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Second Company

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ComingSoon
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Second Company

Postby ComingSoon » Tue, 03 Jul 2012 12:09 pm

Hello,

I am coming to Singapore soon on a P1 as the owner / director of an existing Pte ltd. My plan is to work on a second company (as owner) in a separate field while discharging my director duties for the first firm.

After researching some of the posts in the forum I realized I may have a problem. Does MOM limit work to only the firm that sponsors your P1? As owner of both companies it never occurred to me that there could be a limitation on what work you conduct provided everything is declared to ACRA and IRAS.

Any thoughts?

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Postby sundaymorningstaple » Tue, 03 Jul 2012 12:32 pm

You are spot on. P1 can only work for one company. If you try to be only director then you lose your employment pass. So caught between rock & hard place.

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Rock and a Hard Place

Postby ComingSoon » Tue, 03 Jul 2012 12:38 pm

sundaymorningstaple wrote:You are spot on. P1 can only work for one company. If you try to be only director then you lose your employment pass. So caught between rock & hard place.


Hi,

Thanks for the reply. I didn't quite catch your meaning about trying to be only a director. I'm the only director of the company that is sponsoring my EP.

I guess one option would be to incorporate the second company as a subsidiary of the first company?

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Re: Rock and a Hard Place

Postby Mi Amigo » Tue, 03 Jul 2012 1:45 pm

ComingSoon wrote:Thanks for the reply. I didn't quite catch your meaning about trying to be only a director. I'm the only director of the company that is sponsoring my EP.

SMS meant that you will have a problem if you try to be the only director in a second company.
Be careful what you wish for

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Re: Rock and a Hard Place

Postby ComingSoon » Tue, 03 Jul 2012 1:53 pm

Mi Amigo wrote:
ComingSoon wrote:Thanks for the reply. I didn't quite catch your meaning about trying to be only a director. I'm the only director of the company that is sponsoring my EP.

SMS meant that you will have a problem if you try to be the only director in a second company.


Ah! That makes sense. Thanks for the clarification. So if I were to be a Director and shareholder of the second company, and my wife (on a dependent visa) was also a director, then there would be no problems?

Alternatively we could ask one of the consulting companies to provide Nominee Director services. Though I'd rather avoid the additional costs if possible.

How does the above sound?

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Postby sundaymorningstaple » Tue, 03 Jul 2012 2:55 pm

Actually, what I meant was that as the P1 is being issued to the OP in the capacity of an employee of the first company (P1 means not only is he a director but is the owner/Managing Director, e.g., an employee of the company.

Should he try to work for another company, even if he owns it, he's in violation of the rules governing EP holders, in as much as he cannot work for another company or business at the same time. He cannot work at the second company as a director as he would have to be an inactive director.

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Postby Mi Amigo » Tue, 03 Jul 2012 5:27 pm

Apologies if my earlier comment caused confusion.
Be careful what you wish for

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Bizarre!

Postby ComingSoon » Wed, 04 Jul 2012 8:24 am

sundaymorningstaple wrote:Should he try to work for another company, even if he owns it, he's in violation of the rules governing EP holders, in as much as he cannot work for another company or business at the same time. He cannot work at the second company as a director as he would have to be an inactive director.


Hi SMS,

Thanks for the clarification. This seems a bit unreal to me. There must be other CEOs in Singapore must own more than one company? What about those of us that are moving to Singapore as the owner of more than one company? We can't be expected to shut down a profitable enterprise, can we?

I suppose the second business could be moved to HK, but how does that help Singapore at all?

I understand why they don't want people working for more than one company, but there must be some sort of exception that can be made.... right?

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Postby sundaymorningstaple » Wed, 04 Jul 2012 9:24 am

The problem with making exceptions is that then a precedence is set and forever from that point onwards you will have other saying "well, he did it....."

So, with typical Singapore efficiency, they just stop it before it starts. (The way around it is taking up PR or later citizenship - then all the doors open wide)

Unless Strong Eagle knows another way. He's the "Company Guru" on the board. Maybe he'll weigh in here as I am a bit out of my depth on this.

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Postby sundaymorningstaple » Wed, 04 Jul 2012 9:29 am

I've sent Strong Eagle a PM asking him to have a read of this thread to see if he can shed some better light on the subject and if there is a way, he'll know about it.

Cheers,

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Thanks!

Postby ComingSoon » Wed, 04 Jul 2012 10:03 am

sundaymorningstaple wrote:I've sent Strong Eagle a PM asking him to have a read of this thread


Hi SMS,

Appreciate the help! Thanks for contacting Strong Eagle. I look forward to his feedback.

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Re: Second Company

Postby Strong Eagle » Wed, 04 Jul 2012 11:04 pm

ComingSoon wrote:Hello,

I am coming to Singapore soon on a P1 as the owner / director of an existing Pte ltd.


When you say "existing pte ltd, do you mean that someone else is/are the directors, and that some else is/are the shareholders?

Because you are also saying that you are the owner/director of an existing company. Need more info... have you formed a pte ltd with you (plus a resident director) as directors, and you as sole shareholder? Has this arrangement already been approved by MoM?

