When setting up a business overseas, foreign companies understandably wish to carry out their global expansions with the least amount of risk and liability to themselves.
(PRWEB) November 23, 2011
Rikvin Singapore, a company incorporation specialist, reports a significant increase in the number of client requests in setting up local subsidiaries as opposed to branch offices. According to Rikvin, this phenomenon can be traced to substantial differences between the administrative and legislative requirements of both incorporation options.
“When setting up a business in Singapore, foreign companies understandably wish to carry out their global expansions with the least amount of risk and liability to themselves”, said Satish Bakhda, Rikvin’s Head of Operations.
He pointed to the fact that local subsidiaries have an autonomous and distinct legislative status from their parent company, combined with enhanced safeguards that protect the relevant shareholder’s personal assets.
Mr Satish added that subsidiaries offer several benefits which branch offices do not, since any claims made against Singapore branch offices can be extended to the parent company overseas as well. This could be a factor that discourages any foreign entity from setting up subsidiaries, since any risks taken overseas are not isolated and could possibly affect their overall operations.
With regards to ownership, subsidiaries are allowed to be wholly owned by either foreign or local entities, while branch offices can only be owned by their head offices. Set-up may be facilitated as subsidiaries only require one local resident director, compared to a branch office’s requirement of two resident agents.
In addition, subsidiaries enjoy considerable local tax benefits that branch offices do not, as they are taxed as a Singapore resident entity. This results in lower costs of operation and greater accommodation of alternative functions for the company.
Subsidiaries may also provide flexibility for their parent companies by expanding into other sectors of interest, effectively adapting to emerging market trends. On the other hand, branch offices are legally restricted to the same industry, internal structures and processes as their parent organisations. As such, only multi-national companies like airlines and banks would choose to set up branch offices, having no other choice in their particular line of work.
It seems this inclination of preference for subsidiaries is generally set to continue if no alternative measures are put in place, says Rikvin Singapore. It is also a clearly ideal option for smaller companies who do not need to rely on the international branding of their goods or services, taking into account that there is a limit of 50 members on the formation of a subsidiary.
Foreign entities that may not have the required knowledge or expertise may choose to hire company incorporation specialists such as Rikvin, in order to select the best option for their plans to expand in Singapore.
Rikvin offers business solutions for both local and foreign investors and entrepreneurs. The firm’s specialties include company registration services, offshore company setup, incorporation and other related corporate services. Rikvin also provides professional services on accounting, taxation, immigration. For enquires on Singapore corporate tax rates, visit our website at http://www.rikvin.com/.