Navigating the recent tax changes in Singapore, Malaysia, Hong Kong, & China

Navigating the recent tax changes in Singapore, Malaysia, Hong Kong, & China

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Navigating Tax Changes in the Year of the Dragon  

Happy Lunar New Year!  As we step into the Year of the Dragon, we are pleased to share key insights into Asia's tax landscape. This month, we take a closer look at the various tax changes across the region, and help you navigate your way through each of them. 

Our Regional Tax Team is committed to assist you in navigating these changes, to ensure your business is well-positioned for success throughout the Year of the Dragon and beyond. 

 
 

Thinking About Starting a Business in Singapore? Here's what you need to know

Singapore's economic stability makes it a magnet for businesses. There are endless opportunities for entrepreneurs, regardless of the industry. Our latest article,Startup companies in Singapore: where are the opportunities?, sheds light on the key insights for a successful set-up and discover how BoardRoom's expertise can help your company soar.

 
 

Singapore

Fundamental Shift in Tax Landscape: Introduction of Section 10L in Singapore
Singapore has recently enacted Section 10L in the Income Tax Act, marking a fundamental shift in the tax landscape. Effective from 1 January 2024, gains from the sale of foreign assets will be treated as taxable income if the entity lacks adequate economic substance in Singapore or if the gains arise from the disposal of a foreign Intellectual Property Right (IPR). 

This move is a clear signal of Singapore's commitment to prevent international tax avoidance risks and attract substantial economic activities. We share more on this in our report. 
 

 
 

Malaysia

Capital Gains Tax: Unlocking Opportunities in Malaysia
Our spotlight shines on Malaysia's tax landscape, specifically the notable exemption on gains from the disposal of shares in unlisted Malaysian-incorporated companies. 

This tax exemption is a strategic move to encourage investment in unlisted Malaysian companies, potentially boosting capital inflows, supporting local businesses, and promoting economic growth in the Malaysian market. Find out what this means for you in our report. 
 

 
 

Hong Kong

Pillar Two of BEPS 2.0 Implementation: Hong Kong's Proactive Approach
The Hong Kong government is taking active steps towards aligning with global efforts to ensure multinational enterprises contribute their fair share of taxes. In line with Pillar Two of BEPS 2.0 framework, Hong Kong plans to adopt the global minimum tax rate of 15% and introduce a domestic minimum top-up tax starting from 2025.  

As part of a collaborative approach, a consultation process is currently underway to gather feedback on the proposed implementation, and the legislative amendments are expected to be introduced in the second half of 2024.  Our report takes a closer look at what this will mean for businesses operating in the region.
 

 
 

China

Foreign Trade and Investment: Navigating Policy Changes in China
As China remains a key player in the global economy, it is crucial to stay updated on all the various policy changes that will impact foreign trade and investments. With all the measures that China has made on their foreign-trade policies to help encourage investments, take a deep dive in our report to see how these policies will affect your business.
 

 
 

 
 

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All rights reserved.

Our mailing address is: [email protected]

 

Beyond Compliance: How ESG Factors Impact Corporate Sustainability

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Beyond Compliance: How ESG Factors Impact Corporate Sustainability

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2024, the year where future-ready companies will position sustainability at the core of their business strategies. ESG, once a complex and unfamiliar scape is now increasingly the focus of companies worldwide. The days where a company's performance is assessed by its financial bottom line is long gone. In today's world, investors and stakeholders place equal importance to how a company navigates environmental, social, and governance (ESG) factors, alongside traditional financial metrics.

But what factors affect your company's corporate sustainability initiatives and in turn, impacts profitability? We share more in our latest report.

 
 
 
 
 
 

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Updates on Companies (Amendment) Bill 2024 and Accelerated Transfer Process from ACE to Main Market

Updates on Companies (Amendment) Bill 2024 and Accelerated Transfer Process from ACE to Main Market

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Dear {{Recipient.FirstName}},

As 2023 wrapped, the Malaysian business world saw some significant updates that were designed to benefit the companies that they affect. We take a closer look at these developments and share what you need to know about:

  1. Dewan Negara passing the Companies (Amendment) Bill 2023 on 13 December 2023 and, 
  2. The introduction of the accelerated transfer process by the Securities Commission Malaysia (SC).
 
 

Companies (Amendment) Bill 2023 passed by Dewan Negara on 13 December 2023

The Companies (Amendment) Bill 2023 was passed by Dewan Rakyat on 28 November 2023 and by Dewan Negara on 13 December 2023. Some key amendments to the Companies Act 2016 include the establishment of a framework for reporting the beneficial ownership of companies and the enhancement of existing provisions regarding the restructuring and corporate rescue mechanisms of companies. Learn about all the changes in our report.

 
 
 

Transfer of ACE Market Listed Corporation to the Main Market via the Accelerated Transfer Process

Aimed to enhance the stock market vibrancy, and reduce market friction, the Securities Commission Malaysia (SC) has recently introduced an accelerated transfer process for eligible ACE Market-listed companies. This move will facilitate the transition of ACE Market-listed companies to the Main Market of Bursa Malaysia.

In order to qualify, these companies must fulfil the profit requirements set for the Main Market listing. The regulatory framework governing this initiative came into effect on 1 January 2024, following amendments to the Equity Guidelines, as announced by the SC.

The introduction of the streamlined and expedited transfer process is designed to encourage ACE Market-listed companies to continually enhance their corporate values, fostering sustainable growth for shareholders. We share more on these changes in our report.
 

 
 
Please reach out to your respective client managers in BoardRoom or email us at [email protected] should you require further clarification. 
 

 
 
   

Copyright© 2024 Boardroom Pte Ltd.
All rights reserved.

Our mailing address is: [email protected]

 
 

The power of BPO in facilitating overseas business growth

The power of BPO in facilitating overseas business growth

The power of BPO in facilitating overseas business growth

Expanding a business overseas is a critical growth goal for many organisations. The appeal of new markets is enticing, but the challenges of moving into offshore territories can be overwhelming.

Understanding and complying with diverse, unfamiliar legal frameworks, tax structures and regulatory compliance standards in foreign territories is a complex process, and non-compliance can result in far-reaching consequences for any business. For owners, entrepreneurs and leaders keen to pursue overseas opportunities but needing an in-depth understanding of local issues, specialist business process outsourcing (BPO) services can be essential to safe and successful expansion.

Through a BPO partner, businesses gain insights into local compliance and strategic support in navigating the intricate process of establishing and growing your presence in new markets.

In this article, we explore what a BPO provider is, what they do for their clients, and how BPO can help clients navigate regulatory complexities when considering expansion into Asia.

What is BPO? Your key to successful international expansion

Running a business, especially one that is expanding globally, is complex and can be fraught with compliance risks. Missteps in unfamiliar areas can lead to significant consequences, demanding careful navigation, knowledge and skills. That is where business process outsourcing (BPO) comes in. BPO occurs when a business outsources critical backend functions to external entities.

