Singapore Expats

Quick Advice - DP Holder Being A Shareholder.....

Discuss your views about Singapore business & economy, current policies & issues, starting a business in Singapore.
Post Reply
User avatar
Saint
Director
Director
Posts: 3505
Joined: Thu, 16 Jun 2005 5:19 pm
Location: The Juban Stand, Boat Quay
Contact:

Quick Advice - DP Holder Being A Shareholder.....

Post by Saint » Thu, 29 Mar 2012 4:48 pm

If a company is setup with 4 Shareholders, 2 being PR, 1 Local and 1 DP holder. For the DP holder (Shareholder) to actively work for the Company the DP still needs to apply for LOC or EP?

Being some smart arse says read through the sticky thread, I did and no definite answer.

User avatar
sundaymorningstaple
Moderator
Moderator
Posts: 40376
Joined: Thu, 11 Nov 2004 1:26 pm
Answers: 21
Location: Retired on the Little Red Dot

Post by sundaymorningstaple » Thu, 29 Mar 2012 5:19 pm

I'd say either one, depending on ones qualifications. The odds of getting the LoC are a lot greater than getting the EP though. With the EP, you will be thrown into the current "Policies" and tightening criteria wars, while if you are here on a DP then you're limited to the duration of your tethered sponsor's EP. This obviously isn't you we're talking about......
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

User avatar
Saint
Director
Director
Posts: 3505
Joined: Thu, 16 Jun 2005 5:19 pm
Location: The Juban Stand, Boat Quay
Contact:

Post by Saint » Thu, 29 Mar 2012 5:38 pm

I'm one of the PRs! I'm just trying to find out the legality of a DP holder who is a shareholder working for the Company. I was having this discusion with someone and they thought a Shareholder could legally work by not drawing a salary but just dividends.

The stupid situation is we are using the DP holder as the Shareholder as the her hubby holds a PEP so can't be a Shareholder. However the PEP holder can legally work for the Company but the DP shareholder can't!?!

User avatar
sundaymorningstaple
Moderator
Moderator
Posts: 40376
Joined: Thu, 11 Nov 2004 1:26 pm
Answers: 21
Location: Retired on the Little Red Dot

Post by sundaymorningstaple » Thu, 29 Mar 2012 5:48 pm

Either/Or. But it would be easier to go for the LoC because an LoC holder does not have to "qualify" for the LoC like an EP holder would.
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

User avatar
Strong Eagle
Moderator
Moderator
Posts: 11619
Joined: Sat, 10 Jul 2004 12:13 am
Answers: 9
Location: Off The Red Dot
Contact:

Post by Strong Eagle » Thu, 29 Mar 2012 7:46 pm

Saint wrote:I'm one of the PRs! I'm just trying to find out the legality of a DP holder who is a shareholder working for the Company. I was having this discusion with someone and they thought a Shareholder could legally work by not drawing a salary but just dividends.

The stupid situation is we are using the DP holder as the Shareholder as the her hubby holds a PEP so can't be a Shareholder. However the PEP holder can legally work for the Company but the DP shareholder can't!?!
Not correct. First, a shareholder is a completely separate entity from employees or directors of a company. Shareholders can receive dividends regardless of whether they are employed by the company... in fact, the only criteria is that for a given class of stock every shareholder must receive dividends in proportion to ownership.

Second, I am aware of no rule that says a PEP cannot hold shares in a company. Again, this is not being employed by a company, it is owning shares. A PEP cannot hold other employment, and thus cannot be a an executive or operational director. In theory, a PEP could be an outside director but this might look fishy in a small company.

Third, a shareholder cannot legally work unless they have authorization, and in this case, that would be a LOC for the DP.

merichan
Chatter
Chatter
Posts: 171
Joined: Thu, 14 May 2009 11:29 am

Post by merichan » Fri, 30 Mar 2012 10:49 am

Strong Eagle wrote:
Saint wrote:I'm one of the PRs! I'm just trying to find out the legality of a DP holder who is a shareholder working for the Company. I was having this discusion with someone and they thought a Shareholder could legally work by not drawing a salary but just dividends.

The stupid situation is we are using the DP holder as the Shareholder as the her hubby holds a PEP so can't be a Shareholder. However the PEP holder can legally work for the Company but the DP shareholder can't!?!
Not correct. First, a shareholder is a completely separate entity from employees or directors of a company. Shareholders can receive dividends regardless of whether they are employed by the company... in fact, the only criteria is that for a given class of stock every shareholder must receive dividends in proportion to ownership.

Second, I am aware of no rule that says a PEP cannot hold shares in a company. Again, this is not being employed by a company, it is owning shares. A PEP cannot hold other employment, and thus cannot be a an executive or operational director. In theory, a PEP could be an outside director but this might look fishy in a small company.

Third, a shareholder cannot legally work unless they have authorization, and in this case, that would be a LOC for the DP.

