A Primer On Inward Re-Domiciliation Of Foreign Corporate Entities To Singapore.

Legal News & Analysis - Asia Pacific - Singapore - Regulatory & Compliance

7 December 2020

 

Re-domiciliation refers to the transfer of a corporate entity’s registration from one jurisdiction into another. In 2017, Singapore introduced the inward re-domiciliation regime to boost Singapore's standing as a global business hub.
 

The inward re-domiciliation regime facilitates the relocation of a foreign corporate entity’s regional or worldwide headquarters to Singapore without setting up a separate entity (subsidiary or branch) in Singapore. There is total continuity and minimal disruption to the redomiciled business’ operations as the entity essentially remains the same.
 

Upon re-domiciliation to Singapore, the foreign entity may opt to become a private company limited by shares or a public company limited by shares. It will be subject to the laws and regulations of Singapore.
 

Why Re-domicile to Singapore?
 

1. Business continuity: As the re-domiciled corporate entity effectively remains the same, the goodwill, credit rating, branding, reputation and track record of the corporate entity remain intact. The rights, obligations and liabilities of the re-domiciled company are not affected.
 

2. Taxation: Corporate taxation for Singapore companies is comparatively lower than in many other states. 
 

3. FTAs: The Singapore company may be able to take advantage of the various Free Trade Agreements that Singapore has entered into.
 

4. Stability: Singapore boasts a stable political, social and legal environment that is ideal for businesses. The key policies are always thoughtfully crafted, pragmatic and commercially driven. The World Bank ranked Singapore second in the world to do business in 2020. 
 

5. Gateway to ASEAN: Aside from its business-friendly regulatory environment, high governance standards and world class efficiency, Singapore also is a gateway to the region’s financial and capital markets, including the emerging markets within the ASEAN region.
 

6. Highly-skilled workforce: Largely English-speaking and highly skilled individuals constitute Singapore's workforce.
 

7. Singapore Government grants: There are various grants and co-funding schemes available to foreign corporate entities looking to operate in or relocate to Singapore. Government entities like the Economic Development Board (EDB) and Enterprise Singapore (ESG) provide support for foreign MNCs and start-ups respectively.
 

8. Hub for innovation: Singapore’s robust digital infrastructure and conducive business climate add to its allure of being a regional hub for innovation and R&D. Singapore is host to more than 50 biomedical science facilities for biopharma players such as Novartis, Roche and Merck Sharpe & Dohme (MSD)[1] . Singapore is also an attractive regional financial center for B2B fintech companies looking to operate globally, with the number of such companies in Singapore increasing by 70% from 2019 to 2020[2]
 

Criteria for Re-domiciliation
 

The minimum criteria for inward re-domiciliation to Singapore are as follows:
 

1. Size: The foreign corporate entity must meet any 2 of the below:
 

(i) value of the foreign corporate entity's total assets exceeds S$10 million;

(ii) annual revenue of the foreign corporate entity exceeds S$10 million; or

(iii) foreign corporate entity has more than 50 employees
 

If the foreign corporate entity is a parent company, the criteria will be assessed on a consolidated basis (even if the subsidiaries are not applying to re-domicile into Singapore).
 

If the foreign corporate entity is a subsidiary, the criteria will apply to the subsidiary on a single entity basis. Alternatively, the subsidiary will meet the size criteria if the parent company (which is either a Singapore-incorporated company or company re-domiciled into Singapore) meets the size criteria.
 

2. Solvency: The foreign corporate entity must fulfil the following criteria (as applicable): 
 

(i) there is no ground on which the foreign corporate entity may be found unable to pay its debts;

(ii) the foreign corporate entity is able to pay its debts as they fall due during the period of 12 months after the date of registration application;

(iii) the foreign corporate 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 registration application); and

(iv) the value of the foreign corporate entity's assets is not less than the value of its liabilities (including contingent liabilities).
 

3. The foreign corporate entity is authorised to and has complied with the requirements to transfer its incorporation under the laws of its place of incorporation.
 

4. The foreign corporate entity's first financial year end at its place of incorporation has passed, as at the date of registration application.
 

5. The application for transfer of registration is (i) not intended to defraud existing creditors of the foreign corporate entity; and (ii) made in good faith
 

6. There is no receiver or manager (and no proceeding to appoint the same) in possession or control over any property of the foreign corporate entity. The foreign corporate entity is not under any judicial management; liquidation; winding up; compromise; scheme of arrangement and/or other similar proceedings (and none pending).
 

Other Considerations
 

1. Jurisdictions permitting re-domiciliation to Singapore
 

A foreign corporate entity looking to re-domicile to Singapore must first ensure that it is from a jurisdiction that allows for outward re-domiciliation to another jurisdiction. 
 

Some of these jurisdictions include: Australia, Cayman Islands, Delaware (USA) and New Zealand. After the application for re-domiciliation has been approved, the foreign corporate entity will need to de-register from its original jurisdiction of incorporation and provide the Accounting and Corporate Regulatory Authority (ACRA) with evidence of the same.  
 

2. Singapore does not permit outward re-domiciliation
 

Singapore does not allow for outward re-domiciliation, which means that there is no option for companies to reverse their decision or re-domicile elsewhere after successful re-domiciliation to Singapore. Hence, all foreign entities that wish to undergo re-domiciliation to Singapore should carefully consider and weigh their options prior to doing so.
 

3. Application for re-domiciliation
 

Details and supporting documentation (such as, a certified copy of the constitution and certification of incorporation) of the foreign corporate entity will need to be provided to ACRA. 
 

The directors of the foreign corporate entity will also need to make a declaration that the entity fulfills the minimum criteria for re-domiciliation, as listed above. Once all the required documents have been provided and submitted to ACRA, ACRA may take up to 2 months from the date of submission to process the application for re-domiciliation. 
 

This article is produced by our Singapore office, Bird & Bird ATMD LLP, and does not constitute legal advice. It is intended to provide general information only.
 

bird-bird-eng 

 

For further information, please contact:

 

Sandra Seah, Partner, Bird & Bird

[email protected]

 

[1] https://www.edb.gov.sg/en/news-and-events/insights/innovation/for-global-innovators-all-roads-lead-to-singapore.html

[2] https://asia.nikkei.com/Business/Startups/B2B-fintech-startups-descend-on-Singapore