However, it’s important to recognise that certain functions will come with an increased need to find a provider that specialises in regulatory compliance.

Some of these functions are:

When you engage an expert BPO service provider with specialised skills in regulatory compliance to outsource these critical functions to, your staff can concentrate on your business’s core competencies. By working with an expert provider and also being aware of how each function interplays with your company’s broader operations and expansion goals, risk can be mitigated, ensuring the integrity and continuity of your core business activities.

There are several fundamental advantages of partnering with a compliance focused BPO provider:

Access to specialised skills and local knowledge that may not be readily available within your organisation. This expertise ensures accuracy in compliance and allows easier navigation of in-country requirements and valuable insights into local markets.
Efficiently scale operations especially when expanding internationally, by tapping into vast pools of experienced professionals through the services provided.
Gain access to advanced technologies compliant with regulations, allowing optimisation of internal processes, guaranteeing streamlined operations, while mitigating the risk of non-compliance.
Benefit from a commitment to adapt to changing regulations while maintaining stringent compliance standards, mitigating risks, and ensuring continuous agility in navigating a dynamic regulatory environment.
Your key to successful international expansion

Navigating your expansion into Asia

Asia’s robust economic growth and diverse markets make it an increasingly attractive destination for business expansion. In this rapidly growing business environment, understanding the key factors crucial for successful business expansion is pivotal for tapping into the region’s unique opportunities.

Here are four important factors to look out for in selecting your BPO provider:

The complexity of local regulations

Business owners entering new markets in Asia must understand that the regulatory landscape in the region has evolved and continues to evolve rapidly. Hugo Walkinshaw, Group Chief Executive Officer of BoardRoom, has this advice for foreign investors entering Asia. “There’s some commonality among Commonwealth countries, but you cannot assume if you have a footprint in one country, you can easily take that elsewhere. We advise businesses to be aware that Asia’s not one place.”

Just as every country has a unique culture, language, time zone and climate, so too are its regulatory framework, laws, processes and ESG standards. Therefore, it is recommended you get advice from a BPO provider who has the experience in regulatory compliance and deep relationships with the regulators in the country you are planning to enter.

Owners and business leaders who fail to consider the complex regulations are putting their personal and business reputations at risk.

Compliance focused BPO provider

Leveraging technology in an evolving regulatory landscape

Technology is changing how businesses operate, and the regulations that govern technology are also evolving rapidly. This complexity is magnified in Asia due to the diverse legal and technological landscapes across different countries.

An example is data security, which has become increasingly complex in a rapidly-digitised world where data is valuable, and automation is commonplace. Businesses have a duty of care to themselves, their staff and their customers to protect data and information systems. A service provider with sound security systems in place is an essential layer of protection to your business, ensuring compliance with local data protection laws. This is especially crucial for functions like payroll, where sensitive employee data must be handled with care and accuracy across different legal frameworks.

Partnering with a compliance-focused service provider who understands these regulations and leverages the latest technology provides assurance that compliance requirements are consistently met.

Geopolitical and economic concerns

The Y2K scare, the 1997 Asian crisis, the 2007-08 Global Financial Crisis and COVID-19 – the past two decades have been punctuated by massive economic uncertainty and geopolitical volatility. These factors make for an increasingly complex environment for businesses. However, Hugo says economic opportunities in the region are still compelling.

A corporate services provider that offers an integrated suite of services across multiple countries can leverage regional expertise and serve as a single point of contact for businesses moving into Asia. Furthermore, businesses ought to seek a seasoned provider with a appropriate market presence that is aligned with your expansion goals. These providers will have first-hand experience navigating legislative changes and are better positioned to address the needs of businesses amidst volatile geopolitical and economic uncertainty.

Ensuring the right coverage

When choosing a BPO provider, it is important to understand their size and scale. What services do they provide, and which countries do they operate in?

Businesses entering Asia will find many providers that Hugo calls “single-service, single-country local players”. But these might not offer a comprehensive enough service for your business. Choosing a provider that operates in several countries with a range of services is often a better option, allowing your business to enter whichever country you decide to expand into.

Furthermore, a service provider with regional expertise and integrated services like corporate secretarial and tax advisory can also help optimise your business’s tax payouts. This starts at the incorporation stage with the advice on the most advantageous business structure. Different business structures have varying tax implications, and a knowledgeable service provider can navigate these intricacies to ensure that your business benefits from tax efficiency while remaining compliant.

Leveraging technology in an evolving regulatory landscape

BoardRoom: your compliance focused BPO partner

Successfully establishing a business in Asia requires a deep understanding of its laws and regulatory structures. Regulatory compliance-focused BPO service providers equipped with this expertise offer invaluable guidance to help businesses navigate the complexities of regional expansion. They take on the responsibility of a range of business processes, freeing up your time and resources to grow your business.

At BoardRoom, we have the regional expertise to help your business navigate the complex regulatory landscapes and technology integration in various Asian nations.

Our multi-service offering and our years of experience managing cross-border expansion means you get integrated, efficient solutions to help your business succeed:

Contact our team for your expansion needs now!

Related Business Insights

Tax Insights on SG’s Foreign-Sourced Disposable Gains Tax, HK’s Onshore Equity Disposable Gains, and more

Tax Insights on SG’s Foreign-Sourced Disposable Gains Tax, HK’s Onshore Equity Disposable Gains, and more

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18 January 2024


All the Latest Tax Policies and Amendments from Around the Region

Welcome to the first issue of BoardRoom’s Tax Insights for 2024. With the recent tax changes in Malaysia, our Tax team will be conducting a complimentary webinar to help employers and directors navigate these updates. This issue will also cover Singapore’s recently announced Foreign-Sourced Disposal Gains Tax Regime and Hong Kong’s Tax Certainty Enhancement Scheme for Onshore Equity Disposal Gains.
 

 
 

Take Workplace Performance to The Next Level with Employee Share Option Plans

In a recent report, it was found that over 80% of companies in Asia use employee share plans as a strategy for growth. BoardRoom explores the potential benefits and drawbacks of employee share options plans (ESOPs) for your business as a strategy for growth. Discover their possible pros and cons here.

 
 

Malaysia

Complimentary Tax Webinar on 31 January
With all the changes in the tax landscape in Malaysia, the obligation to stay abreast falls on the company's officers and directors. How will these changes affect the directors and the company in general?

Join us in our upcoming complimentary webinar with our team of experts as they share more on the different tax obligations that employers cannot overlook, to the tax changes announced during the recent Budget that may impact your organisation’s bottom line. Register now to secure your spot. 

