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switching from employment pass to starting own business

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vah
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switching from employment pass to starting own business

Postby vah » Tue, 13 Mar 2018 12:56 am

HI guys, first off, apologies if this has been asked many times previously, I tried searching but only find threads that are at least 3 years old

I have been working in Singapore for about one year under Employment Pass. Currently, I am thinking to open a business with my friend (who is a Singaporean citizen).

We have a concrete plan, it would be a retail-based business, so we will have a physical location and employ some staff. Already managed to secure capital commitments for the idea, estimating investment north of 700k at least. Also read in the previous threads that university education matters ? I have a masters degree from one of the top 10 universities in the world if that's relevant. Work experience wise, I have about 5 years of experience in total
My friend would be in the business only part time, as he has his own full time job, so merely an investor or in advisory capacity.


In this case what are my best options ? Would like to ensure that I could stay legally in Singapore to oversee this business.


thank you in advance.

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Strong Eagle
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Re: switching from employment pass to starting own business

Postby Strong Eagle » Tue, 13 Mar 2018 1:59 am

a) Your friend starts up a private limited with ACRA and becomes its sole director.
b) You and he decide how many shares each of you will have, representing company ownership. You can have two shares or less, or more.
c) Your friend applies for EP for you to work for the company.

Your chances will be enhanced if you have relevant experience in the job for which the EP applies.

Your chances will be greatly enhanced if you drop a couple hundred thousand of the $700K in secured capital you mentioned into your company bank account. The capital can enter the company either as loans or as equity participation. Having real money in a real bank account goes a long way to demonstrating you're not scamming.

Here's what you are up against. Many, many people have decided that forming a business and then seeking an EP is the backdoor way to gain residency in Singapore. They don't have any money and they don't know shit from chocolate icing when it comes to running a business.

Therefore, your job is to convince the authorities that you're not one more mindless scammer. Having a Singaporean person form the company helps... make sure both he and you understand that it is your friend that legally runs the company and is responsible for all the acts of the company. You screw things up, he will pay.

Therefore, you need to read my many posts about starting a business, and in particular the need for a business plan and pro forma financials.

vah
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Re: switching from employment pass to starting own business

Postby vah » Tue, 13 Mar 2018 10:53 pm

Hi Strong Eagle, thanks for your reply. Someone told me that this method is illegal since it is forbidden for a foreigner to work in a private company which shares you own ? Is this correct ? thanks

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Re: switching from employment pass to starting own business

Postby Strong Eagle » Tue, 13 Mar 2018 11:09 pm

vah wrote:Hi Strong Eagle, thanks for your reply. Someone told me that this method is illegal since it is forbidden for a foreigner to work in a private company which shares you own ? Is this correct ? thanks


Completely false. A PEP holder cannot be an officer of a company of which he is a shareholder. This rule was enacted because PEP holders who were without employment at the end of six months attempted to use this ruse to get employed again.

You have no issues. It is how I, as an expat, setup my own company, and how many other expats have done it. Very common.

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Re: switching from employment pass to starting own business

Postby vah » Tue, 13 Mar 2018 11:13 pm

Strong Eagle wrote:
vah wrote:Hi Strong Eagle, thanks for your reply. Someone told me that this method is illegal since it is forbidden for a foreigner to work in a private company which shares you own ? Is this correct ? thanks


Completely false. A PEP holder cannot be an officer of a company of which he is a shareholder. This rule was enacted because PEP holders who were without employment at the end of six months attempted to use this ruse to get employed again.

You have no issues. It is how I, as an expat, setup my own company, and how many other expats have done it. Very common.



I see, my friend must have confused EP and PEP then. I also plan to apply for PR after 2-3 years. Considering it is a legitimate business with significant investment, I am assuming that working for my own company won't be held against me when applying for PR ? thank you


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