In part two of this two-part article, we continue to look at further legal and regulatory matters to be cognisant of as well as employment matters, tax and business contracts. Click here if you would like to read part one of this article on your legal checklist for start-up success.
Competition Laws: Singapore adopted its Competition Act to ensure markets are competitive. Your start-up will benefit from building a compliance program in its business model that educates staff and management about the competition related laws to reduce the risks of potential business infringement. An effective compliance program will also protect you against anti-competition activities of rivals by raising awareness to such activities.
Anti-Money Laundering (AML): This area is governed by the Anti-Money Laundering and Terrorism Financing Act. Companies are realising the importance of evaluating money laundering risks in their organisations. Depending on the nature of your business, you may need to have the tools and techniques to implement a risk-based AML and Combating the Financing of Terrorism (CFT) program for your business.
Business Permits and Licenses: Different sectors may require specific licenses to operate. Some examples are highlighted here. Trading and shipping businesses require TradeNet licenses. Event management businesses require Arts Entertainment Licences for plays and copyright permits to reproduce copyright at events.
For fintech start-ups, the Monetary Authority of Singapore (MAS) guidelines are important to review. The FinTech Regulatory Sandbox enables financial institutions and FinTech players to experiment with innovative financial products or services in a live environment but within defined perimeters.
The application process to the industry-specific regulators is usually straightforward if you fulfil their requirements.
The laws in Singapore including the Employment Act are straightforward and designed to promote entrepreneurship and ease of doing business in Singapore. You may also wish to read our article on the why Singapore is attractive to investors – click here. Singapore’s government gives significant freedom to businesses and employees to negotiate mutually beneficial employment contracts (e.g. there is currently no minimum wage requirement in Singapore).
The Singapore government’s efficient tax regime for start-ups have helped the country emerge as one of the dominant start-up hubs in Singapore. Although start-ups have many tax incentives and there are numerous industry-specific tax deductions and incentives made available to businesses registered in Singapore, your business still has several tax obligations.
Corporate Tax Obligations: Singapore companies are required to declare their revenue and file Estimated Chargeable Income (ECI) with the Inland Revenue Authority of Singapore within three months of the end of their chosen financial year. ECI is the estimated taxable income of the company for the given financial year. Even if a company estimates its chargeable income as zero, it still has to file a “Nil” ECI.
Goods and Service Tax (GST): A Singapore business must register for GST if your business has a turnover of more than S$1 million in the prior 12 months or is projected to do so in the course of the next 12 months.
Depending on what business you intend to carry out, you will need specific legal contracts to protect your company. Some example agreements which most businesses require include shareholders agreements, employment contracts, investment agreements, non-disclosure agreements, company constitutions, independent contractor services agreement and IP assignment or licensing contracts. It is wise to resist the urge to draft your own agreements especially if you are new to the area or lack specialist experience in it, just to save some money. More often than not, poorly drafted agreements will backfire, and disagreements could end up costing a lot more than what you initially tried to save.
If you would like to receive legal advice on setting up your business, protecting your IP rights, drafting relevant contracts required for your business or on compliance issues, please approach our experienced and affable team at AT Law Practice LLP – click here.
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