purchase foreign currencies under the forms of stocks, shares or debt securities. Financial institutions may expand their activities only if a request with the Monetary Authority in Singapore (MAS).

Types of financial companies in Singapore

There are several types of financial companies which can be established in Singapore, among which banking institutions, insurance companies, brokerage firms, investment funds and fintech companies, among which cryptocurrency businesses are quite popular in Singapore.

When it comes to the licenses for opening financial companies, these can be granted as it follows:

  • for local banks, wholesale banks, representative offices of foreign banks, branch offices, finance companies and financial holding companies;
  • for exempt trust companies, for corporate finance advisers for fund management companies and licensed trust companies;
  • for licensed and exempt financial advisers, as well as for exempt persons offering financial advisory services;
  • for direct life and captive insurers and reinsurers and for captive general and life insurers.

Cryptocurrency and other fintech companies can also obtain various special licenses for operating in the financial industry in Singapore.

How to register a financial company in Singapore in 2024

The company registration procedure of a financial company in Singapore will follow the requirements of the Company Law which provides for the business to have one or more shareholders, at least one director and a company secretary. Also, the company must be registered with ACRA before starting the licensing procedure.

It is important to know that the share capital requirements when opening a financial company in Singapore are given by the MAS. The requisites depend on the type of financial institutions opened and the services they offer.

With a considerable experience in the company formation field in Singapore, our agents can help both local and foreign investors to set up financial businesses here. We can also assist those who want to set up fintech companies in Singapore.

Licensing options for Singapore financial companies

According to the Finance Companies Act, businesses intending to provide financial services in Singapore are required to apply for a single license:

  • a capital markets services license,
  • a financial advisers license.

The activities regulated by the two types of financial services licenses include asset management, investment advisory services and property fund management in Singapore. However, before applying for one of the two types of licenses, one is advised to request the services of company formation consultants in Singapore.

The video below presents the main steps to follow if you want to open a company in Singapore as a financial company in Singapore:

The capital markets license for Singapore financial companies

According to the Futures Act in Singapore, the capital markets license is employed when providing the following financial services:

The capital markets services license is only granted to Singapore corporations by the Monetary Authority.

The financial advisers license in Singapore

The financial advisers license falls under the regulations of the Financial Advisers Act in Singapore. The following services are covered by the financial advisers license:

  • offering counsel on investment products such as securities, foreign exchange, life insurance policies,
  • collective investment schemes.

The financial advisers license does not cover general insurances, bank deposits and loans or mortgages.

Why start a financial company in Singapore in 2024?

Banking is one of the most prolific sectors of the financial industry in Singapore in 2024. This year, the net interest income for this sector is expected to reach USD 25.79 billion. Most of the banks operating in Singapore are traditional, and they are expected to have a revenue of USD 21.29 billion in 2024. Even so, many of these banks are oriented towards increasing their digital services portfolios.

For the near future, the following projections are available:

  • by 2029, the net interest income is expected to register an annual growth of 3.1%, with a total market volume of USD 30.05 billion;
  • when compared to other countries, China is expected to have the highest net income in the world.

Singapore banks, merchant banks and insurance companies are not required to apply for these two types of financial licenses as they fall under different legislations. For complete information about how to open a company in Singapore please contact our specialists.