Date: 31 January 2024
Time: 2p.m – 3.30p.m
 

 
 

Singapore

Foreign-Sourced Disposal Gains Tax Regime
On 8 December 2023, the IRAS has issued a new e-Tax Guide for Tax Treatment of Gains or Losses from the Sale of Foreign Assets. Currently, gains from the sale of foreign assets that are capital in nature are not taxable. In a move to address international tax avoidance risks relating to non-taxation of disposal gains in the absence of real economic activities, Singapore has recently amended their foreign-sourced income regime to subject foreign-sourced disposal gains to tax under specific circumstances.

The e-guide explains the income tax treatment of gains or losses from the sale or disposal of movable or immovable property that are situated outside of Singapore. Learn more about it in our report.
 

 
 

Hong Kong

Hong Kong Implements Tax Certainty Enhancement Scheme for Onshore Equity Disposal Gains
Hong Kong enacted the Inland Revenue (Amendment) (Disposal Gain by Holder of Qualifying Equity Interests) Ordinance 2023 on 15 December 2023. The ordinance introduces the tax certainty enhancement scheme for onshore equity disposal gains which includes details of the tax treatment of gains from the disposal of equity interests. Under the scheme, gains on equity interests held for at least 24 months and constituting no less than 15% of the investee entity's total equity interests will be deemed non-taxable and certain exclusions will apply.

The scheme will be applicable to the gains where the disposal occurs on or after 1 January 2024 and will position Hong Kong as an international business and investment centre. Read all about it in our report. 
 

 

Country

Event

Date

Registration

MalaysiaWebinar
Navigating Recent Tax Changes in Malaysia: A Guide for Employers and Directors
31/01/2024 at 2p.mRegistration closed
MalaysiaWebinar
Malaysia’s E-Invoicing Initiative: Accelerating Your Organisation's Readiness
06/02/2024 at 2p.mRegistration closed


 

 

 
 

Copyright © 2024 Boardroom Pte Ltd.
All rights reserved.

Our mailing address is: [email protected]

 

Singapore’s variable capital company: a guide to VCC benefits and setup

Singapore’s variable capital company a guide to VCC benefits and setup

Singapore’s variable capital company: a guide to VCC benefits and setup

In the evolving landscape of Singapore’s financial sector, variable capital companies (VCCs) have emerged as a prominent and flexible solution for diverse investment needs.

Thanks to its innovative structure, the VCC has led an increase in investment flows into the city-state, and has helped to propel Singapore firmly onto the global stage as a destination of choice for fund managers and family offices. This has also led to opportunities for professionals through the creation of local jobs. In response to the high demand, the Singaporean government recently extended the Variable Capital Companies Grant Scheme to 15 January 2025.

This article provides an overview of the VCC to help you decide if it is the right investment vehicle for you. In consultation with multiple business experts, we explain what a variable capital company is and the benefits it offers. We will also explain the setup process and provide advice for giving your entity the best chance of success in the region.

The VCC structure and its unique benefits

The VCC is an innovative structure offering many benefits for investment managers in Singapore – particularly high-net-worth individuals and families.

“The introduction of the VCC Framework at the start of 2020 further strengthened Singapore’s value proposition as a leading full-service asset management hub,” explains Eunice Hooi, Head of Corporate Secretarial for BoardRoom Singapore.

Like private limited companies, VCCs are governed by a board of directors and have shareholders who own shares in the fund. They also offer limited liability for shareholders and directors, as they are considered a separate legal personality (this means that shareholders and directors are protected in cases of litigation against the company).

However, VCCs have unique benefits that may make them a preferred structure for investment managers. In contrast to other investment structures, VCCs offer:

  • operational flexibility;
  • tax efficiency, and
  • privacy.
The VCC structure and its unique benefits
Operational flexibility
VCCs offer investors and fund managers a high level of flexibility across different fund strategies, investor and asset classes.

Importantly, fund managers can use VCCs for both open- and close-ended funds. Open-ended funds allow investors to freely invest, redeem or withdraw shares without shareholder approval, empowering them to respond swiftly to market changes. “VCCs can also pay dividends out of capital, giving fund managers the flexibility to meet their dividend payment obligations,” says Zhan Aijuan, Senior Manager of Corporate Secretarial for BoardRoom Singapore.

In addition, VCCs can incorporate new funds and re-domicile existing funds to a new location.
Tax efficiency
VCCs can access a variety of beneficial tax treatments. Even VCCs with sub-funds are recognised as a single entity at tax time. Distributions from VCCs in Singapore are usually tax-exempt, and the VCC itself may qualify for tax-exemption schemes such as the Singapore Resident Fund Scheme and Enhanced-Tier Fund Scheme.

“VCCs can also enjoy the extensive tax treaty network that the Singapore government has with over 85 countries,” Eunice adds.
Privacy
While VCCs must submit financial statements to regulatory authorities, they do not need to make these documents publicly available. They can also keep their list of shareholders confidential. This means they offer extra privacy and confidentiality for shareholders.

VCCs can be set up as:

  • a standalone fund or
  • an umbrella VCC with two or more sub-funds, each holding a portfolio of separate assets and liabilities.

Josephine Toh, Associate Director of Corporate Secretarial for BoardRoom Singapore, adds that umbrella VCCs can offer valuable economies of scale.

“VCCs need to appoint a variety of professionals, such as fund managers, company secretaries and auditors,” she says. “Umbrella VCCs enable investors to achieve economies of scale by splitting the cost of using the same professionals across all sub-funds.”

Further, the fund managers can claim a 30% reduction on qualifying VCC set-up costs paid to Singapore-based service providers through the Variable Capital Companies Grant Scheme.

Regulatory requirements for VCCs

Compliance requirements for VCCs encompass stringent reporting standards and governance mechanisms to promote transparency and accountability.

The Variable Capital Companies Act governing VCCs in Singapore is relatively new, and therefore will continue to develop. Fund managers must ensure their VCC complies with this legislation as it evolves.

VCCs also have obligations to the Monetary Authority of Singapore (MAS), such as the implementation of processes for anti-money laundering and countering the financing of terrorism.

Key requirements for the setting up of VCCs include:

  • at least one ordinarily resident director in Singapore;
  • one qualified MAS licensee as a fund manager (this can be the same person as the local resident director);
  • a registered office in Singapore;
  • a Singapore-based company secretary; and
  • an auditor and annual audits.

Setting up a Singapore VCC

A prominent feature of the VCC framework is the option for fund managers to either set up a new VCC or re-domicile their existing investment funds with comparable structures to Singapore. This flexibility offers a range of advantages and can significantly enhance the fund manager’s operations. Below are the steps in incorporating a new VCC or re-domiciling existing investment funds.

Incorporating a new VCC

Companies seeking to expand their presence in Singapore or tap into the benefits of the VCC structure can set up a new VCC. Here are the key steps involved:

INCORPORATING A NEW VCC

Register a name

Register a VCC name via the VCC Portal. Once approved, the VCC must be incorporated within 120 days and adhere to any potential reviews by Referral Authorities.

