Asiabiz Talks About Singapore Representative Office Setup

Singapore’s leading business registration specialist Asiabiz said that a representative office is the most ideal launch pad for foreign companies planning to conduct extensive market research before making investment decisions.

“By studying first the profitability of their products and services before engaging in a full commercial operation, foreign companies can avoid huge losses and even turn themselves into key market players as they are already equipped with the knowledge about their target-consumers,” Asiabiz said.

Aside from conducting feasibility study and research, the business registration firm added that a Singapore representative office may also serve as a coordinating entity of its parent company during product promotions and may also be used to oversee the local distributors and agents of its main headquarter.

However, a representative office is prohibited to engage in any activities that will yield profit such as services or products for fee. In addition, this is also not allowed to conduct specific commercial activities such as shipping and storing of products, entering or signing a contract or agreement, trading products, leasing warehouse facilities, or negotiating or opening “Letter of Credit.”

With these limitations, Asiabiz said that a representative office should only be treated as a temporary setup for a bigger and more extensive operation.

“As a temporary launch pad, Singapore does not allow any foreign companies to operate a representative office for more than three years as it deems that this period is enough to determine the profitability and the market environment of the country,” the firm said.

Aside from the limitations in profit-generating activities, a representative office is required to hire a limited number of foreign and local staff.

Also, foreign companies are required to appoint and relocate a chief representative from the main headquarter who will supervise the activities of this office. It is a requirement for the chief representative to apply for Singapore Employment Pass which is a visa issued to foreign professionals and entrepreneurs.

Meanwhile, foreign companies can delist their representative office and shift to other business structures like a subsidiary company or branch office if they want to engage in profit-generating activities. This can be done even if the representative office has not yet exceeded the three-year limit.

During the shift from a representative office to a “real” business structure, Asiabiz said that parent companies are required to appoint a professional firm (e.g., business registration specialist or law/accounting firm) since any foreign entities or individuals are not allowed to self-register their business.

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