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Buying a company

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blabla
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Buying a company

Postby blabla » Thu, 09 Feb 2012 11:25 pm

Hi all,

is anybody maybe selling a company that he/she incorporated, opened bank account etc. but is no longer using, or never used it at all? We are looking for a quick start in SG without loosing months with the bank (we are foreigners) and are contemplating starting this way. The business is software, we are not looking for tax avoidance, but for a way to start in SG with minimum hassle.

Thanks all.

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Postby Strong Eagle » Thu, 09 Feb 2012 11:46 pm

Yah well... good luck. All Singapore companies require at least one resident director. Do you have one?

"Loosing months with the bank"? No idea what that is about. Almost instantly open a company bank account with directors resolutions and someone to sign.

Sounds like you want to buy a shelf company... mostly non existent in Singapore because it is so easy to incorporate.

Any you really should read threads related to the Entrepass... you are obviously trying to do an end around the Entrepass requirements... might work, might not.

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Postby blabla » Thu, 09 Feb 2012 11:50 pm

Strong Eagle wrote:Yah well... good luck. All Singapore companies require at least one resident director. Do you have one?

"Loosing months with the bank"? No idea what that is about. Almost instantly open a company bank account with directors resolutions and someone to sign.

Sounds like you want to buy a shelf company... mostly non existent in Singapore because it is so easy to incorporate.

Any you really should read threads related to the Entrepass... you are obviously trying to do an end around the Entrepass requirements... might work, might not.


Hi,

no you got it totally wrong. a) We are not looking to move into Singapore, I live in a nice place already, b) Nominee Director is a normal service from incorporation agents, c) opening a bank account for foreigners is not so easy as you make it sound.

But thanks for the answer.

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Postby Strong Eagle » Thu, 09 Feb 2012 11:59 pm

blabla wrote:
Strong Eagle wrote:Yah well... good luck. All Singapore companies require at least one resident director. Do you have one?

"Loosing months with the bank"? No idea what that is about. Almost instantly open a company bank account with directors resolutions and someone to sign.

Sounds like you want to buy a shelf company... mostly non existent in Singapore because it is so easy to incorporate.

Any you really should read threads related to the Entrepass... you are obviously trying to do an end around the Entrepass requirements... might work, might not.


Hi,

no you got it totally wrong. a) We are not looking to move into Singapore, I live in a nice place already, b) Nominee Director is a normal service from incorporation agents, c) opening a bank account for foreigners is not so easy as you make it sound.

But thanks for the answer.


Well, I guess you know it all. You can be foreign shareholders in a Singapore company. Your nominee director can open bank accounts and grant signatory rights to whomever he/she chooses. You don't have a "foreigner" opening a bank account, you have a company director... which is required, no matter who owns the stock.

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Postby blabla » Fri, 10 Feb 2012 12:05 am

Strong Eagle wrote:Well, I guess you know it all. You can be foreign shareholders in a Singapore company. Your nominee director can open bank accounts and grant signatory rights to whomever he/she chooses. You don't have a "foreigner" opening a bank account, you have a company director... which is required, no matter who owns the stock.


Hi Eagle,

actually don't get me wrong, I am not trying to be offensive to you, I actually wanted that someone comes over with comments like yours, so that I know if this is a good or bad idea, and thank you for this.

Regarding what you wrote above, I didn't know that Nominee Directors also actually go to a bank and open an account as part of the service, I am afraid that they are just directors on paper, and they don't do anything but sign the Resolution to open a bank account and then we are stuck with incorporated company and left to our own to come over to SG and open an bank account. And this is my problem, actually.

Am I clearer now?

Regards.

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Postby Strong Eagle » Fri, 10 Feb 2012 12:15 am

blabla wrote:
Strong Eagle wrote:Well, I guess you know it all. You can be foreign shareholders in a Singapore company. Your nominee director can open bank accounts and grant signatory rights to whomever he/she chooses. You don't have a "foreigner" opening a bank account, you have a company director... which is required, no matter who owns the stock.


Hi Eagle,

actually don't get me wrong, I am not trying to be offensive to you, I actually wanted that someone comes over with comments like yours, so that I know if this is a good or bad idea, and thank you for this.

Regarding what you wrote above, I didn't know that Nominee Directors also actually go to a bank and open an account as part of the service, I am afraid that they are just directors on paper, and they don't do anything but sign the Resolution to open a bank account and then we are stuck with incorporated company and left to our own to come over to SG and open an bank account. And this is my problem, actually.

Am I clearer now?

Regards.


Your "nominee" director has all the fiduciary rights and responsibilities of any director. They are not "directors on paper", they are the real, live thing. Your nominee director could screw you, could vote against your course of action... and you would be powerless to do anything about it... except that, nominee directors always supply an undated letter of resignation... so that if you don't like your director's actions, you date it pre-empting your director's actions. This is the only real control you have over a nominee director... otherwise he/she really owns control of your company.

