The representative office is a non-commercial entity that can be created by foreign companies seeking to understand the Singapore market and/or behavior of potential clients. The main reason for setting up a liaison office is the future expansion of operations in the city-state.
If you are interested in opening a Singapore representative office, our local experts can guide you. We are at the service of foreign investors and clients interested in setting up operations in the city-state with various solutions.
The representative office in Singapore from a legal point of view
The Singapore liaison office is not a corporate business form, as it depends entirely on the parent company. Furthermore, such a structure cannot undertake any profit-related activity. Since it does not have the same status as a company, a representative office is not allowed to:
- conclude contracts;
- negotiate or applying for bank credits/loans;
- get involved in trading, leasing activities, etc.
It can only carry out activities related to promotion and marketing studies. On the other hand, if you are interested in setting up a company in Singapore, our local agents can advise on a more suitable legal form.
The parent company is liable for all obligations of the representative office because the latter is not a different legal entity from the former. From this point of view, the Singapore liaison office resembles the branch.
The parent firm’s name must be used when creating a Singapore representative office. ACRA will decide on a case-by-case basis if the name is identical to that of an existing local business.
An important aspect to consider is that representative offices are only permitted to function in Singapore for a maximum of 3 years after they are established. Throughout the 3-year period, the establishment will need to reapply for continuation.
Foreign companies can register three types of structures in Singapore:
- branch offices;
- representatives or liaison offices.
Unlike the Singapore branch, the representative office is a liaison office with no legal status. A representative office is not allowed to engage in any commercial activity in Singapore.
Our Singapore company formation agents can offer information about the differences between these three types of business forms.
Here is also an infographic on this topic:
Requirements for foreign companies opening representative offices in Singapore
Foreign companies wanting to establish representative offices in Singapore are also subject to certain conditions. Among these:
- the foreign company’s sales turnover must amount to over 250,000 S$;
- the foreign company must have been registered for at least three years;
- the representative office must have five employees at most in Singapore;
- the name of Singapore representative office must be the same as the parent company’s.
The liaison office must also have a registered address in Singapore. The representative office must be temporary and must re-register as a Singapore subsidiary or branch office within three years if the foreign company wants to continue its operation in the city. Our company formation agents in Singapore can assist with the registration of a representative office. We can also help if you want to open a Singapore company.
The registration of a representative office – a procedure explained by our experts who can help you open a company in Singapore
In order to register a representative office the following documents must be submitted with the Companies Registrar in Singapore:
- a copy of the foreign company’s Certificate of Incorporation;
- a copy of the last annual financial statement and audited accounts of the parent company;
- a notarized declaration to follow the Terms and Conditions governing Singapore representative offices.
Once approved, the authorities will release a Letter of Approval for the registration of the representative office in Singapore.
Steps following the registration of a Singapore liaison office
Usually, foreign companies will appeal to the services of company formation experts in Singapore in order to conduct both the registration procedure and all other requirements after. After the registration, the representative office will be allowed to open a bank account with a Singapore bank. If the representative office will also employ Singapore citizens or bring any staff member from the parent company, employment visas will be required for the foreign employees.
Hiring employees and appointing officers in a liaison office
Upon the opening of a representative office in Singapore, the foreign company may hire a few employees to serve as support staff, but it must name a representative from the head office to relocate to Singapore and manage the representative office’s operations.
Because a liaison office is prohibited from engaging in commercial operations, the number of employees should be acceptable and maintained to a minimum. A representative office may only hire a maximum of 5 staff, according to the regulations.
Any modifications to the representative office, including a change in representatives, address, registered activity, etc., must be communicated to the appropriate authorities at least one month before the modification becomes effective. Notification must be sent along with any name changes to the parent firm.
If you want to set up a company in Singapore under a different form, you can rely on our local specialists.
Activities undertaken by a liaison office in Singapore
As seen above, a Singapore representative office is not allowed to engage in any commercial activity. However, it is allowed to carry out some specific tasks, among which are:
- acquiring information about the Singapore market and its products;
- carry out marketing activities;
- participate in exhibitions, trade shows, fairs;
- acting like a contact point between the parent company and its local customers.
It should be noted that the parent company must appoint a representative for the Singapore liaison office. The representative must relocate to Singapore. Also, the liaison office must renew its application on a yearly basis.
After the three-year period in which the representative office is allowed to function, the parent company can re-register it as a subsidiary or branch office. In this case, it will be required to register with the Accounting and Corporate Regulatory Authority and with the tax authorities in the country.
No tax for liaison offices
Since the representative office in Singapore is not a legal entity itself, it is exempt from all filing requirements that apply to registered corporate bodies and incorporated businesses. In the city-state, a liaison office is not required to keep any statutory records or file tax reports.
The video below shows how to set up a liaison office in Singapore:
Foreign investments in Singapore
According to the latest data gathered by SingStat, the National Statistics Office in the city-state:
- the total FDI stock at the end of 2021 was 2.479 billion SGD;
- in 2020, the number of foreign companies operating in Singapore was 20,725, 2% higher than in the previous year;
- these businesses employed 881,500 workers, 2.8% higher than in 2019.
If you need guidance in setting up a liaison office or any other type of enterprise in Singapore, our agents can guide you.
You can contact our company registration agents in Singapore for details about the advantages of representative offices and about the procedure of switching to a branch or subsidiary. You can also contact us if you want to open a new company in Singapore.