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Comparison of Singapore Representative Office, Subsidiary Company and Branch Office

This is an article that puts the spotlight on the features of three different business entities that are being adopted by foreign companies to carry out their operations. These are Branch Office, Representative Office and Subsidiary Company. The legislative provisions and requirements are different for these business entities. We are a company with loads of experience in incorporating business structures and thus we can provide invaluable help to you in setting up your business venture in Singapore.

Name of the Entity

The representative company has to keep the same name as its parent company, but this does not apply on the branch office and the subsidiary company that are free to choose their own names.

Allowed activities

It is the branch office that is required by law to carry on the same business activities as its parent company while the subsidiary company is free to carry on all business activities. A representative office can only carry out coordinating activities or market research activities.

Suitability

A subsidiary company is suitable for all foreign or local companies that have a desire to expand their activities in the country. A representative office is suitable for foreign companies that are desirous of expanding their operations in Singapore as it works as a temporary vehicle to carry out market research. A branch office is suitable for foreign companies desirous of establishing their base in Singapore.

Pitfalls

A representative office is unable to generate any revenue and it is only for market research and coordination. However, subsidiary company and branch office have many compliance issues with the authorities with financial reports being necessary for both. Audit and AGM’s are necessary for a subsidiary company while there is continuing compliance requirement of audits with the branch office.

Ownership

The branch office can be 100% owned by the head office while there is no ownership in the case of a representative office. It is the subsidiary office that can be owned 100% by the local company or the foreign owner.

Separate legal identity

It is only the subsidiary company that has a separate legal identity and both branch office as well as a representative office is not treated as separate legal entities.

Maximum number of members

There is a cap on the number of maximum members in the case of a subsidiary company that sands at 50 while this is not applicable in the case of a branch office and representative office.

Set up requirement

There has to be minimum one shareholder in case of a subsidiary company while a representative office has to appoint a Chief Representative at the start. A branch office is required to have 2 resident agents who must be Singapore residents.

Limited liability

Subsidiary company has limited liability while representative office and branch office do not have limited liability.

Audited accounts

Subsidiary company and branch office are required to keep audited accounts, but there is no such requirement in the case of a representative office.

Statutory filing requirements

Both subsidiary company as well as branch office is required to file audited returns with IRAS and ACRA while there is no such binding in case of representative office. Both are also required to file annual returns while this is not applicable to representative office.

Tax treatment

Subsidiary company is treated as a Singapore company by tax authorities and it also receives all benefits applicable to local companies. Branch office is treated as nonresident company and it does not receive benefits meant for local companies. There is no corporate tax on representative office.

Validity

A subsidiary company remains perpetual until it is deregistered. On the other hand, a representative office is a temporary vehicle that expires after 3 years. A branch office has to be deregistered otherwise it remains in operation.

Regulatory body

IRAS and ACRA regulate both the subsidiary company as well as branch office while a representative office is governed by International Enterprise Singapore.

Officer appointment

There must be at least one resident director in case of subsidiary company. There have to be 2 resident agents in case of a branch office. The representative office has to appoint a Chief Representative.

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