Entrepreneur's Guide to Setting up a Business in Singapore vs Malaysia

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by: Clint Jhonson

One of the key concerns for SMEs and business entrepreneurs who wish to establish a business is zeroing in on an ideal jurisdiction for their company incorporation. The crucial questions that concern company incorporation in any jurisdiction are: What are the statutory requirements to incorporate a company? What is the country's foreign ownership policy? Is the incorporation procedure simple or complex, time-consuming or quick? What is the cost of company incorporation? What are the compliances that the company needs to adhere to after incorporation? Is it easy for foreigners to relocate to a country for running the company?

Singapore. A local registered address (commercial or residential but no PO Box). At least one local resident director (a Singapore Citizen, a Singaporean Permanent Resident, a person who has been issued an Entrepass, Employment Pass, or Dependent Pass) and unlimited maximum number of directors. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractices. Directors must be natural persons. A local resident and qualified company secretary who is a natural person and not a corporate. A minimum of 1 and maximum of 50 shareholders. A director and shareholder can be the same or different person. A shareholder can be an individual or corporate.

Minimum paid up capital of SGD 1.00. No authorized capital required.
Malaysia. A local registered address. At least two local resident directors (a Malaysian Citizen or a Malaysian Permanent Resident, a person who has been issued an Employment Pass) and unlimited maximum number of directors. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractices. Directors must be natural persons. A local resident company secretary who is a natural person and not a corporate. The company secretary must either be a member of a professional body prescribed by the Minister of Domestic Trade and Consumer Affairs; or licensed by the Companies Commission of Malaysia. A minimum of two shareholders and maximum of 50 shareholders. A director and shareholder can be the same or different person. A shareholder can be an individual or corporate. A minimum authorised capital of RM 100,000 and paid-up Capital of RM 2.00.

Company registration in Singapore can be completed within 1 day. In Malaysia it takes 7-10 days to incorporate a company. Singapore. Fees for company incorporation with Companies Registrar: SGD 315. Fees for company registration with tax department: None. Malaysia. Fees for company incorporation with Companies Commission varies depending on the amount of authorized capital and can range from SGD 400 to SGD 28,000. Fees for company registration with tax department: None. Singapore. Annual returns along with audited annual accounts must be filed with Companies Registrar within 1 month of the Annual General Meeting. Tax returns along with audited accounts must be filed with the Inland Revenue Authority of Singapore by 31 October each year.

Malaysia. Annual returns along with audited annual accounts must be filed with the Companies Commission within 1 month of the Annual General Meeting. Note: Exempt private companies (not more than 20 shareholders and shares are not held by another company) need not file audited accounts. However, they are required by law to maintain their audited accounts for inspection by the authorities at any given time. Every company must keep accounting and other records as are necessary to explain the transactions and financial position of the company and to allow a profit and loss account and a balance sheet to be prepared.

Singapore. A company shall appoint an auditor within 3 months from the date of incorporation, unless it is exempted from audit requirements under Section 205B, or 205C, of the Companies Act. Malaysia. Every company must appoint one or more auditors who must be approved auditors in Malaysia. Appointment of auditors must be done before the first Annual General Meeting.

Although it is relatively easy to set up a business in Singapore and Malaysia, there are certain key differentiators between both the jurisdictions for company set up. Singapore is known for its ease of company set up which can be completed within 1 day, as compared to the 7-10 days norm of Malaysia. Moreover, a Singapore company can be registered with a fee of SGD 315. This is significantly low when compared to the registration fee for a Malaysian company which ranges from SGD 400 to SGD 28,000 depending on the company's authorized capital. Last but not the least; it is easier for foreign investors to satisfy the eligibility criteria for Singapore work passes as compared to the requirements for a valid Malaysian work visa. Thus, Singapore offers a better business environment for company incorporation as compared to Malaysia.

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