Determine the VCC type

Decide between establishing a non-umbrella VCC or an umbrella VCC that contains multiple sub-funds with segregated assets and liabilities.

Appoint key personnel

Appoint VCC officers, including director, company secretary, auditor and fund manager. At this point, you will also need to decide on the VCC's first financial year end (FYE) and determine the accounting period length.

Register the office address and constitution

Provide a publicly accessible registered office address for the VCC and submit a constitution detailing the VCC's governance, operations and key stakeholder rights and responsibilities.

Incorporate the new VCC

This can be done directly through the VCC Portal or via a registered filing agent or corporate service provider. The processing time can range from 14 to 60 days, depending on any additional governmental reviews.

Register any sub-funds for an umbrella VCC

Register individual sub-funds under an umbrella structure of a VCC.

Re-domiciling existing investment funds

Re-domiciling existing investment funds

For fund managers with existing overseas investment funds that align with the VCC framework’s criteria, the option to re-domicile these funds to Singapore can be an efficient and cost-effective strategy. This process involves transferring the registration and legal domicile of an existing fund to Singapore while retaining its existing structure. Here are the key requirements needed for re-domiciling existing investment funds:

Eligibility assessment: Fund managers must first determine whether their existing investment funds meet the criteria for re-domiciliation to a Singapore VCC. The existing fund should have a similar structure and characteristics to that of a VCC, making it a suitable candidate for re-domiciliation.

Approval from shareholders: In most cases, the existing fund’s shareholders must approve the re-domiciliation. This process may require a special resolution or a majority vote, per the fund’s existing legal structure.

Regulatory compliance: Fund managers should ensure that the re-domiciliation process aligns with the regulatory requirements of both the fund’s current jurisdiction and Singapore.

Transfer of assets and liabilities: As part of the re-domiciliation process, assets and liabilities of the existing fund must be appropriately transferred to the newly incorporated Singapore VCC. If applicable, this transfer process should ensure the segregation of assets and liabilities for each sub-fund.

Appointment of local service providers: Engage local service providers, including a permissible fund manager, company secretary, and auditor, to ensure compliance with the VCC Act’s requirements. The engagement of these professionals is crucial for ongoing compliance.

Re-domiciliation application: Submit the necessary documentation to the Monetary Authority of Singapore (MAS) for approval of the re-domiciliation. The application should include details of the existing fund, the proposed Singapore VCC structure, and other relevant information.

Tax implications: Consider the tax implications of re-domiciling the fund to Singapore. Collaborate with tax advisors to maximise the benefits available under Singapore’s tax incentive schemes, such as the Singapore Resident Fund Scheme or the Enhanced-Tier Fund Scheme.

A trusted partner in Singapore VCC incorporation

A trusted partner in Singapore VCC incorporation

The VCC in Singapore is transforming the investment landscape, offering flexibility, tax benefits and privacy. It attracts wealth, creates jobs and solidifies Singapore’s position as a global financial hub. Setting up a VCC in Singapore involves navigating a complex landscape of legal, financial, and regulatory requirements.

BoardRoom, as a trusted partner with more than 50 years of experience in corporate services, can guide you through each step of the process, from registering your company to corporate secretarial services and setting up an efficient tax structure. BoardRoom can also ensure your accounting and tax compliance meet local and APAC-wide standards for your VCC in Singapore.

Contact us today to discuss how we can help set up your VCC and optimise the tax incentives.

Eunice

Contact BoardRoom for more information:

Eunice Hooi

Managing Director Asia, Tax

E: [email protected]

T: +65 6536 5355

Related Business Insights

Startup companies in Singapore: where are the opportunities?

Startup companies in Singapore where are the opportunities

Startup companies in Singapore: where are the opportunities?

In an increasingly unpredictable global business landscape, Singapore stands out thanks to its economic resilience and stability. Renowned for its robust economy, Singapore has strategically cultivated a welcoming environment for startups and businesses alike, offering a unique blend of security, consistent growth and government initiatives that foster innovation.

A straightforward regulatory framework, low corporate tax rate and a strong rule of law underscore the country’s business-friendly atmosphere. For startup companies, Singapore’s appeal extends beyond its economic prowess, as it has positioned itself as a dynamic hub for new ventures ready to capitalise on opportunities and join a vibrant business community.

In this article, we delve into the landscape created for startups and new businesses, the reasons entrepreneurs should consider establishing their startups in Singapore, and the factors business owners need to consider when registering a startup in Singapore.

Why choose to establish your startup in Singapore?

The Singapore Government actively promotes a business-friendly environment through open policies and initiatives, a relatively uncomplicated regulatory framework, a resilient free market economy, low taxes and tax incentives. It also provides a range of attractive grants for startups.

The government’s strong focus on economic development has created an environment where startups in Singapore can thrive and where foreign investors are welcome. Startups and entrepreneurs will find a supportive and innovation-led business community. As a result, Singapore has built a global reputation as a top location for international expansion. Here are just a few other reasons why it is a great place to do business:

  • Singapore has a stable economy with world-class transportation, communication and technology networks and other infrastructure.
  • Thanks to its diversified economy, it offers opportunities in a range of industries.
  • Singapore is a global financial hub with a well-regulated and stable financial system.
  • The Singapore Government has implemented incentives and policies to streamline administration and create a pro-business environment.
  • Its efficient regulatory framework makes establishing a business in Singapore easy. For example, an application to incorporate a private limited company in Singapore can be approved within a day through the Accounting and Corporate Regulatory Authority (ACRA).
  • Singapore has low corporate tax rates and a transparent legal system. The tax system is straightforward to navigate, with tax incentives offered to many businesses.
  • Situated at the crossroads of major shipping routes, Singapore serves as a gateway to the Asia-Pacific region.
  • Its multicultural environment has created diverse markets for businesses to tap into.
Establish your startup in Singapore

What is the startup scene in Singapore?

The government has proactively encouraged an environment of innovation and supports this in a range of ways. For example, the Economic Development Board provides resources and assistance to support overseas companies and individuals starting businesses in Singapore. The government has also invested in the Startup SG program, providing various services and grants to Singapore’s startups. Some sectors offering an array of opportunities that startups could consider include:

Technology
Substantial investment in the tech sector has created a rich ecosystem for innovation in areas such as robotics, blockchain and AI.
Supply chain management
Singapore’s logistics sector provides vital support to other industries, with a range of opportunities open to entrepreneurs in the areas of trade and ecommerce.
Healthcare
The Singapore Government has invested heavily in the healthcare sector, and healthcare tech entrepreneurs will find plenty of opportunities to improve health outcomes for people in Singapore and around the globe.
Fintech
Singapore’s fintech sector presents significant opportunities for startups, with strong venture capital support and a favourable and supportive climate for innovation and collaboration.
Tourism
Startups and entrepreneurs with innovative offerings will find the tourism sector also rich with growth opportunities.
Startup scene in Singapore

A supportive community is a hallmark of the startup scene in Singapore

Along with a variety of government-led assistance programs to support entrepreneurs and innovators, Singapore’s thriving business community has also created initiatives to foster growth. The Action Community for Entrepreneurship (ACE) helps to promote entrepreneurship, catalyse new growth opportunities, scale startups and build champion enterprises. For example, ACE’s Start-up Mentorship Program connects entrepreneurs with experienced business leaders who offer their expertise and guidance without charge.

