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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, 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

Financial companies fall under the regulations of the Finance Companies Act in SingaporeFinancial companies provide fixed and savings deposits to Singapore citizensFinancial companies also provide credit facilities to Singapore corporationsBanks 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

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 Actbusinesses 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?

Thefinancial industry is one of the most prolific economic sectors of the city-state. With more than 200 financial institutions under its supervision at the level of 2019, the MAS has launched various programs and schemes which have determined investors to operate in this field.

According to statistics:

  • – the total value of the banking sectors at the level of 2019 is 2 trillion US dollars;
  • – there are only 4 local banks operating in Singapore in 2019, while the rest of them re foreign, among which 99 are wholesale banks;
  • – the number of insurance companies operating in Singapore in 2019 is over 150;
  • – the number of financial advisory companies offering specialized services has also increased at more than 500 this year.

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.