S Pass - shareholders?

[Asdracles]

Hi all. I can't find info in Internet about the option of a S-Pass holder becoming shareholder of the company where he's working now. I see very clearly that they can't become shareholder of any other company, but this one I couldn't find.

My boss is selling the business. He has already local people to get most of the shares, but he wants the remaining workers (I won't stay but I'm trying to help) to get a little percentage of the company to get "more involved". A few of them are S-pass holders, and they are ok with the idea if it's legal.

Is this possible?

Your help will be very appreciated! Thanks!

[Asdracles]

I "might" have answered my own question. In the Private Company Regulations I couldn't find anything, but in the S-Pass regulations, Part IV, Point 2:

http://www.mom.gov.sg/Documents/service ... itions.pdf

The foreign employee shall not engage in or participate in any business or be a self-employed person.


So looks like the answer is a no, even for the own company. But the funny thing is that a foreigner that is not involved in the business can do it. So do you see any problem if the shareholder is any staying-at-home-country relative? That doesn't sound too logical to me, but I promised to research all the possible options.

Thanks!

[sundaymorningstaple]

I'm pretty sure you can own shares in the company. Being a shareholder does not mean you are participating in the company. When you buy stock in a company, e.g., on the stock market, you become a shareholder in that company. There is nothing stopping you from working for that company. By your reckoning, you would be allowed to keep money in the bank either as it drawn interest. Especially if you happen to work for the same bank? See what I mean?

[Asdracles]

Well, you have been in dealing with entities like MoM longer than me, so can we please stop using logic and sticking to the word?

We had a case in the past when we got a warning letter because a worker became shareholder in another company. But if this were the only illegal thing, the previous sentence would say "in any other business".

So being shareholder can't be defined as engage-participate as far as you don't become director? This is just an english language question.

Thanks!

[sundaymorningstaple]

That's the way learned it. A director and a shareholder are not necessarily the same thing. You can be a shareholder without having any participatory duties in the company other than the right to vote in the year end GM. Whereas a director has much more rights within the company, but may also be a non-participatory director (e.g., a local director for purposes of satisfying ACRA's requirements). Normally Directors are shareholders (but it is not necessary), and shareholders aren't necessarily directors. In fact, quite often new startups will pay their year-end bonuses as shares.

The following from "Guide Me Singapore" site:

Key facts about company formation

Company Name. The name must be approved before incorporation of the Singapore company can occur.
Directors. A minimum of one resident director (a resident is defined as a Singapore Citizen, a Singaporean Permanent Resident, or a person who has been issued an Entrepass, Employment Pass, or Dependent Pass) is mandatory. There is no limit on the number of additional local or foreign directors a Singapore Company can appoint. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractice in the past. There is no requirement for the directors to also be shareholders i.e. non-shareholders can be appointed directors.
Shareholders. A Singapore private limited company can have a minimum of 1 and maximum of 50 shareholders. A director and shareholder can be the same or different person. The shareholder can be a person or another legal entity such as another company or trust. 100% local or foreign shareholding is allowed. New shares can be issued or existing shares can be transferred to another person anytime after the Singapore company has been incorporated.
Company Secretary. As per Section 171 of the Singapore Companies Act, every company must appoint a qualified company secretary within 6 months of its incorporation. It has to be noted that in case of a sole director/shareholder, the same person cannot act as the company secretary. The company secretary must be a natural person who is ordinarily resident in Singapore.
Paid-up Capital. Minimum paid-up capital for registration of a Singapore company is S$1. Paid-up capital (also known as share capital) can be increased anytime after the incorporation of the company. There is no concept of Authorized Capital for Singapore companies.
Registered Address. In order to register a Singapore company, you must provide a local Singapore address as the registered address of the company. The registered address must be a physical address (can be either a residential or commercial address) and cannot be a PO Box.
Taxation. Singapore registered companies enjoy very attractive tax exemptions and incentives. Your company pays less than 9% for the first S$300,000 annual profits and 17% flat after that. There is no capital gains or dividend tax in Singapore. Excellent tax benefits and business reputation of Singapore are the key reasons why entrepreneurs from around the world prefer to form a company in Singapore. For further information on taxes, refer to Singapore corporate tax guide.

Considerations for foreigners when registering a Singapore company

Foreigners wishing to open a Singapore company, must take into consideration the following points:

You must engage a professional firm to register a Singapore company. Singapore law does not allow foreign individuals or entities to self-register a company.
There is no requirement for you to obtain any special Singapore visa if you merely want to incorporate a private limited company but have no plans to relocate to Singapore. You are free to operate your company from overseas as well as free to visit Singapore on a visitor visa whenever required to attend to company matters on a short-term basis. But keep in mind that in such cases, you will need to find a local resident director since each company must have at least one local director. Professional service firms offering Singapore incorporation services often offer the services of a local nominee director for this purpose.
If you plan to relocate to Singapore to operate your company, you are required to obtain an Employment Pass or Entrepreneur Pass type of work pass. Once you have obtained your work permit, you can act as the local resident director.
All company incorporation formalities (as well as work permit formalities, if applicable) can be handled without your having to visit Singapore. The only exception may be the bank account opening, depending on the bank you choose.

MOM is great for telling you what you cannot do. Not so great for telling you the reverse.

However, Based on your first link, I think I would approach somebody with a legal background as I've not been coached in the fine nuances of the law here.

[sundaymorningstaple]

Let's suppose for a moment, I bought shares in a local company while still in my own country. Two or three years later, I decide to move to Singapore and find a job. Let's say the company I was interviewed by, applied for and successfully obtain a S pass for me to work there. Do you suppose that would mean I would have to sell all my stock in that company in order to work there? Doesn't make sense to me.

[Asdracles]

Thanks. I know the difference shareholders-directors. Just not so sure about the meaning of "engage and participate" related with that.

I know that sounds a bit strange that I can't be shareholder in my company when working on it, but if I quit my job and go back home I can!

The case that I mentioned in my company was about someone that after getting the S-pass with us became shareholder in another company. Not director. MOM wrote us a letter saying that she was breaking the S Pass agreement. And in the S Pass rules, I don't see any distinction between "own company" or "different company", that's why each time I'm more confused.

Common sense doesn't help, I guess....

[sundaymorningstaple]

Without seeing the actual text of the letter from MOM and what the person actually did, it would be hard to guess. On the surface it doesn't sound right, but at the same time, just a little change of the actual facts would make it exactly correct. For instance if the S pass hold registered a Pte Ltd company here and owned all the shares. Then the letter from MOM would make absolute sense.

[sundaymorningstaple]

Maybe SE will see this and be able to shed more light on it.

[Asdracles]

I don't remember the full text and I don't think I can't find a copy now, but roughly it was said that our worker became shareholder of a company (her friend had a small company, and she got maybe 1-2%, more simbolic than real), and we got a warning letter saying that this was against the S-Pass regulations.

But I don't think they mentioned that was against the rules to have the shares of OTHER company, or just to to have shares of A company...

I have written to MoM anyway. The case sounds a bit ridiculous as you could become shareholder just by quitting your job!

[Asdracles]

In case anyone else need the answer, S-Pass holders can't have shares even in his company.

MoM confirmed by email, and also I found some guys that bought shares of the company they were working in, and also got the warning letter and had to sell them back.

A bit strange, again, but rules are rules....

[sundaymorningstaple]

Interesting. Sucks! But interesting.