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Question on paid up capital

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Banzaiii
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Question on paid up capital

Postby Banzaiii » Fri, 27 Jan 2012 1:59 pm

I am in the process of incorporating a business in Singapore in order to be able to apply for an EP as a self employed and to relocate to Singapore. I will most probably be using the services of Janus aka. guidemesingapore.com

One of their recommendations is to inject a paid up capital of 50.000 at the time of incorporation, to be able to apply or EP. This sounds fairy logical, since the minimum requirement for EntrePass is 50´.

Does anyone here possibly have any experience of dealing with Janus? Can they be trusted with this amount of cash? This is a quote from their website:

Option 1:List a higher paidup capital at the time of incorporation
Keep in mind that whatever paidup capital amount you list, will need to be deposited into the company's bank account. Since we will be acting as company secretary for your company, we carry certain fiduciary responsibilities in this matter and have to ensure that the necessary paidup capital is in fact inject into the company. Therefore if you wish to list a paidup capital higher than S$100 at the time of incorporation, we will require you to deposit that money with us first. Once your company bank account is open, we will transfer the paidup capital amount into your company's bank account.

Option 2: Increase paidup capital after registration of the company
Under this option, you can increase the paidup capital anytime after registration of the company. In this case, the process is as below:

Incorporate the company with minimum share capital
Open corporate bank account
Inject funds into bank account
Prepare documents for increase of share capital
File documents for share capital increase with authorities

We will then prepare and file the necessary paperwork with Company Registrar to reflect the revised paidup capital of the company. Note that a fee will apply for for additional work that has to be undertaken for items 4 & 5.

Most of our clients prefer Option 1 because it does not cost extra and is faster. Your paid-up capital amount is deposited into a separate 'Client Deposits' account with us and transferred immediately to your corporate bank account once it's open. This service is provided by Janus for the sole benefit of clients only. If you are incorporating with us and need to list a higher paidup capital, let us know which option is preferred by you.


Judging from the website this seems to be a legitimate business, don´t get me wrong, but it does feel a bit dodgy to wire this kind of money to some company that I really know nothing about.

Could anyone here provide any reference?

Thanks!

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Postby Strong Eagle » Fri, 27 Jan 2012 2:21 pm

First of all, you realize this is an attempt to get around the Entrepass requirements. The gahmen is not stupid. If you have business experience, have a track record and are ready to go, and are in certain kinds of business, there are people who have had an EP approved in this manner. But, lots of others haven't.

I don't know anything about Janus, except maybe that they will make you no guarantees.

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Postby Banzaiii » Fri, 27 Jan 2012 3:44 pm

I understand that the big brother is probably not stupid at all, but I am not really eligible for a Entrepass, since I have no intention of hiring anybody. Hence I was suggested by Janus to go for their EP package, that includes incorporation and EP application.
I am looking at this a s a two-year project. I have a time limited contract with an American venture that guarantees me a certain amount of cash monthly within the next two years. After speaking to Janus I was under the impression that this is a relatively common path to take and that my chances of actually getting an EP with my own company were looking pretty good (I have a signed contract to prove the income over the next two years, University degree and vast experience in my field of work). Though they did advise me not to act as a shareholder, but only as a director.
Would all that be be just their persuasive way of convincing me to go with their (not really cheap) "incorporation and relocation" package?

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Postby Strong Eagle » Fri, 27 Jan 2012 6:21 pm

After reading your plan, I would say that you are the sort of person that probably will be approved by going this route.

I am curious though... who is going to be the shareholder, if not yourself? And secondly, why so much money for this kind of venture? You can start a $2 company and do the same thing. $50K in paid up capital is only required for an Entrepass firm, and as you have noted, that aint you.

If you do need more cash to start, why not loan the money to the company? It is much easier to pay back a loan and wind up a $2 company then to attempt to purchase back shares to get your money back out.

I also question Janus statement that as secretary they have a fiduciary responsibility... not really. The nominee director has the liability, the secretary only needs to report activities and decisions of the directors to the shareholders and the government. So I'd question why it wouldn't be sufficient to start the company, open the bank account with yourself as signatory, and deposit whatever funds you want.

The key things to prove are the presence of a contract that makes you profitable the instant you arrive, and that you have the expertise and background to make it go.

Finally, what are they going to do for you? Any self respecting CPA in SG can file for a company, handle the records, get you a nominee director, probably for less than Janus.

When you file for the EP via the company and its nominee director, you will most certainly want to file supporting documentation which includes the contract, your CV and background, and anything else that supports you in the role you are going to undertake. Is Janus planning on doing this for you? Are they supplying the nominee director? You must have one director that is a Singapore resident... what you are in with an EP, you can dump the nominee director. Is Janus supplying the necessary docs for a nominee director, ie, the resignation letter, already signed that you need only date and submit?

There are at least two people that used to frequent this board that have gone the route you are attempting... and I think they did it all themselves. Perhaps they will chime in.

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Postby aster » Fri, 27 Jan 2012 8:32 pm

Going the EP route it can only work in your favour to have a higher paid-up capital. They will obviously look at this as one of quite many factors.

I am really surprised they want you to send them the money first for the share capital. This is complete nonsense and you should tell them this. You are to make the payment directly into the company's bank account, and simply show them proof that the transfer has been made and that the funds have arrived in the corporate account.

As for not being the shareholder, this is very strange. Why would they say that? Who do they want to hide you from? I think it's plainly obvious to the gahmen that it's really your company, and proxies don't work too well because the same names pop up in loads of companies administered by the same people which makes it obvious that they are proxy owners and nothing more.