It is the banking laws in Singapore that require you to come here. Although I have heard that MNC's like HSBC would let you sign a signature card elsewhere, I've never seen this verified. Fact is, you need to be in Singapore to sign the signature card, in person, in front of a bank official. This is the only step in the process where you are actually required to be physically present in Singapore.

So, your choices are that you come to Singapore to become the signatory of record, or you let the nominee director be your signatory of record... who's your Daddy?

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Postby blabla » Fri, 10 Feb 2012 12:38 am

Strong Eagle wrote:So, your choices are that you come to Singapore to become the signatory of record, or you let the nominee director be your signatory of record... who's your Daddy?


Got it, all makes sense now.

BTW you are an accounting/finance pro I gather? Do you work with SMEs?

Regards,

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Postby Strong Eagle » Fri, 10 Feb 2012 6:51 am

No, I set up and run a private limited. I have also enabled others to set up companies so that they could be proper contractors. I've done quite a bit of research into foreign owned companies as I do business in a number of places in Asia.

Your key is having a nominee director that you absolutely trust. And/or setting at least two of you up as directors as well. Must use caution to go this route as if you pay yourself a salary as a director, as opposed to directors fees, you could run afoul of provisions of "working" in Singapore without a permit.

I'd engage a CPA firm familiar with the details of company law to discuss the exact setup. You can do what you want to do, and if you are foreign directors you can still keep control of the company, bearing in mind that each director is independent.

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Postby blabla » Fri, 10 Feb 2012 4:08 pm

Strong Eagle wrote:No, I set up and run a private limited. I have also enabled others to set up companies so that they could be proper contractors. I've done quite a bit of research into foreign owned companies as I do business in a number of places in Asia.


I'm also considering Hong Kong. But since everyone is rushing there and it is easier to incorporate (no local director required etc.), I am more inclined to go Singaporean.

Strong Eagle wrote:
Your key is having a nominee director that you absolutely trust.


I don't have him/she, and internet is full of incorporation agents I know nothing about.

Strong Eagle wrote:
And/or setting at least two of you up as directors as well. Must use caution to go this route as if you pay yourself a salary as a director, as opposed to directors fees, you could run afoul of provisions of "working" in Singapore without a permit.


One thing that worries me here is that if we do it like you suggest, let's say us 2 foreign + 1 local nominee directors, that then the company is not anymore tax resident in Singapore (not directly, but the case is stronger that it is not). We do want to be tax resident in Singapore and pay taxes there.

Regarding the part about paying out directors, if we are shareholders, is it legal in Singapore to pay out dividends even before the end of financial year, if it is obvious that you have extra cash after all current and projected expenses, and if you pay out less/more to convert it to personal loans to shareholders/or from shareholders to company?

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Postby Strong Eagle » Fri, 10 Feb 2012 7:59 pm

Singapore recognizes two types of directors... executive and non-executive directors. Executive directors are active participants in the company and typically receive salary plus directors fees as compensation. You cannot be one of these without an employment pass.

Non-executive, or outside directors, are not active in the day to day business. They cannot earn a salary but can earn directors fees as approved by a meeting of the shareholders at an AGM or EGM. You can be one of these and collect fees. Since you are foreign, you would not pay Singapore income tax on your fees... however, the assumption, and reciprocal tax treaties assume you will pay tax on the fees in your country of residence.

The fact that the company has foreign directors does not affect its tax residency. If it performs work in Singapore, or elsewhere on behalf of a Singapore firm, if it invoices and collects money in Singapore, then it pays corporate tax in Singapore. Your nominee would also pay personal income tax in Singapore, but as noted earlier you would not pay Singapore income tax for your directors fees.

I don't think there is any requirement that dividends be paid at the end of the year. The only requirements that I am aware of is that you cannot pay dividends out of paid up capital... can only be paid out of profits only. Thus, if you choose to pay quarterly dividends, and you balance sheet shows retained earnings for the quarter, dividends can be authorized and paid.

Since you, as a shareholder are not resident, taxation of your dividends would be dependent upon the laws of your country of residence, but dividends in Singapore, as a rule, are never taxable personally since corporate tax has already been paid on the profits.

I don't know why people consent to be nominee directors for a couple of grand a year. They can be held liable for the sins and omissions of the company. I've never seen a situation where a nominee director tried to screw that shareholders who appointed her... and bear in mind that by law, that could certainly happen.

A bit of easy reading.

http://www.singaporelaw.sg/content/CompanyLaw.html

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Hi Blabla

Postby zl80 » Sat, 07 Apr 2012 12:33 pm

This is a very interesting topic, I have just been asked to be a nominee director locally, what are the worst things that can happen to me?

Can I write an indemnity letter to protect myself?

What is the max number on companies can someone be a nominee director of?

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Postby aahn » Wed, 11 Apr 2012 11:47 am

Hi Strong Eagle

Thanks for the information in this thread. Could you please elaborate what you meant by
Your "nominee" director has all the fiduciary rights and responsibilities of any director. They are not "directors on paper", they are the real, live thing. Your nominee director could screw you, could vote against your course of action... and you would be powerless to do anything about it... except that, nominee directors always supply an undated letter of resignation... so that if you don't like your director's actions, you date it pre-empting your director's actions. This is the only real control you have over a nominee director... otherwise he/she really owns control of your company.