The Singapore Women Entrepreneurs Network (SG-WEN) provides an important platform for women in business to unite, network and share experiences and insights.

The Youth Co:Lab is an example of an initiative designed for young people in business. It offers a collaborative and creative workspace for entrepreneurs to cultivate their ideas and support their business growth.

Best practices when registering your startup in Singapore

While Singapore has created a welcoming environment for new businesses, there are many compliance factors that startups and entrepreneurs must consider when incorporating a business in Singapore.

Eunice Hooi, Head of Corporate Secretarial, BoardRoom Singapore, says it is important to seek advice from an experienced, professional advisor when launching a business. “They will guide business owners through every stage of the incorporation process. They will also provide specialty advice on the different types of business structures available, and which one is best suited to the business needs. They will also take into consideration the legal and the tax implications of business ownership.”

Eunice says business owners need to consider the answers to several questions. What is the nature of your business? Are you establishing a branch i.e. an extension of your head office in another country? Or do you want to test the market by registering a representative office before you set up a permanent structure in the foreign country? A professional advisor can help you answer these questions and provide advice on the types of company structures in Singapore. They will also help you fulfil your obligations and avoid the pitfalls of inadequate planning.

Three critical aspects when establishing a business in Singapore are tax, corporate secretarial and payroll.

Tax
The type of business structure you choose will dictate how much tax you pay. Eunice explains. “A sole proprietorship and partnership are not taxable at the business level, but rather each business owner is taxed separately on his share of income at the owner’s level. An individual owner who is a sole proprietor or a partner would be taxed based on the progressive tax rates ranging from 0% to 24%, depending on the income level. On the other hand, a corporate partner of a partnership is subject to tax at corporate tax rate at 17% on its share of income from the partnership.”

A professional can help you understand the tax implications of your business and decide on a structure that takes advantage of tax incentives.
Corporate secretarial
Corporate secretarial is another consideration for entrepreneurs looking to start a business in Singapore, as corporate governance and company compliance can be complex and time-consuming. A service provider such as BoardRoom can support businesses in a range of ways, including ensuring a company complies with local Singapore requirements, ensuring accurate and timely submission of annual returns and providing expert advice on corporate governance matters.
Payroll
It’s vital that businesses meet their payroll obligations. While Singapore has streamlined and simplified payroll requirements for businesses compared to other countries, staying up to date with payroll needs can be a challenge for new and established businesses. This includes ensuring compliance with salary disbursements and mandatory contributions, maintaining salary records, providing itemised payslips and adhering to leave entitlements, meaning there is no room for error.

Singapore also has cultural nuances and sensitivities that those unfamiliar with the business landscape might find challenging. It is important to understand and respect the cultural norms of your workforce. Ken Wong, Managing Director Asia, Payroll at BoardRoom, highlights some of these nuances: “Singapore is so diverse and there are times when you actually will need to make salary payments earlier so employees can enjoy festive holidays with salaries being paid to them in advance,” says Ken. “Singapore also has a prevalent ‘bonus culture’, with employees often expecting to receive some form of bonus at the end of the year, this is often not written in an employment contract.”
A supportive community

How BoardRoom supports your startup

Singapore is a politically safe, business-friendly country. Businesses and startup companies in Singapore enjoy an array of incentives and support to help them thrive. For entrepreneurs and business owners venturing into the Singapore market, understanding and respecting the local business landscape is crucial. This includes being well-versed in areas such as tax regulations, business structures, corporate regulatory requirements and payroll compliance.

Offering a range of corporate services, BoardRoom has proven itself to be a trusted partner of established and startup businesses in Singapore. We guide your business at every step and offer a range of corporate services, including corporate secretarial, payroll, tax compliance, company incorporation, accounting and bookkeeping and ESG advisory services.

Contact us to discuss how we can help you establish your startup today.

Related Business Insights

Setting up a company in Singapore: what you need to know

Setting up a company in Singapore - what you need to know

Setting up a company in Singapore: what you need to know

In the heart of Southeast Asia’s thriving markets, Singapore’s growing economy and political stability continue to attract multinational corporations and startups. Eager to build on the country’s reputation as an economic powerhouse, the Singapore Government’s policies and regulations have created a favourable environment for businesses to thrive in.

If you are a business owner or investor considering setting up a company in Singapore, you are not alone. Every month, thousands of businesses are registered in Singapore.

In this article, we explore the various benefits of establishing a business in Singapore, the different types of business structures and important considerations when embarking on the process of company registration.

Seven benefits of setting up a company in Singapore

There are many reasons investors, entrepreneurs and company directors choose to form a company in Singapore. Here are some salient factors:

  • There is no minimum shareholder requirement.
  • There is no minimum requirement for paid-up capital when incorporating a private limited company.
  • There is no foreign exchange control.
  • Singapore is close to Asia’s thriving markets.
  • Singapore offers favourable tax incentives and low corporate tax rates.
  • Singapore’s workforce is highly educated and skilled.
  • Singapore is politically stable.
  • Singapore has a sound legal system and a mature financial infrastructure.
Benefits of setting up a company in Singapore

SEVEN BENEFITS OF SETTING UP A COMPANY IN SINGAPORE

There is no minimum shareholder requirement

Singapore maintains a relatively open investment environment and imposes no minimum shareholder requirement on businesses.

“Because there are no restrictions on foreign ownership, a foreign entity can own the Singapore subsidiary or fully own a Singaporean company, either as a corporate or individual investor,” says Eunice Hooi, Head of Corporate Secretarial, BoardRoom Singapore.

There is no minimum requirement for paid-up capital when incorporating a private limited company

Singapore has a robust free-market economy and generous investment policies. It also has no minimum requirement for paid-up capital when incorporating a private limited company (PLC). Because of this, a PLC, which is one of the most common business types in Singapore, can be incorporated with just SGD 1.

There is no foreign exchange control

Generally, Singapore has no restriction on foreign exchange transactions and capital movements. “From an investment perspective, this means that it is easy to remit or repatriate capital and/or profits in and out of Singapore,” says Eunice.

Singapore is close to Asia's thriving markets

Singapore’s location is also very attractive to investors. It is in a strategic location close to the massive economies of both China and India.

