Setting up a Holding Company in Singapore

What is a holding company?

A holding company is an entity created to buy and own the shares of another company. The companies in which these shares come from are known as subsidiaries of the holding company. The holding company owns and controls the assets used by the subsidiary companies. The holding company typically does not produce its own goods and services or take part in daily operations of the business.

Business owners are drawn to starting holding companies as it assists with the structure of their business as it grows. The holding company is able to secure greater protection against risks and streamline operations for a business that is still in the growing and diversifying phase.

Including the aforementioned above, having a holding company will provide business owners with various benefits.

Asset Protection

    • It was stated before that the holding company owns and holds the valuable assets of a business. Examples of these assets include:
      • Property
      • Intellectual property
      • Equipment
    • As the holding company controls these assets, the subsidiary companies would undertake the business’ daily operations and its trading responsibilities. The valuable assets held by the holding companies are therefore protected from creditors and other liabilities that operating companies may incur. This is a good benefit to having holding companies.

Reduced Risk

    • Since, as previously stated, the holding company is the entity that holds the valuable assets and is separate from the operating companies, the risk of losing those assets is greatly minimized in cases where the operating company performs poorly or becomes insolvent.

Minimise tax

    • A holding company can be set up to help reduce the amount of taxes that the business is required to pay.
      • It can be structured to receive lower tax rates.
      • It is also possible to have the holding company in another country that has lower corporate tax rates.
        • Recent international jurisdictions have limited the tax benefits from this.

Central Control

    • The management of the business with a holding company and subsidiary companies is usually controlled by the directors of the holding company. Due to this, a more centralised management structure is formed to allow the holding company to maximise performance and growth.
    • With any new procedures or plans, the holding company directors can assist the individual operating companies gain more favourable financing terms than if they were on their own.

Concentrate Property Assets

    • The holding company, since it is the central holder of the property assets, can deal with those assets for the benefit of the business as a whole. This will save time for subsidiary companies, allowing them to continue their operations without worrying about this.

Flexibility for Growth and Development.

    • The holding company having the assets on hand allows them to:
      • Diversify more efficiently
      • Invest in new opportunities
      • Exit ventures if necessary
    • The operating companies are also able to take these steps without risk to the holding company or its assets. The holding company gives power to the subsidiaries to invest in various projects

Succession Planning

    • The holding company can ensure the continuity of the business when key people from the operating companies leave with the help of a centralised board of directors.

Separating the roles and responsibilities between holding company and its subsidiaries is important in terms of maximizing growth and efficiency within a company. We at HCCS recommend undertaking this strategy for your business as it provides greater risk protection and company flexibility.

Holding Companies in Singapore are usually registered as Private Limited Companies ( Pte. Ltd).

This type of structure is often popular with foreign companies entering into Singapore, that do not have operations in the City State or to hold assets and be the parent company for business operations overseas. Entrepreneurs looking to set up a holding company in Singapore often cite the low tax and ease of business to be a major factor in selecting Singapore as their jurisdiction of choice.

At HCCS we will be pleased to guide you through Setting up a Holding Company in Singapore, providing you with the essential information and ensuring that all statutory compliance obligations are met.

Singapore holding company

Requirements for Holding Company Incorporation

Below are the requirements for Setting up a Holding Company in Singapore:
1 1 Director that is a Singaporean resident
2 1 Shareholder that can be a person or corporate entity
3 Company Secretary who is a Singapore resident
4 A minimum paid up capital of $1
5 A registered local address.

If you are unable to provide a director that is a Singaporean Resident. At HCCS we will be pleased to provide you a Nominee Director, in order to satisfy the requirements under the Companies Act.

Please contact us, if you would like  more information regarding Holding Companies in Singapore.