I'm currently considering using Janus Corporation's company incorporation + nominee director services for a new company in Singapore.

I plan to be the sole shareholder of the company - 100% foreign owned and pay myself an income stream which is taxed in my country of residence (Australia).

The website says that the nominee service is offered for statutory compliance only, however is it still possible for them to have control over finances as they are required to open the bank account?

Also, if I do use a nominee director service and I am the sole shareholder, I am assuming I have full legal control over the company (I only can make decisions on the company's behalf) even if the nominee director is exposed to some risk?

*EDIT*

To provide a bit more information I run a dropshipping business that operates from China with a customer base mostly in Australia and US, but some customers in Europe.

The main reason I wish to incorporate a Singapore company is strictly for GST purposes. Although I have been to Singapore a few times and find it a wonderful place, if the opportunity arose to live there I would seriously consider it.

It is difficult to remain competitive against international sellers with the current Tax / GST structure in Australia. From the looks of things, it seems using a third party's services such as Janus to incorporate a company and opening foreign bank account + pp account seems like the way to go.

It's clearly evident you know your stuff Strong Eagle, so any advice would be much appreciated.


Cheers
Aahn

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Postby Strong Eagle » Wed, 11 Apr 2012 5:31 pm

aahn wrote:Hi Strong Eagle

Thanks for the information in this thread. Could you please elaborate what you meant by
Your "nominee" director has all the fiduciary rights and responsibilities of any director. They are not "directors on paper", they are the real, live thing. Your nominee director could screw you, could vote against your course of action... and you would be powerless to do anything about it... except that, nominee directors always supply an undated letter of resignation... so that if you don't like your director's actions, you date it pre-empting your director's actions. This is the only real control you have over a nominee director... otherwise he/she really owns control of your company.


I'm currently considering using Janus Corporation's company incorporation + nominee director services for a new company in Singapore.

I plan to be the sole shareholder of the company - 100% foreign owned and pay myself an income stream which is taxed in my country of residence (Australia).

The website says that the nominee service is offered for statutory compliance only, however is it still possible for them to have control over finances as they are required to open the bank account?

Also, if I do use a nominee director service and I am the sole shareholder, I am assuming I have full legal control over the company (I only can make decisions on the company's behalf) even if the nominee director is exposed to some risk?


Thanks
Aahn


Singapore corporate law makes no distinction as to where you get your directors... including buying them as "nominee directors". All directors of the company have the same fiduciary responsibility under the law. Your director could be sued for actions you take while running the company; hence, directors are also provided with powers to rein in actions of the company and to control things like the bank account, the books, and a lot more. Remember, virtually every action undertaken in a company requires a directors resolution to implement... even opening a bank account.

Your only recourse, as a shareholder, is to call and AGM or EGM to remove and/or replace directors. When a company like Janus supplies a nominee director, you get a pre-signed letter of resignation that you can execute at any time, if a director were to take an action you didn't want taken.

As a practical matter, Janus, or anyone else won't want to interfere in your business and will mostly rubber stamp anything (legal) that you want to do. They have a reputation to protect. Just be aware that the director is liable for your actions, and is a lot more than "statutory compliance". That's bullsh*t.

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Postby aahn » Thu, 12 Apr 2012 7:24 am

From your own knowledge, do you think using a nominee director service is a safe approach? I know there is always some element of risk but would you feel comfortable using their service if you were in my position?

Also, these services are clearly provided to overcome Singapore's hurdles to incorporating a company. Are such company formations frowned upon by the Singapore Government? Or is the extra tax revenue enough for them to accept 100% foreign owned companies.

For me it's quite an interesting structure as we have nothing like it in Australia. Which I believe in turn pushes start ups overseas where tax / GST requirements are more small business friendly.

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Postby Strong Eagle » Thu, 12 Apr 2012 10:38 am

aahn wrote:From your own knowledge, do you think using a nominee director service is a safe approach? I know there is always some element of risk but would you feel comfortable using their service if you were in my position?

Also, these services are clearly provided to overcome Singapore's hurdles to incorporating a company. Are such company formations frowned upon by the Singapore Government? Or is the extra tax revenue enough for them to accept 100% foreign owned companies.

For me it's quite an interesting structure as we have nothing like it in Australia. Which I believe in turn pushes start ups overseas where tax / GST requirements are more small business friendly.


I have used a nominee director at a time when two directors were required. There was no issue, as my account supplied the director and she was trustworthy.

It's not about overcoming hurdles. It is about having a person who is legally in Singapore being legally responsible for the company. The government wants someone who can be sued in country by the government, or by another party. Foreigners don't fit the bill. So, nobody, "frowns" because the director has legal and fiduciary responsibilities, just like every other Singapore director.


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