Singapore Representative Office: A Temporary Setup For Foreign Companies

Some foreign businessmen and investors in Singapore

, especially those in the speculative market, believe that conducting market research before engaging in to a full-blown operation is a crucial move in order to avoid financial losses. With this, the government has created a type of business arrangement called a representative office which will allow foreign companies to determine the viability of their businesses.

In strict legal terms, a Singapore representative office is not a business entity per se as it is prohibited to engage in any activities that will generate revenue. In fact, this office is only allowed to conduct limited non-commercial activities.

This setup is primarily designed to allow foreign companies to conduct an extensive market research, thus allowing them to know if they have a high success rate in their respective sector.

Market research may be imperative for some foreign companies as it will allow them to test the market first before making a crucial decision on their business.

Aside from conducting market research, a representative office may also supervise the local agents and distributors of its parent company, provide assistance to customers as long as it will not be related to repair and technical services, and act on behalf of its parent company in negotiation but is prohibited to enter in to any legal contracts.

Despite the limitations of this setup, this is one of the most important steps in business.

To operate a representative office in Singapore, the most crucial requirement is the appointment and relocation of a chief representative who must come from the main headquarter. However, it is important to remember that foreign companies are only allowed to hire a limited number of employees, both foreign and local, who will perform the activities of this auxiliary office.

Foreign companies should register their Singapore representative office to the International Enterprise Singapore which is the governing body in this sector. But since any foreign entities are prohibited to self-register their own business, the firm said that it is a legal requirement to hire a professional registration company.

For foreign companies, the business registration firm believes that they should only see their representative office as a temporary setup since the authorities prohibit anyone to operate this office for more than three years.

by: Diane Enriquez

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