Guide To Retail Success: The Sale Of Jewellery In Singapore

I. Introduction

Singapore continues to be a prime destination for multinational companies looking to establish retail operations in Asia. However, understanding the legal framework governing various sectors of the retail industry is critical for success. This article will explore the key requirements that dealers of jewellery or other products comprising precious stones and metals must navigate in order to operate in compliance with Singapore laws. For businesses seeking to sell jewellery in Singapore, knowing the legal framework is critical in ensuring that those businesses avoid costly penalties and operate successfully in this dynamic market.

II. Choosing the appropriate business structure

Before embarking on the journey of selling jewellery in Singapore, it is essential to first establish a legal foundation for one's business. This step would include selecting the appropriate business structure - whether it is a sole proprietorship, partnership or private limited company.

Based on our experience, most jewellery businesses opt to incorporate a Singapore private limited company due to its advantages in terms of limited liability, tax benefits, and greater credibility with customers and suppliers. The following are some points to note on the process of incorporating a Singapore private limited company:

1. The first step of the incorporation process is to choose a company name and submit a name application via the Accounting and Corporate Regulatory Authority (ACRA). The proposed company name must not be identical to an existing name nor contain prohibited or undesirable words.
2. Once the name has been approved by ACRA and reserved, the applicant will have 120 days in which to prepare the required documentation in order to proceed with the incorporation. The key requirements for the new company are as follows:
   1. have at least one (1) shareholder (individual or corporate entity);
   2. initial issued share capital of at least one (1) share;
   3. have at least one (1) locally resident director in Singapore;
   4. have a registered office address in Singapore;
   5. have a resident company secretary in Singapore; and
   6. have a constitution.

III. Dealing in precious stones and precious metals

A. Registration requirement

Now that the company has been incorporated, the next step to take, before any item is marketed or placed for sale, is to consider whether the company will need to obtain any licensing or registration to carry out the intended retail activity. In this case, the intended retail activity is the sale of jewellery or other products comprising precious stones and metals, and such activity may fall within the scope of the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 (PSPM Act).

In accordance with the PSPM Act, a person must not act as, or hold himself out to be, a person who carries on a business of "regulated dealing", without first being registered under the PSPM Act as a "registered dealer". The PSPM Act defines "regulated dealing" as doing any of the following:

1. manufacturing any precious stone, precious metal or precious product;
2. importing or possessing for sale any precious stone, precious metal or precious product;
3. selling or offering for sale any precious stone, precious metal or precious product;
4. selling or redeeming asset backed tokens; or
5. purchasing any precious stone, precious metal or precious product for the purposes of resale.

As the list of regulated dealing includes the sale (or offering for sale) of any "precious stone", "precious metal" or "precious product", it is important to understand what falls within the scope of "precious stone", "precious metal" and "precious product".

For the purposes of the PSPM Act, the term "precious metal" refers to any gold, silver, platinum, iridium, osmium, palladium, rhodium, ruthenium and an alloy with at least two per cent. (2%) in weight of any of the metals mentioned. The term "precious stone" refers to any diamond, sapphire, ruby, emerald, jade and pearl.

For any business looking to sell jewellery and other products comprising precious stones and metals, the important definition is that of "precious product". Under the PSPM Act, the term "precious product" means any jewellery, watch, apparel, accessory, ornament or other finished product:

1. made up of, containing or having attached to it, any precious stone or precious metal or both; and
2. that satisfies either of the following:
   1. at least 50% of the value of the jewellery, watch, apparel, accessory, ornament or other finished product (or other percentage of value prescribed in substitution) is attributable to the precious stone or precious metal or both; or
   2. the jewellery, watch, apparel, accessory, ornament or other finished product is priced above the prescribed value of S$20,000,

but excludes:

1. any machinery, tool or equipment used for industrial purposes; or
2. any medical device within the meaning given by item 1 of the First Schedule to the Health Products Act 2007.

A person who acts as, or holds himself out to be, a "regulated dealer" but who has not been registered under the PSPM Act shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$75,000 or to imprisonment for a term not exceeding three (3) years or to both. In the case of a continuing offence, the person shall be liable to a further fine not exceeding S$7,500 for every day or part of a day during which the offence continues after conviction.

B. Registration process

Below is an overview of the registration process as a regulated dealer under the PSPM Act:

1. Step 1 - Submit application: On the GoBusiness Licensing Portal, the applicant will need to complete and submit the application form for registration and pay the application fee of S$120. The registration must be made on an annual basis.
2. Step 2 - Registrar processes application: The Registrar (being the Ministry of Law) may contact the applicant for any clarifications. If the Registrar believes that the applicant is a fit and proper person, in-principle approval may be granted around four (4) weeks after the application is submitted.
3. Step 3 - Pay registration fee: Depending on the selected class of registration, a registration fee of S$250 or S$350 per place of business must be paid within 30 days after receiving in-principle approval.
   1. For the registration tier of "Class A", the registration fee is S$250 per outlet annually. The registration is subject to a condition that the net price of every precious stone, precious metal, precious product or asset-backed token that is, or is to be, sold by the registered dealer is less than S$2,000 apiece.
   2. For the registration tier of "Class B", the registration fee is S$350 per outlet annually. The registered dealer is allowed to sell precious stones, precious metals, precious products or asset-backed tokens of any value.
4. Step 4 - Registrar issues certificate: After the Registrar receives payment of the registration fee, the applicant will be sent an approval email notification with the Certificate of Registration.

IV. Concluding remarks

As may be seen from the above, the sale of jewellery and other precious products in Singapore is governed by a range of legal requirements, including those related to business registration. Given the consequences and the heightened scrutiny on money laundering, terrorism financing and proliferation financing, it is crucial for retail businesses in this sector to ensure compliance with all applicable laws and regulations in Singapore before embarking on the sale of jewellery or other products comprising precious stones and metals. When in doubt, it is highly recommended to seek professional legal advice to navigate the legal landscape effectively and mitigate potential risks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.