subject: Singapore Representative Office: A Good Launch Pad for Foreign Businesses [print this page] Singapore Representative Office: A Good Launch Pad for Foreign Businesses
In some cases, conducting feasible studies and market research before making an investment is a good step for companies especially those who are operating in a speculative but promising market.
With this, some foreign companies in Singapore have registered a representative office which is designed to perform non-commercial activities that aim to determine the profitability and viability of their products and services.
After proving the viability of a certain business, it is then safer to engage in a full operation and make huge investments.
Under the Singapore law, a representative office is not really a legal business entity but rather an administrative arrangement in which its activities should not be commercial in nature and will not generate profit.
According to the Accounting and Corporate Regulatory Authority (ACRA), these are the only activities a representative office can engage to: establish business contacts, oversee its parent company's local distributors and agents, conduct extensive market research, and perform liaison services without entering in to a legal contract.
It is important to remember that a Singapore representative office is prohibited to perform profit-generating activities, lease warehouse facilities, lease office to another establishment, enter in to any agreements and contracts, and undertake commercial activities.
Meanwhile, these are the basic information about a representative office:
A foreign company should register its representative office annually up to a maximum of three years. And after this period, it should shift to another business arrangement such as a subsidiary company or branch office if it wants to continue its presence in the country.
As an extension of its parent company, a representative office should bear the same name unless if this is already being used in Singapore or the authorities deem it as vulgar or indecent.
It is a legal requirement to appoint a chief representative officer from the main headquarter who will personally head the office.
A parent company is legally liable for the acts and losses of its Singapore representative office.
This office is only allowed to employ a limited number of foreign and local workers who will only perform non-commercial activities.
Because a representative office is not an incorporated company, it is not a requirement to perform corporate legalities and formalities such as submitting the tax returns, maintaining statutory documents, and conducting general meeting.
This office should inform other business entities about its status through its communications materials, staff's name cards, and name plaque.