I beg to differ about shareholder & PEP, Saint is correct

Direct quote from MOM website:

The following groups of foreigners are not eligible for the PEP:

[...]

(iii) foreigners who are listed as Sole Proprietors, Partners or Directors in a business/company registered with ACRA and are shareholders of that business/company.

Link to the full text : http://www.mom.gov.sg/foreign-manpower/ ... fault.aspx


That's why I'm the shareholder of my hubby's company... at the time of constituting it he had a PEP :)

He can however hold shares of any other companies

User avatar
Strong Eagle
Moderator
Moderator
Posts: 11619
Joined: Sat, 10 Jul 2004 12:13 am
Answers: 9
Location: Off The Red Dot
Contact:

Post by Strong Eagle » Fri, 30 Mar 2012 1:16 pm

merichan wrote:
Strong Eagle wrote:
Saint wrote:I'm one of the PRs! I'm just trying to find out the legality of a DP holder who is a shareholder working for the Company. I was having this discusion with someone and they thought a Shareholder could legally work by not drawing a salary but just dividends.

The stupid situation is we are using the DP holder as the Shareholder as the her hubby holds a PEP so can't be a Shareholder. However the PEP holder can legally work for the Company but the DP shareholder can't!?!
Not correct. First, a shareholder is a completely separate entity from employees or directors of a company. Shareholders can receive dividends regardless of whether they are employed by the company... in fact, the only criteria is that for a given class of stock every shareholder must receive dividends in proportion to ownership.

Second, I am aware of no rule that says a PEP cannot hold shares in a company. Again, this is not being employed by a company, it is owning shares. A PEP cannot hold other employment, and thus cannot be a an executive or operational director. In theory, a PEP could be an outside director but this might look fishy in a small company.

Third, a shareholder cannot legally work unless they have authorization, and in this case, that would be a LOC for the DP.

I beg to differ about shareholder & PEP, Saint is correct

Direct quote from MOM website:

The following groups of foreigners are not eligible for the PEP:

[...]

(iii) foreigners who are listed as Sole Proprietors, Partners or Directors in a business/company registered with ACRA and are shareholders of that business/company.

Link to the full text : http://www.mom.gov.sg/foreign-manpower/ ... fault.aspx


That's why I'm the shareholder of my hubby's company... at the time of constituting it he had a PEP :)

He can however hold shares of any other companies
There is an "and" in that statement. If you are not a director, partner, or SP of "that" (ie -the same company) then you can own shares.

This statement exists to keep PEP's from getting around Entrepass rules by forming a company, then working for it. MOM may well see through your trick of being the shareholder... the end game is obvious.

merichan
Chatter
Chatter
Posts: 171
Joined: Thu, 14 May 2009 11:29 am

Post by merichan » Fri, 30 Mar 2012 4:43 pm

I just wanted to point that Saint was correctly interpreting the rules of the PEP saying that he had to have the DP of the PEP made shareholder in his case.

as his PEP holder could not indeed become the shareholder of the company he is working in

the AND in that sentence can be interpreted both ways, and it seems from our discussions with MOM that they tend to interpret it more as an either than a both conditions must be filled.

Nothing more nothing else...

User avatar
Saint
Director
Director
Posts: 3505
Joined: Thu, 16 Jun 2005 5:19 pm
Location: The Juban Stand, Boat Quay
Contact:

Post by Saint » Sat, 31 Mar 2012 10:40 am

As everyone else has said, a PEP holder can not be a shareholder in any way or form.

ozymandius
Newbie
Newbie
Posts: 1
Joined: Wed, 06 Jan 2016 9:40 am

Re:

Post by ozymandius » Wed, 06 Jan 2016 9:50 am

merichan wrote:I just wanted to point that Saint was correctly interpreting the rules of the PEP saying that he had to have the DP of the PEP made shareholder in his case.

as his PEP holder could not indeed become the shareholder of the company he is working in

the AND in that sentence can be interpreted both ways, and it seems from our discussions with MOM that they tend to interpret it more as an either than a both conditions must be filled.

Nothing more nothing else...
Can DP holder of a PEP holder be the major shareholder while setting up a company in singapore, without the LOC? i.e just the share-holder, not an employee!

User avatar
Strong Eagle
Moderator
Moderator
Posts: 11619
Joined: Sat, 10 Jul 2004 12:13 am
Answers: 9
Location: Off The Red Dot
Contact:

Re: Re:

Post by Strong Eagle » Wed, 06 Jan 2016 10:53 am

ozymandius wrote:
merichan wrote:Can DP holder of a PEP holder be the major shareholder while setting up a company in singapore, without the LOC? i.e just the share-holder, not an employee!
Yes, but because you are a DP, you cannot be a director. Therefore, you will need to acquire a "normally resident" person to be the director of your company.

Post Reply
  • Similar Topics
    Replies
    Views
    Last post

Return to “Business in Singapore”

Who is online

Users browsing this forum: No registered users and 2 guests