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Postby Banzaiii » Sat, 28 Jan 2012 6:40 am

After reading your plan, I would say that you are the sort of person that probably will be approved by going this route.

I am curious though... who is going to be the shareholder, if not yourself? And secondly, why so much money for this kind of venture? You can start a $2 company and do the same thing. $50K in paid up capital is only required for an Entrepass firm, and as you have noted, that aint you.


Janus recommended me not to own any shares in the company, since I would then be asked to apply for an Entrepass rather tha EP.(I have asked a good old friend to be my shareholder.) They say that injecting 50.000 into the company will increase the credibility with the authorities and increase my chances of getting an EP approved.

If you do need more cash to start, why not loan the money to the company? It is much easier to pay back a loan and wind up a $2 company then to attempt to purchase back shares to get your money back out.


Well, I don't really need this cash in Singapore, I would only be injecting it due to the reasons stated bove / to increase the credibility with MOM.

I also question Janus statement that as secretary they have a fiduciary responsibility... not really. The nominee director has the liability, the secretary only needs to report activities and decisions of the directors to the shareholders and the government. So I'd question why it wouldn't be sufficient to start the company, open the bank account with yourself as signatory, and deposit whatever funds you want.


Since I am not currently a resident, Janus would temporary provide me with a local nominee director. I would then be able to take on that role when and if the EP is approved and i can get a resident permit.
The key things to prove are the presence of a contract that makes you profitable the instant you arrive, and that you have the expertise and background to make it go.

Finally, what are they going to do for you? Any self respecting CPA in SG can file for a company, handle the records, get you a nominee director, probably for less than Janus.

When you file for the EP via the company and its nominee director, you will most certainly want to file supporting documentation which includes the contract, your CV and background, and anything else that supports you in the role you are going to undertake. Is Janus planning on doing this for you? Are they supplying the nominee director? You must have one director that is a Singapore resident... what you are in with an EP, you can dump the nominee director. Is Janus supplying the necessary docs for a nominee director, ie, the resignation letter, already signed that you need only date and submit?


That's all part of the package - the local nominee director, filing the application for EP etc. The plan is to go with that, but I would rather not be injecting all this money if it was not absolutely necessary. On the other hand, I can understand why there would be a recommendation to do so, since if it would not have been necessary, this would be a much easier route than EntrePass and a lot more people would be taking it. It seems more or less logical to me that a 50.000 paid up capital might be looked upon favorably by the authorities, since I would basically be meeting the requirements for EntrePass.

Anyway, I would rather not wire the cash to some firm that I've only been reading about online and have no relation with....

Would you think it could be a good idea only to start up a company with minimum of capital and try to apply for EP with that? I could then always increase the capital at a later stage if the application would be denied...

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Postby aster » Sat, 28 Jan 2012 8:46 am

Personally I don't think it matters to hide shareholder ownership here as it's just too obvious and I don't think it leads anywhere to be honest. But at least you're not using proxies which is good.

As for your EP I think we missed out the most important point: what kind of salary will you be considering for yourself? A min. of 8k/mth will put you in line for a P1 pass.

With regards to the company and the amount of funds in its account, would it work in your case to have the company running for a couple of months (or possibly even one FY) and making good money before your EP application? This would help greatly, as getting an EP for a company that just started and never even made a penny looks a bit different from one that is already operating and generating decent profits.

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Postby Strong Eagle » Sat, 28 Jan 2012 10:08 am

There is no escaping the fact that this is a start up company, created solely for the purpose of providing you with the vehicle to obtain an EP so that you can work on a contract you already have in hand.

It seems like putting lipstick on a pig to have a "fake" shareholder, who, by the way, would absolutely control your company and its directors, and by putting up money in shares that is not needed to run a professional consultancy.

If I were you, I'd start the company as a $2 company with authorization to issue a couple hundred thousand shares in the future. Make yourself the sole shareholder of two shares. Find a nominee director. Create the company. ACRA will probably tell you that you should check with MOM because you might not get your EP. Have your nominee director file your EP for you... although you really need to do the work. In this case, I would file manually so that all supporting documentation could be included.

Only if you are rejected and want to appeal would I consider upping the paid in capital or changing shareholders.

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Postby Banzaiii » Sat, 28 Jan 2012 10:13 am

Thanks for the input!
Unfortunately I won't be able to wait for a whole FY before applying for EP, but my American partner already owns me around 45.000USD and that amount will be invoiced and paid as soon as the incorporation process is completed and there is a bank account to trasfer the funds to. After that I will be invvoicing them about 15k SGD monthly, and I could pretty much pay myself all that money in salary, since there will be very little costs involved. So qualifying for a P1 should not be a problem.

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Postby Seasoul » Sun, 05 Feb 2012 12:45 pm

Strong Eagle wrote:In this case, I would file manually so that all supporting documentation could be included


By manually you mean go in person to the MOM to file the employment request as opposed to sending it online or via email ?

I am in the midst of doing so myself and would like to add a few documents to the simple employment form the employer is required to fill in my case, with my CV, background and previous experiences as well as track record in SG to support this employment.

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Postby Strong Eagle » Mon, 06 Feb 2012 12:55 pm

Seasoul wrote:
Strong Eagle wrote:In this case, I would file manually so that all supporting documentation could be included


By manually you mean go in person to the MOM to file the employment request as opposed to sending it online or via email ?

I am in the midst of doing so myself and would like to add a few documents to the simple employment form the employer is required to fill in my case, with my CV, background and previous experiences as well as track record in SG to support this employment.


Yes... to ensure that all additional documents are submitted. If you can do it via email (and I am not aware that you can), I suppose that would be preferable since everything would already be in electronic form.


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