The Essential Guide on How to Open Subsidiary Company Successfully

Expanding your business into Singapore is a strategic move that promises growth, stability, and access to one of the most business-friendly environments in the world. Opening a subsidiary company can be your key to unlocking these opportunities. In this guide, we’ll walk you through everything you need to know to set up a subsidiary company in Singapore, ensuring you make informed decisions every step of the way.

What is a Subsidiary Company?

Definition and Main Features

• A subsidiary company is a company owned by another company, known as the parent or holding company.
• The parent company holds a controlling interest in the subsidiary, owning or controlling more than half of its stocks.
• A subsidiary company is a separate legal entity from its parent company, with its own liability and assets.
• The parent company's liability is limited to the amount of capital invested in the subsidiary, emphasizing the separate legal identity of the subsidiary while clarifying the extent of the parent company's obligations.

A subsidiary company is a distinct legal entity owned by a parent company, often used by foreign businesses to expand into new markets. Unlike a branch office, a subsidiary operates independently, with its own assets, liabilities, and legal obligations. This separation offers significant advantages, including limited liability for the parent company and the ability to establish a unique identity in a new region.

In Singapore, a subsidiary is typically registered as a private limited company, making it a popular choice for businesses aiming to grow in Asia’s bustling economic hub.

Differences from a Private Limited Company

• A Private Limited Company (Pte Ltd) is a type of business structure with less than 50 shareholders.
• A subsidiary company is a type of private limited company incorporated in Singapore, where the parent company from overseas is a shareholder.
• A subsidiary company is a private limited company with a parent company from overseas.

Why Choose Singapore for Your Subsidiary?

Singapore is more than just a dot on the map—it’s a powerhouse for global business. Strategically located at the crossroads of Asia, it offers unparalleled access to major markets. Combine this with a transparent regulatory system, robust infrastructure, and a business-friendly tax regime, and you have the perfect launchpad for your subsidiary.

One of the most appealing aspects of setting up a subsidiary in Singapore is the wealth of tax incentives and exemptions available. The corporate income tax rate in Singapore is 17%, and various tax incentives and exemptions can further reduce the overall tax burden. Subsidiaries enjoy benefits such as reduced corporate tax rates, bilateral tax treaties, and exemptions on foreign-sourced income. These advantages not only enhance profitability but also make Singapore an attractive choice for international expansion.

Expansion and Growth Opportunities

• Foreign companies can establish branch offices, representative offices, or create new businesses in Singapore.
• Establishing a subsidiary is a common option for foreign companies due to Singapore’s favorable business legislation.
• Singapore welcomes foreign investors and has a business-friendly environment.

Access to New Markets and Customers

• A subsidiary company can have third-party minority shareholders, including individuals.
• The company is incorporated as an autonomous entity that exists separately from the parent company.
• Any liabilities arising from the subsidiary’s operations cannot be transferred to the parent company.

Requirements for Registering a Subsidiary Company

Registering a subsidiary company in Singapore requires careful planning and compliance with the relevant laws and regulations. The following are the key requirements for registering a subsidiary company in Singapore:

Documents and Requirements

To register a subsidiary company in Singapore, you will need to prepare and submit several essential documents and information. These include:

• A unique and approved company name: Ensure that the name is not already in use and meets ACRA’s naming guidelines.
• A registered office address in Singapore: This must be a physical address where official correspondence can be sent.
• A minimum of one director who is ordinarily resident in Singapore: This can be a Singapore citizen, permanent resident, or an Employment Pass holder.
• A minimum of one shareholder: This can be an individual or a corporate entity, including the parent company.
• A company secretary who is a resident of Singapore: The company secretary must be appointed within six months of incorporation.
• A paid-up capital of at least S$1: This is the minimum capital required to register a subsidiary.
• A business profile: This outlines the company’s activities and objectives.
• A copy of the parent company’s certificate of incorporation and business profile: These documents verify the parent company’s existence and legitimacy.
• A copy of the parent company’s financial statements and auditor’s report (if applicable): These provide insight into the parent company’s financial health.

