Enhancement of Singapore as a regional hub.
In a public consultation exercise that ran from 26 October to 16 November 2016, the Ministry of Finance (MOF) and the Accounting and Corporate Regulatory Authority (ACRA) sought public feedback on the proposed introduction of an inward re-domiciliation regime in Singapore (the Proposed Regime). The Proposed Regime will allow a foreign-incorporated entity (Foreign Entity) to transfer its registration from its original jurisdiction to Singapore, while preserving its identity and history. Currently, re-domiciliation regimes may be found in jurisdictions such as Australia, Canada, and New Zealand.
A company may want to seek re-domiciliation for a variety of reasons, the most common being that the new host jurisdiction offers a preferable tax or regulatory environment. Alternatively, a company may wish to obtain financial or fiscal benefits and improved access to financial and capital markets associated with the new host jurisdiction.
Notably, the Foreign Entity must be able to adapt its original legal structure to constitute a company limited by shares under Singapore laws if it wishes to obtain re-domiciliation to Singapore.
Proposed Requirements for Re-domiciliation
The foremost requirement is that the Foreign Entity must be of a certain minimum size. The proposed approach is to use the criteria for “small company” and “small group” in the Thirteenth Schedule of the Singapore Companies Act (Cap. 50). At the company level, the criterion is that a company is a small company if it is a private company throughout the relevant financial year and satisfies any two of the following criteria:
- Revenue for each financial year does not exceed S$10 million
- Value of its total assets at the end of each financial year does not exceed S$10 million
- No more than 50 employees at the end of each financial year.
The other proposed requirements for transfer of registration to effect re-domiciliation are, among other things, the following:
- Laws of the Foreign Entity’s home jurisdiction permit re-domiciliation, and all relevant requirements of the home jurisdiction have been complied with
- Application for registration is not intended to defraud existing creditors of the Foreign Entity
- Foreign Entity must provide a solvency statement (or proof of a genuine intent to restructure for distressed foreign entities) and
- Foreign Entity must lodge with the Registrar certain documents as prescribed under the proposed section 354E of the Singapore Companies Act.
The Registrar has the discretion to register or not register the Foreign Entity or to impose other conditions.
Effects of Re-domiciliation
A Foreign Entity that successfully re-domiciles to Singapore will become a Singapore company and must comply with the requirements of the Singapore Companies Act.
Re-domiciliation will 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 property, rights or obligations of the Foreign Entity; or
- affect legal proceedings by or against the Foreign Entity.
Duties Following Re-domiciliation
After the transfer of registration, the re-domiciled Foreign Entity must
- de-register in its place of incorporation;
- update its registration details in all its business correspondence within three months;
- register pre-existing charges which have been created prior to the re-domiciliation of the Foreign Entity (in accordance with the existing registration regime under Division 8 of part IV of the Singapore Companies Act) within 30 days; and
- complete and have ready for delivery share certificates to all persons registered as holders of existing shares or debentures within 60 days.
Through these updates to the Singapore regulatory framework for corporations, MOF and ACRA thus seek to ensure that Singapore’s corporate regulatory regime remains internationally competitive and robust by offering foreign companies the opportunity to seek re-domiciliation to Singapore in appropriate cases.