With well-established infrastructure, including one of the busiest airports in the world and one of the largest ports in Asia, the country is well-placed to do business with other thriving economies.

Singapore offers favourable tax incentives and low corporate tax rates

Singapore has a range of tax incentives that are attractive to investors and boasts one of Asia’s lowest corporate tax rates of just 17%.

Singapore has also implemented the one-tier tax system, which means businesses pay corporate tax at the corporate level just once. Therefore, no additional taxes are imposed on the income, and shareholders are exempt from taxation on any dividends distributed by the company.

There is a highly skilled workforce in Singapore

Singapore boasts numerous corporate service providers, offering entrepreneurs a wide array of options when setting up a business.

The country is also home to a highly educated and literate workforce. That is reassuring for foreign investors who are setting up a company in Singapore and are looking for local talent to hire.

Singapore is politically stable

For business owners looking to establish a business in a country they have never operated in before, stability and security are paramount. Singapore is politically stable, with nations around the world recognising Singapore’s business-friendly regulations, reliable policies and high governance. This makes it an attractive and low-risk location for businesses.

Types of company registration in Singapore

There are several ways to structure a business in Singapore. These include:

  • sole proprietorships;
  • partnerships;
  • private limited companies (PLC);
  • limited liability partnerships (LLP); and
  • variable capital companies (VCC).
Sole proprietorships
This structure consists of one business owner who is personally responsible for any of the business’s debts and losses as the business owner is subject to unlimited liability.
Partnerships
Consisting of two to 20 owners, in a partnership, the owners also take on unlimited liability. They are, therefore, personally responsible for any of the business’s debts and losses.
Private limited companies (PLC)
In this structure, the business is established with its own legal identity. As it is separate from shareholders and directors, their liability is limited to the sum of what they have funded as capital.

This gives entrepreneurs peace of mind when setting up a company. It also means they can raise capital relatively easily. They can do this by increasing the number of shareholders or by issuing more shares to current shareholders.
Limited liability partnerships (LLP)
This structure is similar to that of a PLC. While a privately limited company can have one to 50 shareholders, in a limited liability partnership, there must be a minimum of partners with up to 20 partners.

In a business with this type of structure, the partners will not be held personally liable for any business debts incurred by the LLP. However, an individual partner may be held personally liable for claims from losses resulting from their own wrongful act or omission.
Variable capital companies (VCC)
A variable capital company is another type of corporate structure in Singapore. This structure allows a company to be established as a single, standalone fund for a single entity or as an umbrella fund for multiple funds.

The flexibility of this structure allows the investors to either incorporate a new VCC in Singapore or redomicile their existing offshore investment fund to Singapore as a VCC.

The structure also offers flexibility in how shares are issued and redeemed.
Choosing a company structure

How to choose a company structure

Entrepreneurs and investors are advised to have a carefully considered business plan and decide whether the business will be a short-term or long-term venture when starting a company. Those factors will affect the best kind of business structure they should set up in the establishment phase.

When it comes to ending the business, Eunice says there are several options. “It can be done through liquidation. Another way is through a simple process called striking off, when the company has a clean balance sheet. A third option would be to sell the business through an asset divestment or a share divestment.”

Kevin Cho, Director of Corporate Secretarial, BoardRoom Singapore, highlights the importance of considering the benefits specific to Singapore when choosing a business entity. “For example, Singapore offers tax benefits to startups established as private limited companies. These businesses are entitled to a new startup tax exemption for its first three consecutive tax years I.e. 75% exemption on the first SGD 100,000 of normal chargeable income* and a further 50% exemption on the next SGD 100,000 of normal chargeable income*.”

*Normal chargeable income refers to taxable income that is subject to tax at the prevailing Corporate Income Tax rate of 17%.

Steps to setting up a company in Singapore

Business owners and investors exploring business registration in Singapore should engage with a professional corporate service provider who can guide them on the processes of setting up a business. This includes making sure the company name is available and suitable for registration, deciding on the entity structure, and ensuring compliance with local and regional regulatory requirements at all times.

Once the business is formally registered with the local authority, namely the Accounting and Corporate Regulatory Authority (ACRA), it may purchase its certificate of registration and business profile which contains the necessary corporate information from ACRA. The business will also be assigned a unique entity number then.

The business also has to determine its share capital and be sure to abide by the rules governing shareholders and directors. For example, a minimum of one local resident director must be appointed. It is noteworthy that foreign individuals can serve as directors if they meet specific criteria. Additionally, the company should consider engaging a qualified company secretary.

It can also be helpful to engage a professional corporate service provider as the tax treatment of companies set up in Singapore varies and depends on the type of business being set up.

“PLCs are taxed as separate entities at the corporate tax rate of 17% on the business profits,” explains Eunice. “On the other hand, LLPs are given a tax-transparency treatment, meaning they are not taxed at the LLP level. So the owners or the partners will be taxed on their share of income from LLP based on the relevant tax rates that are applicable to corporate partner and individual partner.”

Steps to setting up a company in Singapore

The right advice for your move into Singapore

Singapore offers attractive incentives for foreign investment and is a politically stable, easily accessible and talent-rich country in which to set up business. If you’re considering a move into Singapore as a business owner, director or investor, BoardRoom can help with all aspects of the business lifecycle.

BoardRoom offers a range of services including corporate secretarial, accounting, tax, payroll and ESG advisory services.

For help establishing your business in Singapore, please contact us today.

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How to set up a family office in Singapore successfully

How to set up a family office in Singapore successfully

How to set up a family office in Singapore successfully

The family office is an increasingly popular business entity in Singapore, providing affluent families the opportunity to formally safeguard and optimise their wealth for the benefit of future generations.

Family offices are most often used for asset management. However, they are also useful for conducting additional activities such as wealth and succession planning, lifestyle management and philanthropy.

Family offices involve various day-to-day administration tasks, usually carried out or supported by external professionals and service providers.

Single-family offices (SFO) service members of the same family, while multi-family offices (MFO) service members of different families.

This article explores the process of setting up a family office in Singapore and outlines reasons you might set up a family office, including the latest tax incentives you may be eligible for.

Why set up a family office in Singapore?

As an established financial hub, Singapore holds immense appeal for local and overseas high-net-worth (HNW) individuals looking to establish a family office. In 2021, it ranked as the second most competitive location for international wealth management globally. Furthermore, in 2022, it had the world’s third fastest-growing population of HNW individuals.

Singapore’s allure can be attributed to its:

  • open, well-regulated economy;
  • strategic and convenient geographic location – a gateway to Asia with ready access to global and regional financial markets;
  • diverse ecosystem of wealth management talent (e.g. bankers, law firms and advisors);
  • companies and service providers;
  • economic and political stability;
  • pro-business regulatory system;
  • extensive double tax treaties with more than 80 countries;
  • low corporate tax rate of 17% (and no capital gains tax);
  • abundant tax incentives and exemptions; and
  • quality medical and education systems.
Setting up family office in singapore

What are the family office tax exemptions in Singapore?

