Commencing a new business in Singapore is an exhilarating journey but it comes with a series of critical steps, the most crucial being registering with the Accounting and Corporate Regulatory Authority (ACRA). However, aspiring entrepreneurs must tread carefully, as common pitfalls could lead to the rejection of their company registration applications.
In this article, we discuss why ACRA might reject a company registration application and provide valuable guidance on navigating these potential obstacles, ensuring a smooth path towards establishing your business in Singapore.
Inside This Article:
Common Grounds for ACRA’s Rejection of Your Company Registration Application
Here is a glimpse of five key factors which might lead to the rejection of your company’s registration application:
Non-Compliant Company Name
Your chosen company name is critical to your brand identity. ACRA requires that the name be unique and distinguishable from other businesses in Singapore. This means it cannot be an exact match or too similar to an existing company’s or reserved name. Also, names with obscene or objectionable meanings and those with religious connotations will likely be rejected.
To avoid this pitfall, thoroughly search InCorp’s Company Name Check Tool to ensure your preferred name is available. If a similar name exists, consider tweaking your choice or using a thesaurus to find synonyms that preserve your brand identity while meeting ACRA’s requirements.
ACRA rejects business names if:
- ACRA has introduced stricter guidelines under the 2024 regulatory enhancements. Any business names that resemble existing names too closely or cause public confusion will be scrutinised and possibly rejected.
- Another applicant has already reserved the name.
- The name has an offensive or objectionable meaning.
- The name has religious connotations.
- The Ministry of Finance instructs the Registrar to reject the name.
In cases where ACRA accepts similar business names, legal complaints can still be filed against a company by another entity that was the original user of the name. This highlights the importance of selecting a unique and distinct name to avoid conflicts.
While facing rejection can be frustrating, it is essential to recognise the long-term advantages of selecting a unique name for your company. Following ACRA’s guidelines and utilising our pointers to pick a company name in Singapore will help ensure that your application is not rejected and that your business stands out distinctly in the market.
Lack of Registered Singapore Address
Securing office space and registering it as your company’s official address is crucial to ensure compliance with Singapore laws and successfully incorporating your business. This requirement is mandated under Section 142(1) of the Companies Act, Cap. 50.
The registered office address must fulfil the following criteria:
- Have a Physical Office Address: The address cannot be a PO box but a physical office address in Singapore.
- Open and Accessible: The office must be open and accessible to the public for at least 3 hours during regular business hours on each business day. This ensures that all communication and notices can be adequately addressed and received.
It is important to note that your business will receive mail from various government entities, including reminders on annual requirements, new incentives, and bank correspondence. Regularly checking your mail is essential to ensure you get all the crucial information.
For small businesses and startups needing more resources to rent physical office space or operate from a home-based setup, ACRA allows using a home address as the business address. However, remember that this information will be publicly available in records, meaning everyone can access and see the home address when searched. You can use your home address as the registered office address under the Home Office Scheme with URA or HDB. However, specific requirements must be met to register your home address as the official address for your business.
Alternatively, companies can opt for a virtual office address to maintain privacy while fulfilling legal requirements.
Insufficient Number of Shareholders
In Singapore, if you are registering a Private Limited Company, the Companies Act requires that it have at least one shareholder. This type of company’s maximum allowable number of shareholders is limited to 50. There is no embargo on who can be shareholders as long as their number falls within the specified range.
Shareholders for the business can be individuals or corporations, and they can be local or foreign. If the company has a single shareholder, that individual or corporation can own 100% of the shares, regardless of nationality or residency status.
On the other hand, an Exempt Private Limited Company has slightly different requirements. It needs a minimum of 1 shareholder and can have a maximum of 20 shareholders. However, in this type of company, all shareholders must be individuals, and corporations cannot hold shares directly or indirectly.
To ensure a smooth registration process and avoid rejection, you must adhere to ACRA’s rules and regulations regarding the number and type of shareholders allowed for each type of company.
Absence of a Local Director
While ACRA allows for local and foreign shareholders, it mandates that every incorporated business in Singapore must have at least one local director.
A local director must be a Singapore Citizen, Permanent Resident or hold an Employment Pass or EntrePass. They must be at least 18, have total legal capacity, and not be disqualified from serving as a company director.
