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New company incorporation on DP with LoC

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jackson2013
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New company incorporation on DP with LoC

Postby jackson2013 » Sun, 05 Jun 2016 6:57 pm

Dear all – I have been reading many of the posts on the forums here, thank you for the kind advice/suggestions however was hoping you to obtain further help.

My wife is currently on a dependent pass that is linked to my EP, she is in the process of launching a recruitment/employment agency business.

We have been using the services of one particular consultant who has been useless, so was hoping to get a 2nd opinion on this forum. The situation is as follows:

- Company (PTE Ltd) has already been incorporated with SG$35,000 start up capital.
- 2 Directors, one is a PR, the other is my wife (who is a foreigner on a Dependent Pass)
- She is 100% shareholder in the company
- Her title is Managing Director
- Her salary is SG$7000 per month.

Letter of Consent (LOC) application was submitted and rejected. Reason given was “The Candidate has to apply for an EntrePass to operate a new business in Singapore”

Our consultant then advised us to apply for an Employment Pass (salary stated was SG$8,500), EP was also rejected. We are about to appeal and need to provide a business plan, etc stating manpower projections.

We have been told that under the Letter of Consent route, that because my wife is a director and shareholder, then this has contributed to the rejection. How have others on this forum seen things structured so that this isn’t an issue? Does she have to give 100% shareholding to someone else? Is there some way of still retaining being a Director or do you suggest that the also give up this title? It has been suggested that the ownership be transferred to the other director on the company who is a PR....

Under the EP (appeal) route, to what extent does the shareholder/director issue come into play?

Any suggestions would be appreciated. Ideally we’d like to somehow make the Letter of Consent route work as it is easier. Going down the EP path appears to be more challenging (requires more document), but we will be prepared to do if there is no other alternative.

EntrePass will obviously be even more of a challenge.

jackson2013
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Re: New company incorporation on DP with LoC

Postby jackson2013 » Sun, 05 Jun 2016 7:03 pm

EP rejection reason was along the same lines "The Candidate has to apply for an EntrePass to operate a new business in Singapore”

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Re: New company incorporation on DP with LoC

Postby sundaymorningstaple » Sun, 05 Jun 2016 8:31 pm

I wondered how long it would take them to slam the door (loophole) closed. All people have to do is abuse it a couple of times and MOM and/or ICA will modify the rules closing up the discrepancy. They have no choice as the local population has become watchdogs on the FT front.

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Strong Eagle
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Re: New company incorporation on DP with LoC

Postby Strong Eagle » Tue, 07 Jun 2016 6:44 am

Your post leads me to believe that that gahmen has come to the conclusion that the LOC is being abused. I suspect that at least a couple of things have happened.

a) People created a SP, asked for a LOC, then didn't do anyrthing with it or it was such a pittance earned that it looks like nobody was taking it seriously.

b) People created a SP, got a LOC, then did not do what they said they would do and instead went off and did something entirely different once they got the LOC. This would particularly piss off the gahmen if the undertaking were supposedly technical/professional and someone ends up working in a hair salon or something else.

c) People started asking for LOC's for which lesser educated Singaporeans would be fully qualified to do... for example, a part time shopkeeper at a kiosk.

I judge the government believes that the LOC is being abused the same way the Entrepass was being abused before it was tightened down. Someone with no money, no business experience, and no skill in what they think they want to do applies for a LOC. Half of the subcontinent would have moved to Singapore on the Entrepass if the rules hadn't been tighteded. Boom! Party over.

There are a few other things worth pointing out that are germane to your rejection. First, you should make it perfectly clear in your appeal that you cannot apply for an Entrepass because you cannot meet the stringent qualifications, and if you have not read up about the Entrepass on the MoM website and in my original post in the Business section, I highly recommend that you do.

Second, someplace, somewhere, I have an email from MoM stating that they take professional persons application for EP and Pte Ltd on a case by case basis. They realize that self employed professionals like accountants, project managers, financial planners, and the like cannot qualify for the Entrepass, and since Singapore is still alleging that its looking for professional and technical talent, an idividual can form a company and begin a practice.

