Companies (Amendment) Act 2017 – Inward Re-Domiciliation Regime in Singapore
Companies (Amendment) Act 2017 – Inward Re-Domiciliation Regime in Singapore within first half of 2017
The Companies (Amendment) Act 2017 has introduced an inward re-domiciliation regime 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 will be implemented within the first half of 2017.
An inbound foreign corporate entity that is re-domiciled to Singapore will become a Singapore company and be required to comply with the Companies Act like any other Singapore company. Re-domiciliation will not affect the obligations, liabilities, properties or rights of the foreign corporate entities. It must meet certain prescribed requirements and their application will be subject to the Registrar’s approval. Eg. Foreign corporate entities must reserve its proposed name and rules on name reservations apply.
Proposed Requirements for Re-domiciliation
The foreign corporate entity will need to meet the minimum size requirement. The proposed approach is to use the criteria for “small company” and “small group” in the Thirteenth Schedule of the Singapore Companies Act (Cap. 50). At the company level, the criterion is that a company is a small company if it is a private company throughout the relevant financial year and satisfies any two of the following criteria:
- 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 other proposed requirements for transfer of registration to effect re-domiciliation are, among other things, the following:
- Laws of the Foreign Entity’s home jurisdiction permit re-domiciliation, and all relevant requirements of the home jurisdiction have been complied with
- Application for registration is not intended to defraud existing creditors of the Foreign Entity
- Foreign Entity must provide a solvency statement (or proof of a genuine intent to restructure for distressed foreign entities) and
- Foreign Entity must lodge with the Registrar certain documents as prescribed under the proposed section 354E of the Singapore Companies Act.
Registrar’s power to refuse or revoke registration
The Registrar has the discretion to register or not register the foreign corporate entity or to impose other conditions. The Registrar has the power to refuse or revoke registration of an FCE under certain circumstances (e.g. noncompliance with minimum requirements, intended company is likely to be used for an unlawful purpose or for purposes prejudicial to Singapore’s interests). However, the applicant may appeal to the Minister for Finance against the Registrar’s decision, within 30 days after the date of such decision made.
Information required in a transfer of registration application?
- a 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 transfer of registration
The re-domiciled company will become a Singapore company and has to comply with Singapore laws. Re-domiciliation does not:
(a) create a new legal entity;
(b) prejudice or affect the identity of the body corporate constituted by the foreign entity or its continuity as a body corporate;
(c) affect the obligations, liabilities, property rights or proceedings of the foreign corporate entity; and
(d) affect legal proceedings by or against the foreign corporate entity.
Deregistration in its place of incorporation
The foreign corporate entity will need to submit evidence that it has been deregistered in its place of incorporation within the prescribed time. If it is unable to do so, there is an application to the Registrar for an extension of time. The Registrar will consider all relevant circumstances before deciding whether to grant approval for an extension of time.
Post Registration Obligations:
- Any pre-existing charges on the entity must be registered within 30 days from the date of registration.
- Within 60 days from the date of registration, the foreign corporate entity must complete and have ready for delivery appropriate share certificates to all persons registered as holders of existing shares or debentures as at the date of registration
- Must submit to the registrar the proof of de-registration at its original jurisdiction within 60 days from the issue of the notice of transfer of registration. An appeal for an extension of time may be submitted to the registrar if the proof cannot be submitted within the prescribed time.
In the meantime, the foreign corporate entity should seek tax advice on the impact of re-domiciliation in its original country of incorporation. The Singapore Government is currently reviewing the tax framework for re-domiciled companies and will provide details in due course.
Through these updates to the Singapore regulatory framework for corporations, MOF and ACRA thus seek to ensure that Singapore’s corporate regulatory regime remains internationally competitive and robust by offering foreign companies the opportunity to seek re-domiciliation to Singapore in appropriate cases.
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