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Setting up a company by an EP holder

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Hitoiro
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Setting up a company by an EP holder

Post by Hitoiro » Sat, 12 May 2018 11:50 am

Hi there,

I am currently an EP holder (director) in a start-up company and I have no plans to quit my current job.
However, I would like to set up a company not related to my current occupation. No plans to be a director of this new company or issue my own EP or be anyhow involved except for owning it.
My plan is to hire respective Singaporean and SPR specialists on a project basis who will conduct certain activities (tourism related).

Appreciate your advice on how legal/doable this is. Do I have to notify my current employer about it if there is no conflict of interest or any sort of working involvement from my side?
Thanks!

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Strong Eagle
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Re: Setting up a company by an EP holder

Post by Strong Eagle » Sat, 12 May 2018 9:15 pm

Hitoiro wrote:Hi there,

I am currently an EP holder (director) in a start-up company and I have no plans to quit my current job.
However, I would like to set up a company not related to my current occupation. No plans to be a director of this new company or issue my own EP or be anyhow involved except for owning it.
My plan is to hire respective Singaporean and SPR specialists on a project basis who will conduct certain activities (tourism related).

Appreciate your advice on how legal/doable this is. Do I have to notify my current employer about it if there is no conflict of interest or any sort of working involvement from my side?
Thanks!
You can be the owner, ie, shareholder of a company, any company, including one that you setup. You cannot be a director as long as you are an EP with another company, except under very limited circumstances. Therefore, while you can be the person to login to ACRA to create the company, you must have at least one other "normally resident" (translates to citizen or PR) who will be the organizing director(s).

As to whether you need to inform your current employer, that depends upon what your employment contract says, and your work relationship. Most employment contracts I have seen have a prohibition against working for another company (yours or otherwise), but this is a negotiable item between you and your employer.

Bottom line: You can own a company but you can't run it on your EP. And setting it up implies "running". You're going to need that other party.

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Hitoiro
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Re: Setting up a company by an EP holder

Post by Hitoiro » Sat, 12 May 2018 10:20 pm

Thanks a lot, it's pretty clear!
Strong Eagle wrote: Bottom line: You can own a company but you can't run it on your EP. And setting it up implies "running". You're going to need that other party.
As for hiring a resident director, is that equal to engaging one of the companies that provide a package of corporate address, nominee director and secretary?

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Re: Setting up a company by an EP holder

Post by Strong Eagle » Sun, 13 May 2018 3:10 am

Hitoiro wrote:Thanks a lot, it's pretty clear!
Strong Eagle wrote: Bottom line: You can own a company but you can't run it on your EP. And setting it up implies "running". You're going to need that other party.
As for hiring a resident director, is that equal to engaging one of the companies that provide a package of corporate address, nominee director and secretary?
That is generally correct. Unless you know a citizen or PR willing to stand in as the director for you, the only other choice is one of the firms that supplies directors for a price.

A couple of things worth noting:

a) They want (and will insist) on supply a whole raft of corporate services, from bookkeeping to audit, to bank statement review, to employment pass applications, contracts, and business plans. Their director is legally responsible (criminally and civilly) for the actions of the company, and they want to know that you are a good boy, playing nice. They will extract their pound of flesh to do this.

Once you are up and running, and _if_ it is your intent to leave the other company, you can then apply for EP under you new company and become its director. Then you can dump the rented director.

b) A "nominee" director has one special meaning in Singapore, and that is that the director primarily represents the interests of a nominee, ie, you, in this case. It is a definition, required, for example, when a director joins that board representing the interests of a majority shareholder. This tells other people that the director's interests may be biased in favor of that majority shareholder. In your case, it doesn't mean much because...

A director is a director is a director, and that director has responsibilities and rights enumerated by the companies act that cannot be abridged by employment contract, the articles of incorporation, or any other device. You cannot prevent the director from performing acts in the name of the company (except with a pre-signed, undated letter of resignation by the director), and the director is at risk for your actions, for example, using your bank accounts for money laundering.

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Hitoiro
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Re: Setting up a company by an EP holder

Post by Hitoiro » Sun, 13 May 2018 10:25 am

Thank you so much! Your information is absolutely precious and super useful!

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