Quick Advice - DP Holder Being A Shareholder.....

[Saint]

If a company is setup with 4 Shareholders, 2 being PR, 1 Local and 1 DP holder. For the DP holder (Shareholder) to actively work for the Company the DP still needs to apply for LOC or EP?

Being some smart arse says read through the sticky thread, I did and no definite answer.

[sundaymorningstaple]

I'd say either one, depending on ones qualifications. The odds of getting the LoC are a lot greater than getting the EP though. With the EP, you will be thrown into the current "Policies" and tightening criteria wars, while if you are here on a DP then you're limited to the duration of your tethered sponsor's EP. This obviously isn't you we're talking about......

[Saint]

I'm one of the PRs! I'm just trying to find out the legality of a DP holder who is a shareholder working for the Company. I was having this discusion with someone and they thought a Shareholder could legally work by not drawing a salary but just dividends.

The stupid situation is we are using the DP holder as the Shareholder as the her hubby holds a PEP so can't be a Shareholder. However the PEP holder can legally work for the Company but the DP shareholder can't!?!

[sundaymorningstaple]

Either/Or. But it would be easier to go for the LoC because an LoC holder does not have to "qualify" for the LoC like an EP holder would.

[Strong Eagle]

I'm one of the PRs! I'm just trying to find out the legality of a DP holder who is a shareholder working for the Company. I was having this discusion with someone and they thought a Shareholder could legally work by not drawing a salary but just dividends.

The stupid situation is we are using the DP holder as the Shareholder as the her hubby holds a PEP so can't be a Shareholder. However the PEP holder can legally work for the Company but the DP shareholder can't!?!

Not correct. First, a shareholder is a completely separate entity from employees or directors of a company. Shareholders can receive dividends regardless of whether they are employed by the company... in fact, the only criteria is that for a given class of stock every shareholder must receive dividends in proportion to ownership.

Second, I am aware of no rule that says a PEP cannot hold shares in a company. Again, this is not being employed by a company, it is owning shares. A PEP cannot hold other employment, and thus cannot be a an executive or operational director. In theory, a PEP could be an outside director but this might look fishy in a small company.

Third, a shareholder cannot legally work unless they have authorization, and in this case, that would be a LOC for the DP.

[merichan]

I'm one of the PRs! I'm just trying to find out the legality of a DP holder who is a shareholder working for the Company. I was having this discusion with someone and they thought a Shareholder could legally work by not drawing a salary but just dividends.

The stupid situation is we are using the DP holder as the Shareholder as the her hubby holds a PEP so can't be a Shareholder. However the PEP holder can legally work for the Company but the DP shareholder can't!?!

Not correct. First, a shareholder is a completely separate entity from employees or directors of a company. Shareholders can receive dividends regardless of whether they are employed by the company... in fact, the only criteria is that for a given class of stock every shareholder must receive dividends in proportion to ownership.

Second, I am aware of no rule that says a PEP cannot hold shares in a company. Again, this is not being employed by a company, it is owning shares. A PEP cannot hold other employment, and thus cannot be a an executive or operational director. In theory, a PEP could be an outside director but this might look fishy in a small company.

Third, a shareholder cannot legally work unless they have authorization, and in this case, that would be a LOC for the DP.

I beg to differ about shareholder & PEP, Saint is correct

Direct quote from MOM website:

The following groups of foreigners are not eligible for the PEP:

[...]

(iii) foreigners who are listed as Sole Proprietors, Partners or Directors in a business/company registered with ACRA and are shareholders of that business/company.

Link to the full text : http://www.mom.gov.sg/foreign-manpower/ ... fault.aspx


That's why I'm the shareholder of my hubby's company... at the time of constituting it he had a PEP

He can however hold shares of any other companies

[Strong Eagle]

I'm one of the PRs! I'm just trying to find out the legality of a DP holder who is a shareholder working for the Company. I was having this discusion with someone and they thought a Shareholder could legally work by not drawing a salary but just dividends.

The stupid situation is we are using the DP holder as the Shareholder as the her hubby holds a PEP so can't be a Shareholder. However the PEP holder can legally work for the Company but the DP shareholder can't!?!

Not correct. First, a shareholder is a completely separate entity from employees or directors of a company. Shareholders can receive dividends regardless of whether they are employed by the company... in fact, the only criteria is that for a given class of stock every shareholder must receive dividends in proportion to ownership.

Second, I am aware of no rule that says a PEP cannot hold shares in a company. Again, this is not being employed by a company, it is owning shares. A PEP cannot hold other employment, and thus cannot be a an executive or operational director. In theory, a PEP could be an outside director but this might look fishy in a small company.

Third, a shareholder cannot legally work unless they have authorization, and in this case, that would be a LOC for the DP.

I beg to differ about shareholder & PEP, Saint is correct

Direct quote from MOM website:

The following groups of foreigners are not eligible for the PEP:

[...]

(iii) foreigners who are listed as Sole Proprietors, Partners or Directors in a business/company registered with ACRA and are shareholders of that business/company.

Link to the full text : http://www.mom.gov.sg/foreign-manpower/ ... fault.aspx


That's why I'm the shareholder of my hubby's company... at the time of constituting it he had a PEP

He can however hold shares of any other companies

There is an "and" in that statement. If you are not a director, partner, or SP of "that" (ie -the same company) then you can own shares.

This statement exists to keep PEP's from getting around Entrepass rules by forming a company, then working for it. MOM may well see through your trick of being the shareholder... the end game is obvious.

[merichan]

I just wanted to point that Saint was correctly interpreting the rules of the PEP saying that he had to have the DP of the PEP made shareholder in his case.

as his PEP holder could not indeed become the shareholder of the company he is working in

the AND in that sentence can be interpreted both ways, and it seems from our discussions with MOM that they tend to interpret it more as an either than a both conditions must be filled.

Nothing more nothing else...

[Saint]

As everyone else has said, a PEP holder can not be a shareholder in any way or form.

[ozymandius]

I just wanted to point that Saint was correctly interpreting the rules of the PEP saying that he had to have the DP of the PEP made shareholder in his case.

as his PEP holder could not indeed become the shareholder of the company he is working in

the AND in that sentence can be interpreted both ways, and it seems from our discussions with MOM that they tend to interpret it more as an either than a both conditions must be filled.

Nothing more nothing else...

Can DP holder of a PEP holder be the major shareholder while setting up a company in singapore, without the LOC? i.e just the share-holder, not an employee!

[Strong Eagle]

Can DP holder of a PEP holder be the major shareholder while setting up a company in singapore, without the LOC? i.e just the share-holder, not an employee!

Yes, but because you are a DP, you cannot be a director. Therefore, you will need to acquire a "normally resident" person to be the director of your company.