How to better manage business in Southeast Asia by registering a Singapore company?
#startup #entrepreneur #singapore #southeastasia
In this episode, I want to talk about how to set up a better company structure if you want to do business in Southeast Asia.
Especially as foreigners, many times, we will use the Singapore company as the parent company to do the structure design.
Why use a Singapore company as the parent company structure?
First of all, speak the language, do business in Singapore, and set up the official language of the company, which can be handled in English.
On paperwork, company document registration, tax declaration, and all government-issued documents will be in English, which is relatively easy to understand.
The difference is if you go to countries such as Vietnam, Thailand, etc. Official documents will be communicated in the local language.
Let’s say for example, you decided to enter the Vietnamese market. If you find a local Vietnamese business partner, you can consider allocating shares directly at the Singapore company level.
For example, you take 70% and your business partner takes 30% of shares in the Singapore company, and then registers the Vietnamese subsidiary with the Singapore company being the parent company.
The Vietnamese subsidiary may be represented by your local business partner or by a local colleague.
What are the benefits of this design?
Imagine there is a change in the relationship with your business partner.
There are many times in business where there is a chance of disagreement. If you and your business partner develop in different business directions and want to separate, it will be simpler to deal at the Singapore company level. It is very convenient to do shares transfer procedures at the Singapore company level.
If you guys really want to separate, because of different ideas, this is also common. At this time, in the Singapore company, you can transfer all the shares to the business partner, or the business partner can transfer all the shares to you.
Transfer documents and government procedures are easy to understand because they are in English.
However, if you go to other countries in Southeast Asia, the official documents are not necessarily in English, and it is easy to cause more problems due to language barriers.
This is the case of a peaceful breakup.
What about the partnership relationship even worse?
In worse cases, the dispute is resolved through the courts. In Singapore, the common law system is used, and when it comes to dealing with money disputes, the common law system can be used to deal with it. Otherwise, in a certain country in Southeast Asia, it will be more difficult to control the situation by using the local laws.
And for the subsidiary business level, the operational impact will be reduced.
For example, if there is no parent company in Singapore, and there is a disagreement as just mentioned, when you guys want to separate, and if the share transfer process locally is not as smooth as imagined, it may affect the local business operation.
This could be due to the local administrative reasons , and it may take more than one month to complete.
However in Singapore, it can be processed in a few working days. In addition, when you do business in Southeast Asia, usually it involves an application for a business license. If there is a change in the shareholders, it is necessary to update the information in the licensing authority.
However, if it is only a change in the parent company shareholdings, which is at the Singapore company level, this will certainly give you convenience in terms of administrative procedures.
If you have any questions about registering a Singapore company, please feel free to contact us.