You see, there are about 20 million people in certain countries that try this ruse... create a private limited, then apply for an EP to shoehorn themselves into Singapore, when they wouldn't otherwise have a chance to get in.

So... a reading of the threads in this forum will show you that if you are already operating a successful business and wish to transfer here, or open a new branch, OR if you are already experienced and have contracts in hand, and a demonstrable income stream, then you can probably do this. If however, you have created a company with no external history, no ready to go contracts, and no expertise, you will be shot down.

So... what's this first company all about?

My plan is to work on a second company (as owner) in a separate field while discharging my director duties for the first firm.


First of all, "owners" don't work in companies. They hold shares. They are passive investors. Employees work in companies. Directors may be "executive directors" which means that they are both employees and directors, and receive both a salary plus directors fees. "Outside directors" do not work as employees... they sit on the board of directors only and receive fees for handling the responsibilities of directors.

You need to understand that a P1 doesn't exist for your benefit, it exists for the benefit of Singapore based companies who allege that they cannot find suitable local talent; therefore, the gahmen grants then the right to hire EP's to fill the gap.

The law is quite clear. On a P1, you can only work for the company that provided you the P1. Everything I have seen is silent as to whether an outside director position is considered working for another company. But, clearly, as you have written it, this is not applicable anyway... you want to WORK in a second company as an employee or executive director.

You need to also be careful in small companies that you aren't actually doing work as an employee, while calling yourself a director and taking only fees. If you are selling, producing product, or doing the books for either company, you are not doing directors duties, you are an employee.

So... if I have this right, you want to own two companies as a sole shareholder in each company, and you want to work for each company that you own. And, your expectation is that after forming the first company, you are going to run on down to ACRA and form a second company with you as shareholder, director, and employee.

I predict this aint gonna happen. ACRA will reject you out of hand since you have an EP... you might get to be a shareholder but not a director... then MoM will refuse to issue a second EP, or might revoke your first EP to give you the second.

It might happen IF, a) You actually have a lot of money and a lot of experience... you present a very strong personal P&L, a solid business plan, and plenty of business experience, and I bet that someone will find a way to let you in. Or b), you apply for a PEP based on your income before coming into Singapore. PEP can work for more than one company.

After researching some of the posts in the forum I realized I may have a problem. Does MOM limit work to only the firm that sponsors your P1? As owner of both companies it never occurred to me that there could be a limitation on what work you conduct provided everything is declared to ACRA and IRAS.

Any thoughts?


Give us the legal status of the companies currently, your background and other details as I have noted above, and maybe there will be something else to add.

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Postby Strong Eagle » Thu, 05 Jul 2012 10:20 am

Based upon the comments you made in your PM to me regarding the nature of your business, the simplest thing for you to do is create a new pte ltd that is wholly owned by your first company.

Example: I create a pte ltd in Singapore. Later I created companies in Malaysia and Thailand that were wholly owned by my Singapore company. This put my Singapore company at risk. Therefore, I created a Singapore pte ltd holding company and transferred ownership of all three companies to the holding company. I was/am the managing director of both the holding company and the operating company in Singapore. Never had a problem.

If you go this route, one question is how to fund the newly created second company. You could either issue stock in an amount large enough to capitalize it and have your first company own it all, or you can make loans to the second company from the first. I'd stay away from capitalization and have first company loan the second company the start up capital. And if I were to infuse my own cash in the form of a loan, I'd loan the money to the first company, not the second, to keep an arm's length transaction.

Owning a subsidiary makes annual reporting and taxes somewhat more complicated. You'd really need to talk to an accountant about how to best repatriate profits to your first company and yourself.

As for your friend's suggestion on incorporating the second company in a zero tax country:

a) Singapore rules are clear about what is taxable in Singapore and what is not. See http://www.iras.gov.sg/irasHome/page04.aspx?id=460 for more information.

b) I'd be careful about trying to avoid too much Singapore tax. I am aware of a fellow that paid zero corporate and personal tax for several years, taking advantage of corporate startup allowances and no personal tax on dividends. He didn't get his PR renewed.

c) I'm an advocate of paying a "fair share" and therefore am not a good person to ask about schemes for tax avoidance... like those of our boy, Mitt Romney, in the US.

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Thanks!

Postby ComingSoon » Thu, 05 Jul 2012 12:54 pm

Strong Eagle wrote:Based upon the comments you made in your PM to me regarding the nature of your business, the simplest thing for you to do is create a new pte ltd that is wholly owned by your first company.


Hi Strong Eagle,

Thanks for all ideas and opinions. I've been exploring a wholly owned subsidiary option and may go that route if we can sort out the details.

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Re: Thanks!

Postby Strong Eagle » Thu, 05 Jul 2012 3:55 pm

ComingSoon wrote:
Strong Eagle wrote:Based upon the comments you made in your PM to me regarding the nature of your business, the simplest thing for you to do is create a new pte ltd that is wholly owned by your first company.


Hi Strong Eagle,

Thanks for all ideas and opinions. I've been exploring a wholly owned subsidiary option and may go that route if we can sort out the details.


My CPA got everything all set up for me, if you need someone to do it.


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