We shared in our prior article, that with the passing of the Singapore Companies (Amendment) Act 2017 (the "Act"), foreign corporate entities are now permitted to transfer (or "re-domicile") their jurisdiction of registration into Singapore, effectively enabling them to move their global operations/ headquarters into Singapore with relative ease, thus negating the potential loss of corporate history, branding and identity.
The provisions of the Act are, however, not absolute in the sense that any entity of any size or description may migrate into Singapore. There are, in this regard, certain criteria, which will need to be met by the foreign migrating entity prior to any application for re-domiciliation being approved. These include the following:
1. The foreign corporate entity must satisfy any two (2) of the following criteria:
- The value of its total assets must exceed S$10 million; or
- Annual revenue must exceed S$10 million; or
- The entity more than 50 employees.
(note: where the applicant foreign entity is a "parent" company, the criteria will be assessed on a consolidated basis (even if the subsidiaries are not applying to transfer their registration to Singapore).
2. The foreign entity will need to be solvent for the purpose of Singapore law. This means:
- There is no ground on which the entity could be found to be unable to pay its debts;
- The entity is able to pay its debts as they fall due during the period of 12 months after the date of the application for transfer of registration;
- The entity is able to pay its debts in full within the period of 12 months after the date of winding up (if it intends to wind up within 12 months after applying for transfer of registration);
- The value of the entity's assets is not less than the value of its liabilities (including contingent liabilities)
3. The entity must also be permitted to transfer its incorporation under the law of its place of incorporation and in addition, complied with the requirements of the law of its place of incorporation in relation to the transfer/ re-domiciliation
4. The application for transfer of the entity into Singapore is:
- Not intended to defraud existing creditors; and
- Made in good faith; and
5. As at the date of the application, the entity's first financial year end at its place of incorporation has passed; and
6. The entity is not under judicial management, not in liquidation or being wound up etc.
Once an entity has re-domiciled, it will become a Singapore company and has to comply with all Singapore laws (whether they be corporate or fiscal related). In this regard it should be noted that re-domiciliation does not:
- Create a new legal entity;
- Prejudice or affect the identity of the body corporate constituted by the foreign entity or its continuity as a body corporate;
- Affect the obligations, liabilities, property rights or proceedings of the migrated entity; and
- Affect legal proceedings by or against the foreign corporate entity.
Whether it be the significant number of business-friendly tax and trade agreements with global partners, the stable political environment, or the advanced business infrastructure, the introduction of the re-domiciliation regime is welcomed by many and a timely alternative for those international corporations looking to capitalise on the significant benefits which Singapore, as an internationally recognised financial and trade hub, has to offer.
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.