The Singapore Government is actively nurturing the growth of private banking locally due to the fast-growing pool of capital it generates, which can be utilised for urgent climate change mitigation efforts. In July 2023, it announced several enhancements to Singapore’s tax incentive schemes for SFOs.

Eligible family offices can now take advantage of these schemes and exemptions:

This scheme grants permanent residency to individuals who possess at least 5 years of entrepreneurial, investment or management track record, and they establish a Singapore-based Single-Family Office with Assets-Under-Management (AUM) of at least SGD 200 million, where minimally SGD 50 million must be deployed in the 4 stipulated investment categories. Read more about the qualifying criteria for the Global Investor Programme.
Under Section 13O of the Income Tax Act, family offices with an annual local business spending of SGD 200,000 can claim a 100% tax exemption on Singapore-based funds, provided that certain conditions are met.
Section 13U of the Income Tax Act provides a tax exemption for income and gains on certain investments for both local and offshore funds with a minimum SGD 50 million investment.
From 1 January 2024, eligible donors can claim a 100% tax deduction (capped at 40% of the donor’s Singapore statutory income) for overseas donations made through qualifying local intermediaries.

Each entails a set of conditions that family offices must meet to qualify.

How do I set up a family office in Singapore?

The company incorporation process for family offices in Singapore can be complex, but the outcome can provide considerable benefits for HNW families.

“First of all, you need to consider your objective for setting up this family office – whether it is for investment or philanthropy purposes,” says Kevin Cho, Director of Corporate Secretarial for BoardRoom Singapore. “You need to consider what funds will be set aside for philanthropy or charitable purposes.”

Defining the goal you want to achieve will help guide the structure and operations of your family office and indicate the legal and tax implications you will need to navigate. Potentially, you may realise that a different investment vehicle (e.g. company limited by guarantee, trust or VCC) or even a different location will be more suitable.

Next, you will need to undertake the following:

    Choose whether to establish an SFO or MFO, depending on your family’s needs
    Decide on the right legal entity (e.g. a company or trust)
    Establish a tax-efficient company structure as well as trust structure
    Identify the services you require (e.g. tax and legal services, wealth management, concierge services and charitable giving)
    Obtain the necessary licences for operation, depending on your activities
    Establish robust governance and compliance frameworks
    Draft a solid business plan
    Open accounts with reputable banks
    Organise your technology and operational infrastructure, such as internal practices, accounting software, reporting tools and cybersecurity
    Identify and hire qualified personnel or businesses to carry out your business needs (e.g. lawyers, tax advisors, investment managers and accountants)
    Draft a family charter that governs the powers and activities of the company

    Family office formation is a significant undertaking. To ensure a smooth process, it is important to partner with an experienced corporate services provider for assistance with navigating Singapore’s complex legal, tax and regulatory requirements. Working with such a partner will give you access to a team of business specialists, plus a network of trusted advisors and consultants who can guide you through the beginning stages of your family office and beyond.

    Benefits of setting up a family office

    The benefits of setting up a family office

    According to Eunice Hooi, Head of Corporate Secretarial for BoardRoom Singapore, top uses for a family office include asset protection and succession planning.

    “One possible arrangement is to put the assets under a trust structure instead of a standard company structure,” she says. “Having a trust arrangement protects the assets under law, assuming the parents are acquiring the assets for the benefit of the minor child under the trust arrangement.”

    The trust agreement can set the terms on when and how the child will legally own the assets – this might be when they turn 21 or get married.

    “So the family office structure allows you to plan ahead of time,” Eunice explains.

    Additional uses for a family office can include:

    • consolidated wealth management;
    • customised financial solutions and investment strategies;
    • diversification of assets and risk mitigation; and
    • the preservation of family values and legacies.

    As a centralised hub, the family office provides an efficient, streamlined solution for managing family affairs.

    What are the regulatory requirements for setting up a family office in Singapore?

    Understanding and complying with local regulatory requirements is paramount when establishing any new company in Singapore.

    If you are considering starting an SFO, it will likely be exempt from regulations and won’t need to apply for a fund management licence.

    “As SFOs only manage assets belonging to one family, SFOs in Singapore are not subject to licensing or regulation under the Securities and Futures Act (SFA),” Eunice says. “However, MFOs are. This is to safeguard the interests of the different families that are being served by the MFO.”

    Before commencing operation, MFOs need to obtain a capital market services licence from the MAS. They then need to conduct their activities in line with regulations. A skilled corporate services provider with extensive knowledge of the local rules can help ensure your company remains compliant from the start.

    While SFOs may not be subject to MAS regulation, they still need to meet certain requirements to qualify for the available tax exemptions under the Income Tax Act 1947.

    Expert guidance for your new venture

    Expert guidance for your new venture

    Establishing a family office in Singapore can be an effective way to secure your family’s financial future. At BoardRoom, our business experts work closely with you to ensure your new venture succeeds. We will guide you through every phase of the company formation process, ensuring your entity meets local standards and requirements while capturing all the benefits and opportunities Singapore offers.

    In addition to company incorporation and corporate secretarial services, we provide a full suite of complementary services to support your business throughout its lifecycle.

    “BoardRoom provides a one-stop shop for family office clients, providing a range of corporate services, such as accounting and tax advisory services,” Eunice says. “We work very closely with other stakeholders in the family office ecosystem, such as lawyers who can assist with drafting trust agreements, and licensed fund managers.”

    With over 50 years of experience servicing clients in Singapore, BoardRoom can be relied upon to consistently provide accurate solutions that minimise risk and hassle.

    Adopting a tailored approach, we help you achieve your short and long-term wealth management goals.

    “When a client comes to us with the intention to set up a family office, we start by gaining a strong understanding of their goals, needs and background as an investor,” Eunice says. “This way, we can ensure that their choice of investment location and vehicle best suits their needs.”

    For a discussion about how we can assist you with establishing a family office in Singapore, please contact us today.

    Contact BoardRoom for more information:

    Eunice

    Eunice Hooi

    Managing Director Asia, Tax

    E: [email protected]

    T: +65 6536 5355

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    Maximising performance: the potential benefits and drawbacks of employee share options plans

    Maximising performance_ the potential benefits and drawbacks of employee share options plans

    Maximising performance: the potential benefits and drawbacks of employee share options plans

    Employee share plans are becoming an increasingly popular strategic tool, with over 80% of companies in Asia using them to bolster their competitive edge in the current talent market and align their workforce with their organisational growth trajectory. Equity based remuneration such as employee share option plans (ESOPs) or employee stock option schemes (ESOSs), not only incentivise employees to work towards company’s goals but also increase staff retention rates.