Here's your problem(s)

a) Your wife cannot be a director on a DP... it is considered working. She certainly cannot hold a title of Managing Director until and if she gets her EP. Only the PR could be the MD. This is such a touchy issue that PEP's specifically can be shareholders in a company but not a director... it was/is a way for PEP's to become magically employed to avoid getting booted out of the country after six months.

b) You've got a company with $35K in it and at the salary you proposed, a total life span of 5 months, not including any operating expenses. I'm really surprised you didn't get a letter stating that revenues won't cover salaries as others have. Your consultant seems to think that a pretend number of $7,000 is the magic number to get them to believe it is a "serious" business. Can you see that the number is irrelevant without supporting revenues?

c) Now, your consultant thinks he is going to prop up the the whole process by kicking up the monthly salarty to $8,500. To be paid from what revenues? And why all of a sudden is she worth $1,500 more on an appeal than she was last time? "Your honor, I really, really, REALLY object to your last ruling! Now she's worth even more."

d) Your wife's chosen profession is a cut throat business with thousands of Singaporeans starting and quitting all kinds of employment businesses. They may see your wife as direct competition, they may see your wife as not qualified, they may see the busines sector as one that doesn't qualify as being "wanted" by the gahmen, they may see any sort of proejection as being unrealistic, given what they know about the business.

Here's where you screwed up.

a) You didn't submit a realistic business plan with marketing plan, target market, etc, and 3 to 5 years of pro forma financial plans that demonstrate you understand your revenue and expenses streams, and shows your breakeven point. Who are your clients? How do you attract talent? What are your per client annual revenues and how many bodies do you have to shove in the door to meet that revenue projection? What's your differentiator from the million muppets already running employment agencies?

b) You didn't demonstrate that you have sufficient capital to keep the business in operation until break even point.

c) You didn't provide a detailed CV of your wife's experience... preferably that of running a successful employment business. If this is a brand new venture for her, I'd say your dead in the water right now.

d) Although not written in stone anywhere, you'll never get a LOC on a Pte Ltd. You can get a LOC on a SP... although the screws seem to have been tightened as I noted above. Or, you can get an EP from a Pte Ltd. You can't be a LOC and be a director... as pointed out elsewhere, LOC implies that you are working for someone else, not running the place.

I judge that if you choose to appeal, your chances of success are 50 percent or less... and that's operating on intuition only, to take it FWIW. If you do appeal, then

a) Decide if you are going to go the SP/LOC route with the smaller business or you are going to go with the "gravitas" of a Pte Ltd. If SP, close down the Pte Ltd completely before cranking up the SP. If keep the Pte Ltd, get your wife off the Bizfile records as a director, make sure the PR is MD. Prepare a letter to put in your pocket, just in case, that apologizes for being mislead by a consultant who told you i) someone on a DP could be a director, and ii) that a director could work on a LOC. Let them know you've got it right now.

b) Put that business plan together... around 10 pages. Make sure you clearly ID your target market, prove that it is a niche that locals can't get into, and show why you can. Make sure you do cover manpower projections, even if it just the hiring of local accountants, printers, etc. Note that company bank accounts are local. You are trying to convince the gahmen that your business is worthwhile to Singapore.

c) Make sure that your pro forma financials are consistent and realistic. MoM used to ship them over to Spring for evaluation... you make wild claims or unrealistic projections in a a business that will be understood, and it's "buh-bye".

d) Make sure the skills sets of your wife are evident in a compressed CV... a successful track record in the business elsewhere will go a long way. No experience probably means the death knell.

e) Make sure the amount of salary to be paid is consistent with your projections and available cash, and no more than the absolute minimum required to get any kind of an EP. Big numbers are BS if not backed up with real big revenues.

f) Your PR MD must file the appeal and refile for the EP. Who make the filings? Who signed the directors resolutions to apply for an EP for your wife and then appoint her director? You need all the paperwork lined up... that an EGM was called for the purposes of approving the application of EP, that the resolution passed.

g) You must include solid evidence as to why you cannot qualify for an Entrepass to head that argument off before it gets started. You might ask a friend to write to MoM, asking a question like, "I am a certified project manager who wants to do contract work for multi-nationals in Singapore. Because I am a single practitioner, I cannot qualify for the Entrepass. How could I work in Singapore?" and see what the answer is.

Maybe this will work. Maybe not. As for your other question, "to what extent does the shareholder/director issue come into play?", 95 percent of businesses in Singapore that are not SP are a Pte Ltd, with a couple of shareholders who also are directors... absolutely the most common place setup for a small company.

I judge that the SP/LOC route is going to be a lot tougher these days, based on recent posts. if you do go this route, I'd still have all the documentation available, and I'd be aware that a failure to succeed under a LOC probably means you are dead in the water all the way around. The more complex process of a Pte Ltd does suggest someone a bit more serious about a real business, and that's what I think you need to demonstrate.

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Re: New company incorporation on DP with LoC

Postby Strong Eagle » Mon, 13 Jun 2016 11:28 am

Was I too blunt?

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sundaymorningstaple
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Re: New company incorporation on DP with LoC

Postby sundaymorningstaple » Mon, 13 Jun 2016 10:40 pm

:lol: :lol:


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