Know Your Customer (KYC) Processes

As part of the registration process, the Accounting and Corporate Regulatory Authority (ACRA) and the corporate service provider will conduct Know Your Customer (KYC) checks on the parent company and its directors and shareholders. This is to ensure that the company is compliant with anti-money laundering and terrorist financing regulations.

The KYC process will require the provision of personal and corporate identification documents, such as passports, national ID cards, and certificates of incorporation. The corporate service provider will also conduct due diligence on the parent company and its directors and shareholders to ensure that they are not involved in any illicit activities.

How to Open a Subsidiary Company in Singapore

Setting up a subsidiary company in Singapore is a streamlined process when you have expert guidance. By understanding the requirements and leveraging the right resources, you can ensure a hassle-free incorporation journey. Setting up corporate bank accounts is a crucial step in the incorporation process, and businesses should be aware of the legal requirements and fees involved.

Step 1: Engage a Corporate Services Provider

Navigating the legal and compliance landscape of Singapore can be overwhelming, especially for foreign companies. Engaging a professional corporate services provider, such as CFO Group Integrated Services, ensures that every detail is managed seamlessly. From understanding the nuances of the process to ensuring compliance with the Accounting and Corporate Regulatory Authority (ACRA), our team provides end-to-end support.

Step 2: Compile the Necessary Documents

Incorporation begins with gathering essential documents, including:

• A company constitution that defines the subsidiary’s structure and operations.
• A valid company address in Singapore.
• A list of shareholders and directors.

These documents form the backbone of your application. Additionally, meeting Singapore’s “Know Your Customer” (KYC) requirements is vital. Banks and regulatory bodies require detailed information to assess risks, such as potential money laundering or terrorism financing. Your corporate services provider will guide you in preparing accurate and compliant submissions.

Step 3: Submit Your Application

Once your documents are ready, your appointed filing agent will submit the incorporation application to ACRA. The application must include supporting materials and adhere to Singapore’s regulatory standards. This step ensures your subsidiary aligns with the country’s legal framework.

Step 4: Pay Registration Fees

ACRA requires a registration fee, the amount of which depends on factors such as the company’s share capital and the number of shareholders and directors. Ensuring timely and accurate fee payment is critical to avoid delays in the approval process.

Step 5: Receive Approval and Incorporation

Upon submission, ACRA reviews your application, typically within one to three business days. Once approved, you’ll receive a Certificate of Incorporation and a Unique Entity Number (UEN). These identifiers officially establish your subsidiary company, enabling you to begin operations in Singapore.

With CFO Group Integrated Services, every step of this process is handled with precision and care, ensuring you meet all regulatory obligations while focusing on your business goals.

Ready to Establish Your Subsidiary? Take the first step toward expanding your business in Singapore. Let CFO Group Integrated Services simplify the process and help you unlock new opportunities.

Contact us today to get started and ensure your business is set up for success.

Engage a Professional Corporate Services Provider

It is highly recommended that foreign companies engage a professional corporate services provider to assist with the registration process. A corporate services provider can provide guidance on the registration requirements, prepare the necessary documents, and facilitate the registration process with ACRA.

A corporate services provider can also provide ongoing support and compliance services to ensure that the subsidiary company remains compliant with Singapore laws and regulations. This includes assistance with annual filings, tax obligations, and other statutory requirements.

Submit Your Application

Once all the necessary documents and information have been prepared, the application can be submitted to ACRA for approval. The registration process typically takes one to three days, and the company will receive a Certificate of Incorporation and a Unique Entity Number (UEN) upon approval.

It is essential to note that the registration process may vary depending on the specific requirements of the parent company and the subsidiary company. It is recommended that foreign companies seek professional advice to ensure that they comply with all the necessary requirements and regulations. Engaging a corporate services provider can streamline this process, ensuring that all legal and regulatory obligations are met efficiently.

