Shelf Companies in Singapore: What They Are and How to Buy One

Shelf Companies in Singapore: What They Are and How to Buy One | Bestar

Shelf Companies in Singapore: What They Are and How to Buy One

A shelf company is a ready-made legal entity that's already incorporated but has been kept dormant, meaning it has no business activity, income, or liabilities. Think of it as a pre-packaged company waiting on a shelf for a buyer. Once you purchase it, you can begin business operations immediately.

In Singapore, shelf companies are typically set up with S$1 in paid-up capital, a resident company secretary, a nominal director, and a single shareholder. Foreigners can own 100% of the shares.

Benefits of Buying a Shelf Company

Buying a shelf company can be a smart move if you want to get your business up and running quickly. Here’s why:

• You can skip the incorporation process. Setting up a new company in Singapore involves filing documents with the Accounting and Corporate Regulatory Authority (ACRA), appointing a resident director and secretary, and securing a local address. With a shelf company, all this is already done for you.

  
  

• You can save time on paperwork. A shelf company already has essential documents like a shareholder agreement and constitution. You’ll only need to make small changes to these to fit your needs, which is much faster than creating them from scratch. This can be especially useful if you need to quickly meet requirements for bidding on a contract.

  
  

• You may find it easier to get a loan. Banks and investors often prefer to work with companies that have an established history. An older shelf company, even one that was dormant, can have a longer incorporation date, which might make it easier to secure a business loan or line of credit. Many lenders require a business to be at least two or three years old before they'll approve corporate credit.

The Cost of a Shelf Company

The price of a shelf company in Singapore can range from S$2,500 to S$20,000. The cost depends on the company's age and any additional services the seller includes. As you might expect, older, more established companies cost more.

How to Buy a Shelf Company

The process of buying a shelf company is straightforward:

1. Choose your company. You can pick a shelf company based on its incorporation date—older companies are often more appealing to potential lenders and partners. You can also choose one based on its name, though this isn't a major concern since you can change the name later.

   
   

2. Negotiate the sale. Many sellers offer extra services, such as help with a name change or assistance with opening a bank account. You can negotiate for these to be included in the price. The seller will also guarantee that the company has no debts or liabilities.

   
   

3. Sign the transfer agreement. A contract of sale will be drafted to transfer ownership from the current owner to you. Once signed, the shares in the company will be transferred to you or your appointed representatives.

After You Buy Your Shelf Company

Once you've purchased a shelf company, there are a few important steps you'll need to take:

• Make necessary changes. You can change the company's name, registered address, or corporate bank account. You may also need to appoint new directors and remove the existing ones. Be sure to update all of these changes with ACRA through the BizFile+ website.

  
  

• Stay compliant with regulations. A shelf company is sold with all its statutory obligations in good standing. This means the original owner has already filed all the necessary paperwork. After the sale, it's your responsibility to continue meeting these requirements, which include:

  
  

  • Determining the start and end of the financial year.

  • Holding an Annual General Meeting (AGM) each year.

  • Maintaining accounting records.

  • Filing annual financial statements and tax returns.

Need help?

To ensure a smooth purchase, it's highly recommended that you work with a corporate services firm. They can assist you with the buying process and make sure all legal and regulatory formalities are handled correctly.

Do you have more questions about what it takes to start a business in Singapore?

How Bestar can Help

Shelf Companies in Singapore: What They Are and How to Buy One

Engaging a professional corporate services firm is highly recommended when purchasing a shelf company in Singapore. While the process may seem straightforward, Bestar provides essential expertise and support that can save you time, money, and potential legal headaches.

Here's how Bestar can help:

1. Expert Guidance and Due Diligence

A key risk of buying a shelf company is inheriting hidden liabilities or a poor reputation. Bestar will:

• Conduct due diligence: We will thoroughly vet the shelf company to ensure it has no debts, pending litigation, or other financial issues. We verify all statutory filings with ACRA and IRAS (Inland Revenue Authority of Singapore) are up-to-date and compliant.

  
  

• Assess your needs: We can help you determine if a shelf company is truly the best option for your business goals, or if a fresh company incorporation would be a better fit.

2. Streamlining the Acquisition Process

The process of transferring ownership and making changes to the shelf company can be complex. Bestar will:

• Handle all paperwork: We manage the drafting and signing of the sale-purchase agreement and all other legal documents required for the transfer of shares and ownership.

  
  

• Manage changes with ACRA: We will update all company particulars with ACRA on your behalf, including the company name, registered address, and details of new directors and shareholders.

  
  

• Facilitate bank account changes: We can assist with the often-complex process of changing bank account signatories and ensuring a smooth transition of the corporate bank account.

  
  

3. Ensuring Legal Compliance

Singapore has strict regulatory requirements for businesses. Bestar acts as your compliance partner, ensuring you don't miss any critical obligations. We can:

• Act as your Company Secretary: By law, every Singapore company must have a qualified company secretary who is ordinarily resident in Singapore. The firm can provide this service, ensuring all corporate records are maintained and that filings are submitted on time.

  
  

• Provide Nominee Director services: If you are a foreign owner and do not have a resident director, Bestar can provide a nominee director to fulfill this legal requirement.

  
  

• Manage ongoing compliance: We can handle a range of administrative tasks, including:

  
  

  • Filing annual returns and financial statements with ACRA.

  • Ensuring corporate tax filings are done correctly and on time.

  • Maintaining statutory records and minute books.

4. Providing a Full Suite of Business Services

Beyond the initial purchase, Bestar offers a complete range of support services that are crucial for new businesses:

• Accounting and bookkeeping: We can manage your daily financial records, prepare financial statements, and handle payroll.

  
  

• Tax advisory: We can help you with tax planning and ensure you are taking advantage of all available tax reliefs and incentives.

  
  

• Business advisory: We can offer strategic advice on business structuring, and regional expansion, and help with applications for various business licenses and work passes.

  
  

By partnering with Bestar, you can save significant time and resources, avoid common mistakes, and focus on what's most important: growing your business.

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