    In this article, we investigate the benefits and potential drawbacks of ESOPs for companies in Singapore and provide advice for ensuring successful share scheme implementation.

    How ESOPs work

    ESOPs grant employees the option to purchase company shares at a predetermined price (also known as the exercise price), often lower than the prevailing market price. After a moratorium or ‘vesting’ period, the employee may exercise their options by buying the shares at the exercise price and become a part owner of the company. The plan rules or an internal remuneration committee generally sets the exercise price and timeframes of ESOPs.

    You may also hear ESOPs referred to as employee share option schemes or stock option plans.

    ESOP vs. shares: how they differ

    ESOPs offer employees the unique opportunity to secure a stake in their company’s future success without the immediate financial commitment required when purchasing shares in a publicly listed company. ESOPs also differ from share schemes like restricted share plans and performance share plans, which grant employee shares as part of their remuneration after a set vesting period once agreed-upon targets are met.

    ESOP vs. shares_ how they differ

    Top ESOP benefits explained

    ESOPs can influence employee attitudes and behaviours in multiple ways, providing benefits to companies and their workers.

    The main benefits of ESOPs are:

    • improved employee engagement;
    • increased innovation and productivity; and
    • reduced employee turnover.
    Employee engagement
    ESOPs can be an effective employee engagement strategy due to the sense of company ownership and an alignment of worker and employer objectives, goals and values. In a recent study of employee equity plan usage in Asia, about 60% of participating workers either agreed or strongly agreed that their personal success and their company’s success were one and the same.

    As share value depends on the company’s success, employees are encouraged to put in more effort to improve the company’s market performance and also make decisions that promote long-term value creation rather than short-term gains.
    Increased innovation and productivity
    When employees feel they play a fundamental role in the company’s growth and can see the tangible effects of share price rises in their share plan, they are incentivised to expand their focus beyond day-to-day responsibilities. ESOPs provide channels for them to ideate, innovate and engage in activities that drive the company forward.

    When well-managed and communicated, ESOPs also provide employees with clarity on common goals, which further aids engagement and productivity.
    Reduced employee turnover
    Research shows that the likelihood of an employee resigning decreases as the value of employee shares rises.

    “ESOP participants tend to stay in their job for longer than expected because they know they will be able to reap the rewards i.e. the number of options exercisable after the vesting period. This is even more so, when the share price increases over the years.” explains Nora Jasmine Lai, Operations Manager of Employee Plan Services for BoardRoom.

    Alongside the prospect of financial gains, the partial ownership offered by ESOPs also promotes job satisfaction and a sense of belonging.

    “When employees are rewarded through their ESOP, it strengthens their sense of recognition within the company and they are part of its growth and success,” Nora explains. “In the long run, this motivates them to grow with the company.”

    ESOP-led talent retention has a variety of benefits, including reduced recruitment and training costs, improved business continuity, knowledge retention and the progression of long-term organisational goals.

    Potential drawbacks of ESOPs

    Depending on a range of factors – such as your organisation type and performance, the quality of plan execution and market fluctuations – ESOP implementation may be challenging or even unsuitable.

    Some potential drawbacks of ESOPs include:

    Employees must pay for the shares upfront with their own money before receiving shares into their account and realising them as monetary gains. One way companies can alleviate this challenge and exhibit dedication to ESOP goals, is to partner with local banks, who may offer bridging loans to employees, contingent on the immediate repayment of the loan upon share sale.
    Employees cannot realise their gains if the share price drops below the exercise price in an economic downturn. They may leave the company before the share price improves, thus losing the opportunity to reap their rewards.
    Employees who are not Singaporean residents may be subject to withholding tax when they exercise their options and realise a gain.
    ESOP management can become increasingly complicated and time-consuming as time passes, your company grows across borders, and there are more plans to design and keep track of – each with their own vesting periods and exercise price. Compliant administration and reporting must be ensured across all relevant jurisdictions.

    Companies can ensure smooth ESOP implementation by engaging a premium ESOP services provider – ideally, one that specialises in a range of complementary corporate services such as tax. Firms that offer customisable ESOP platforms such as EmployeeServe can help to simplify and streamline your scheme management by allowing employees to view and transact on holdings in real time.

    Factors to consider before implementing ESOPs

    Factors to consider before implementing ESOPs

    If you are implementing ESOPs in your organisation for the first time, meticulous planning is essential.

    Management staff should consider the following ahead of the design phase:

    • What are your organisational needs and objectives, and how can ESOPs help you achieve them?
    • What percentage of the total number of shares will be set aside?
    • How will the vested options of departing employees be treated?
    • How will employees manage or assess their ESOPs?
    • Will you implement a digital ESOP management system? If so, is it user-friendly enough?
    • Is a share custody account required for overseas participants?

    An experienced ESOP services provider can explain how ESOPs work, answer your questions about ESOP implementation, and guide you through the design process to help tailor the plan to your specific needs.

    If you already have a share scheme in place and want to review it, the best way to do this is to partner with a leading ESOP services provider. ESOP specialists have the knowledge, skills and technological know-how to update your scheme to align with your business goals.

    Tips for successful share scheme execution

    Tips for successful share scheme execution

    According to Nora, effective ESOP implementation requires two things: a quality platform and strong communication from HR and management.

    “Often, employees don’t understand their role in a huge scheme,” she says. “There is often too much jargon and complexity tied to the scheme, which stops people from understanding the benefits they can reap.

    “But as a part owner of the company, they want to do more and understand their role in the entire cycle.”

    A purpose-built platform helps employees understand how the scheme works, especially if it is easy to use and supported by regular communication from HR and the broader company.

    “The system can release regular communications, such as newsletters, to allow employees to keep track of the goals set via the scheme,” Nora says. As a result, employees stay more focused on progressing long-term organisational goals.

    Personalised employee share options services

    When executed thoughtfully and managed effectively, employee share options can catalyse sustainable growth, benefiting both employees and the business as a whole.

    For businesses in Singapore seeking to implement or refine their share scheme, BoardRoom’s premium ESOP services offer a reliable end-to-end solution. With over 60 years of experience and a deep understanding of the local business landscape, we can assist in creating, implementing and managing ESOPs that align with your organisation’s goals and values.

    Our highly sought-after ESOP services give you access to:

    • a dedicated ESOP platform, EmployeeServe, empowering you to navigate the complexities of ESOPs with confidence so that employee satisfaction is achieved and regulatory compliance is assured;
    • in-house experts in multiple aspects of ESOPs, plus a strong network of trusted vendors, including ESOP designers and lawyers, for a seamless, comprehensive service via one point of contact; and
    • share custody accounts for overseas participants, making share trading and the realisation of cash proceeds easy.

    Contact us to learn more about our expert ESOP services today.

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