During the application process, you will need to appoint a local director. If you do not have one readily available, consider appointing a nominee director to meet the statutory requirements.
In addition to a local director, all incorporated businesses in Singapore must have a company secretary within six months of incorporation. The company secretary must also meet specific qualifications and requirements.
Missing Business License
When reserving your company name with ACRA, you must submit at least one SSIC Code (Singapore Standard Industrial Classification). The SSIC Code helps define the nature or industry in which your business operates.
Certain industries require specific licenses before a business can commence operations. If your business falls within one of these regulated industries, you must submit a valid license and your application to avoid rejection.
Conclusion
In conclusion, we recognize the critical importance of meticulously navigating the company registration process. Our success hinges on selecting a unique and distinctive business name, ensuring compliance with ACRA’s guidelines, and securing a registered office address that facilitates effective communication and accessibility. Understanding the intricacies of shareholder requirements, whether for a Private Limited Company or an Exempt Private Limited Company, is vital to avoid any hindrance in the incorporation process. Embracing these principles with dedication and seeking expert advice when needed, our firm sets itself up for a seamless and prosperous journey in Singapore. With a firm grasp of the intricacies of company registration, we are ready to forge ahead and embark on a successful venture in Singapore, achieving our goals and serving as a trusted partner for our clients.
FAQs on Why ACRA Can Reject Your Company Registration Application
Is it possible for non-residents to register a company in Singapore?
- Yes, non-residents can register a company in Singapore without the need to immigrate. However, they are required to appoint a local director during the registration process. Afterwards, they can operate the company from their home country while the local director represents the company in Singapore. If they wish to work as a local director for their Singapore company, they must immigrate to Singapore.
How straightforward is the process of registering a company in Singapore?
- Registering a company in Singapore is a relatively easy and efficient online process. In most cases, it takes less than an hour to complete. After successful registration, ACRA will issue essential official documents, including the e-Certificate of Incorporation, which electronically confirms your company’s registration in Singapore.
What distinguishes identical from similar business names?
- Identical business names are the same (e.g., ABC Company Pte Ltd vs ABC Corporation Pte Ltd – ‘Company’ and ‘Corporation’ are disregarded at the end). On the other hand, similar business names are different but closely resemble each other, leading to potential confusion. ACRA determines the resemblance based on factors such as business activities, evidence of public confusion, and financial harm resulting from using such names. For more information on ACRA’s treatment of identical and similar business names, name complaint policy, and application process, refer to their Policy Statement on the Treatment of Business Names and Name Complaints and their guide on how to apply to name complaints.
Why doesn’t ACRA protect the intellectual property rights of my registered business name?
- ACRA’s role in registering business names is to facilitate the business registration process in Singapore. However, it’s essential to understand that registering a business name differs from registering a trademark. Unlike a trademark registration, a business name registration does not grant exclusive rights to use the name. When you register a trademark, you gain legal protection, and it confers the exclusive right to use the trademark or authorise others to use it with specific goods and/or services in Singapore. This means other traders cannot use the registered trademark without your consent. Conversely, registering a business name with ACRA does not provide the same level of protection. It merely serves as a requirement for business in Singapore and does not grant exclusive rights to use the name. As a result, other businesses may be able to use similar or identical business names without your consent, leading to potential confusion in the marketplace. To ensure full protection of your intellectual property rights, including your business name, consider registering it as a trademark. This will provide the necessary legal protection and prevent others from using the name without your permission, safeguarding your brand and reputation in the market.
What is an alternate address, and how can we register an alternate address with ACRA?
- Business owners and company officers can register an Alternate Address with ACRA. From 2024, ACRA will implement a new contact address regime, replacing the Alternate Address system. Your contact address, rather than your residential address, will be publicly available, ensuring enhanced privacy for business officers. As of August 2024, the $40 fee for registering an alternate address has been waived under ACRA’s new Contact Address system, which enhances privacy protections for business officers. However, it’s important to note that all official correspondences from ACRA will continue to be sent to the residential address. The Contact Address must be within the same jurisdiction as the residential address and be a contactable address (e.g., office or corporate service provider’s office). P.O. Box addresses are not permitted for the Contact Address registration.
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