Do you have a Dependant’s Pass (DP) and are thinking about starting your own business in Singapore? If that’s the case, the good news is you are not alone and that it’s a common procedure.
In Singapore, there are generally two phases to establishing your business on a DP:
Phase 1: Incorporating a Singapore Company
When you form a Private Limited Company (Pte Ltd), you are forming a legal entity that is distinct from yourself. It restricts your personal responsibility – this means that if your company goes bankrupt, any debts or losses you suffer as a result of running your business will not affect any personal assets you may hold (such as your home).
Criteria to meet when setting up a Singapore Private Limited Business.
- A company secretary: A corporate secretary such as Crystal Clear, is your company’s legal representative who helps you communicate with the government and stay compliant.
- A local resident director: Your local director must be a Singapore citizen or permanent resident having at least a 30% ownership in the firm at the time of incorporation.
- A shareholder: An individual or a corporation can be a shareholder, and it can be 100 percent foreign. However, the shareholder must own at least 30% of the company’s stock.
- A registered Singapore address: All official documentation will be delivered to you here.
- A Local or PR employee: At least one Singaporean or permanent resident who earns at least S$1,400 and gets Central Provident Fund (CPF) contributions
- Paid-up capital: A Singapore business must have a minimum paid-up capital of $1 to be registered. However, a minimum of S$50,000 is recommended if you intend to apply for an Employment Pass (EP).
Limitations of the Dependent Pass when Starting a Business in Singapore
- At the time of incorporation, a DP holder cannot be identified as a shareholder or director.
- A DP holder can only be hired as an employee of a Singapore firm if the following conditions have been met: –
- The company has been successfully registered (needs to exist before it can sponsor)
- A corporate bank account has been established – An application for and approval of a Letter of Consent has been submitted.
- To work in Singapore, you must apply for an appropriate work pass, such as an Employment Pass, S Pass, or work permit.
- A DP holder can only have one Letter of Consent at a time (LOC)
- After obtaining a Letter of Consent from the Ministry of Manpower enabling the DP holder to function as a director for the stated firm, a DP holder may be a director of a Singapore company.
Phase 2: Obtaining a Work Visa
If you are on a DP, you can either work for your firm after applying for a Letter of Consent or seek to change to an Employment Pass Visa once you have established your company. Both have distinct application requirements which we shall discuss next.
Letter of Consent (LOC)
Obtaining a Letter of Consent from the Ministry of Manpower was formerly one of the methods to work for a firm in Singapore while on a DP. The application is made by the employer – in this case, it might be the company that you have established, making you a “employee” of the firm. The LOC has the advantage of not requiring a minimum wage.
The new DP/LOC Law, however, introduces certain modifications. To continue working in Singapore after May 1, 2021, DP holders will need to apply for an appropriate work pass, such as an Employment Pass, S Pass, or work permit. Those who are currently working on a Letter of Consent (LOC) can continue to do so until the LOC expires.
Employment Pass (EP)
If you wish to be a director of your firm as well as an employee, you’ll need to apply for an Employment Pass visa. Because this is a sponsored visa, you can only apply when your firm has been established and your corporate bank account has been established. The good news is that after you’ve been given an EP under your own business, you’ll be able to operate as your own resident director.
To be considered for EP, you must first have a job offer. On behalf of the candidate, the employer must apply for an Employment Pass. A first-time candidate can stay and work in Singapore for up to two years once the pass is issued.
The minimum qualifying wage for Employment Passes and S Passes will be increased to S$4,500 in August 2020. The minimum qualifying wage for older and more experienced Employment Pass candidates in their 40s was also increased to roughly double that of the youngest applicants.
Timeline in the DP Incorporation Process
Step 1: To begin, based on the preceding considerations, you can either appoint: A local director who is a Singaporean citizen or has Singaporean PR. Although the Director cannot be another EP or DP holder, they can be nominated as a shareholder OR Crystal Clear’s Nominee (Local) Director Service PLUS another Executive Director who could be 100% international and based in another country to assist you in forming the business and opening a bank account.
Step 2: After your business is formed, you ask your executive director to assist you in opening a corporate bank account. Once your company has been registered, you may choose from an array of banks we partner with.
Step 3: We can assist you in applying for the Letter of Consent once the firm has been incorporated and a corporate bank account has been established (LOC). This will allow the DP holder to work for the firm as an employee.
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