How can someone on a Dependant’s Pass set up their business in Singapore?
4 minute read
Are you currently on a Dependant’s Pass (DP)and considering setting up your own company in Singapore? If you are, the good news is that it is a common procedure although there are a few considerations to be taken into account.
This article will cover the most common considerations for starting a business on a DP:
- Starting a private limited company
- Requirements to register your company in Singapore
- Restrictions on starting a company on Dependent Pass
- Work visas
- Steps in the DP Incorporation process
Setting up your business on a DP in Singapore will typically involve two steps:
1) incorporating your company and opening your corporate bank account then
Starting a private limited company
When you set up a Private Limited Company (Pte Ltd), this means that you are creating a separate legal entity from yourself. It limits your liability as an individual – this means that if your company turns to custard, any debts or losses you incur while running your business will not impact any personal assets (such as your house) that you may own. Here’s a quick rundown of a private limited company in Singapore.
Main features of a Pte Ltd
- Has its own legal identity that is separate from its shareholders (owners) and directors
- Allowed to bring in new shareholders and investors as you grow
- Easy to transfer ownership if you sell the business in the future
- Shareholders are not directly liable for debts and losses
- Company’s profits are taxed at corporate tax rates generally lower than personal taxes
- Eligible for local tax exemptions and incentives
Requirements to register your company in Singapore
Here’s what you need to incorporate your company in Singapore:
- One local resident director: At the time of incorporation your local director must be either a Singapore citizen or permanent resident who is living in Singapore with at least 30% shareholding in the business.
- One shareholder: A shareholder can either be an individual or a corporate and can be 100% foreign. However, the shareholder needs at least 30% shareholding in the business.
- One company secretary: A corporate secretary is the legal representative for your company who helps you liaise with the government and keep your company compliant.
- Paid-up capital: The minimum paid-up capital to register a Singapore company is $1.
- A registered address in Singapore: this is where you will receive all official documents.
- Local or PR employee: The company need to have at least one Singaporean or permanent resident who earns at least S$1,400 and receives Central Provident Fund (CPF)
Restrictions on Starting a Company on a Dependent Pass
- A DP holder cannot be listed as a shareholder or director at the time of incorporation
- A DP holder can only be added as an employee of a Singapore company once:
– The company has been successfully registered (needs to exist before it can sponsor)
– The corporate bank account has been opened
– A Letter of Consent has been applied for and approved
- MUST apply for an applicable work pass such as an Employment Pass, S Pass, or work permit to work in Singapore
- A DP holder can only own one Letter of Consent (LOC) at a time
- A DP holder may be a director of a Singapore company after he/she obtains a Letter of Consent from the Ministry of Manpower, allowing the DP holder to act as a director for the said company.
Once you have incorporated your company, if you are on a DP you can either work for your company after applying for a Letter of Consent or by applying to change to an Employment Pass Visa. Both have different application requirements and we would be happy to connect you with our visa partners to support you to apply when required.
Letter of Consent (LOC)
Originally, one of the ways you can work for a company in Singapore if you are on a DP is by obtaining a Letter of Consent from the Ministry of Manpower. The application is made by the company that will be the employer – in this instance, it can be the company that you have incorporated, making you an “employee” of the company. The benefit of the LOC is that there is no minimum salary requirement.
However, there are changes with the new DP / LOC Law. Starting May 1 2021, DP holders will have to apply for an applicable work pass such as an Employment Pass, S Pass, or work permit to continue working in Singapore. However, those who are already working on Letter of Consent (LOC) can continue working until LOC expires.
Need more answers on the new DP / LOC changes? (Click here.)
If you do not want to be ‘just’ an employee but also a director of your company, you would need to apply for an Employment Pass visa. As this is a sponsored visa you can only apply for this visa after your company is first set up and your corporate bank account has been opened. The good news is that when you are successfully granted an EP under your own company you are eligible to act as your own local resident director! This means you don’t need to use a nominee director service saving you $. Find out how you can go about getting an EP in Singapore here. When you are ready to apply we would be happy to connect you with our visa partners.
To be eligible for EP, you need to first secure a job offer. An employer has to apply for an Employment Pass on behalf of the candidate. Once the pass is approved, a first-time candidate can stay and work in Singapore for up to 2 years.
It was announced in Aug 2020 that the minimum qualifying salary for Employment Passes and S Passes will be raised to S$4,500. The qualifying salaries for older and more experienced Employment Pass candidates in their 40s were also raised to around double the minimum qualifying salary for the youngest applicants.
Steps in the DP Incorporation Process
Week 1: Based off the above considerations, to start you can either appoint:
A) A friend with Singaporean Citizenship/PR as your local director. The Director cannot be another EP or DP holder, however they can be appointed as your shareholder.
B) Sleek’s Nominee (Local) Director Service PLUS another Executive Director (who can be 100% foreign and living overseas) to help you open the company and bank account (this Executive Director cannot be yourself or another existing DP or EP holder). Sleek’s Nominee Director cannot be the sole director of your company as it is only provided for regulatory purposes.
Week 2: After your company is incorporated, you arrange for your executive director to help you open your corporate bank account. You can select a bank directly via our platform once your company has been registered. More on opening a bank account here.
Week 3-5: Once the company is registered and the corporate bank account opened our visa partner can help you to apply for the Letter of Consent (LOC). This will allow the DP Holder to work as an employee under the company.
If you’re ready to take your business from dream to reality, we can help you make it happen. Get tailored, practical advice from us about your situation – get in touch with us today.