Benefits of Setting Up a Subsidiary Company

Tax Incentives and Exemptions

• Subsidiary companies in Singapore get tax benefits under the following tax exemptions and incentives.
• These tax incentives help businesses to grow by lowering their tax burden and increasing their profitability.
• Singapore’s network of bilateral tax treaties and tax exemptions for foreign-sourced income make it a lucrative avenue for international investors.

Strategic Location and Business Environment

• Singapore’s central location within Asia makes it easier for businesses to connect with major regional markets.
• Singapore has a robust legal framework supported by business-friendly policies which provides a conducive environment for business operations.
• The country’s transparent regulatory system, efficient infrastructure, and stable political climate together make it an appealing business hub in Asia.

Separate from Parent Company

• The parent company wants to venture into a new business in a different industry and perhaps even a different branding.
• Forming a subsidiary will result in an independent legal and financial entity that separates them from their parent company.
• This allows the parent company to have a separate identity and branding. The parent company's liabilities are limited to the capital invested in the subsidiary, and the subsidiary's assets can be liquidated to cover the debts of the parent company in case of insolvency.

It provides a centralized platform for employee data, ensuring secure management of sensitive employee data and making it easier to manage employee information.

Post-Incorporation Requirements

After incorporation, the real work begins. You’ll need to open a corporate bank account, appoint key personnel, and ensure ongoing compliance with Singapore’s statutory obligations, such as filing annual returns and holding AGMs. A Singapore company must comply with these statutory obligations to maintain its operational efficiency. Staying compliant is crucial to maintaining your subsidiary’s reputation and operational efficiency.

Tax obligations are another essential consideration. Subsidiary companies in Singapore benefit from a flat corporate tax rate of 17%, alongside various exemptions and incentives that reduce the overall tax burden. Partnering with a trusted service provider ensures you stay on top of these obligations while maximizing available benefits.

Tax Obligations and Compliance

Understand Your Tax Obligations

• Singapore subsidiary companies are considered tax residents.
• Hence, they can obtain tax benefits that are usually provided.
• Subsidiary firms are taxed at the prevailing corporate tax rate of 17%.

Singapore Tax Rates

• A company is taxed at a flat rate on its chargeable income regardless of whether it is a local or foreign company.

Annual Filing Requirements

• All locally incorporated companies are required to hold an Annual General Meeting (AGM) and file annual returns under S175, S197, and S201 of the Companies Act.
• The Companies Act does not prescribe the minimum level of qualification for the person preparing the accounts.

Overcoming Common Challenges

Navigating Legal and Compliance Issues

• To navigate the complexities of the legal and regulatory landscape of Singapore, you need to ensure that there is a proper governance structure in place in the subsidiary.
• This includes ensuring compliance with all relevant laws and regulations.

Managing Cultural and Operational Differences

• If you want your Singapore subsidiary company to effectively integrate into the local market, you must ensure that cultural and operational differences are being efficiently managed.
• Subsidiaries in Singapore can achieve this in the following ways.

Take the Next Step with CFO Group Integrated Services

Let me ask you this—what’s holding you back from claiming your slice of Singapore’s booming business market? Maybe it’s the endless paperwork, the maze of regulations, or simply not knowing where to start. Whatever it is, we’re here to eliminate those obstacles and fast-track your success.

At CFO Group Integrated Services, we don’t just help you register a company—we help you build an empire. Our team of experts specializes in cutting through the noise, handling every detail from incorporation to compliance so you can focus on scaling your business. No headaches, no guesswork—just results.

Here’s the real deal:

• We simplify every step of the process, making registration faster and stress-free.
• We ensure full compliance, so you can operate with confidence.
• And most importantly, we help you hit the ground running in one of the world’s most dynamic business hubs.

Imagine this: In just a few days, your subsidiary is up and running, complete with its own Unique Entity Number (UEN) and ready to dominate the Singapore market. No roadblocks, no delays—just pure momentum.

This is your moment. The competition isn’t slowing down, and neither should you.

Click here, book your consultation, and let’s make your vision a reality. Because waiting around won’t get you ahead—action will.