During PM Lee Hsien Loong’s meeting with Japanese PM Shinzo Abe and DPM Taro Aso this week, he articulated that Singapore would like to see more robust changes in the ongoing review of the Japan-Singapore Economic Agreement for a New Age Partnership (JSEPA).

The JSEPA, which was initially signed in 2002, has given a leg up to both economies, boosting trade links and economic development between the two countries. In 2012, Japan emerged as Singapore’s eighth largest trade partner, with total trade amounting to S$52.1 billion.

Now, in its third review, PM Lee is encouraging his Japanese counterparts to make an ambitious review, rather than minor adjustments.

According to PM Lee, the presence of the Japanese companies in Singapore is one of the factors why Singapore is calling for greater engagement from Japan. Furthermore, the nation’s participation in ASEAN will be mutually beneficial for all parties involved.

Japan and Singapore also exchanged views on the territorial tensions over the Senkaku and Diaoyu islands in the East China Sea. To that, PM Lee said that greater cooperation is required to move forward in the 21st century economy.

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Interested in opening a company in Singapore? Learn more about our Singapore company incorporation packages at http://www.rikvin.com/incorporation/packages.

According to an announcement by World Bank, China has made the biggest progress in the Asia Pacific region in terms of making its regulatory environment more business-friendly. However, there are still many hurdles for foreign companies which intend to do business there. According to the Guide on Doing Business in Singapore vs. China, published by Singapore company incorporation specialist Rikvin, entering the market via a Singapore entity may be the best way forward.

The Guide analyses two main points i.e. the difference between the process of incorporating a company in China against that in Singapore as well as the tax treatments of a Singapore company and a Wholly Foreign Owned Enterprise (WFOE) in China. Hence, the guide was created to help entrepreneurs determine how best to do business in China.

Analysis by Rikvin showed that while a company may typically be incorporated in less than 1 day in Singapore, the process is much longer in China. In China, the incorporation process is complex, involves many government authorities and may take anywhere between 3 and 6 months.

In addition, a Singapore entity benefits from over 70 Avoidance of Double Taxation Agreements (DTAs) and Free Trade Agreements (FTAs) that Singapore has concluded with partner countries including China. These agreements set the stage for smoother business relations between partnering countries.

  China is a rapidly growing market which offers significant opportunities for many companies. However, incorporating a company in China may not be feasible for many SMEs. By having a base in Singapore and then entering the appropriate agreements with China-based companies, many businesses can enjoy the best of both countries.”

On top of that, Singapore incorporated firms benefit from a partial or full tax exemption scheme for new start-up companies (SUTE) as well as tax exemption on foreign-sourced dividends, foreign branch profits and foreign-sourced service income under section 13(8) of the Income Tax Act.

To that end, Rikvin recommends Singapore company registration for firms that wish to do business in China. Commenting further, Mr. Satish Bakhda, Head of Operations at Rikvin said, “China is a rapidly growing market which offers significant opportunities for many companies. However, incorporating a company in China may not be feasible for many SMEs. By having a base in Singapore and then entering the appropriate agreements with China-based companies, many businesses can enjoy the best of both countries.”

“This route not only saves time and money, but allows one to form business contacts with many Chinese firms that are already based in Singapore. In addition, Singapore offers a very attractive business environment, economic freedom, global competitiveness and openness to trade,” affirmed Mr. Bakhda.

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Interested in opening a company in Singapore? Learn more about our Singapore company incorporation packages at http://www.rikvin.com/incorporation/packages.

In recent weeks, the call for greater transparency has become more salient. In a month or so, Singapore’s financial institutions will have to sound off high-risk accounts that they suspect to be willfully evading taxes. Local authorities have pledged greater cooperation with jurisdictions such as Australia, US and UK in investigating tax offences. In addition, Singapore has also committed to promote greater exchange of information between jurisdictions that are investigating tax crimes. To that end, new updates in the Income Tax Act will trump Singapore’s famed banking secrecy laws.

Will this affect Singapore’s attractiveness as a financial hub? Find out more in this month’s issue of RikvinConnect.

In this issue:

• Foreword: Towards Greater Transparency
• Singapore Committed to International Tax Cooperation
• Tips on Managing Your Payroll
• Need Help with Drafting a Document?
• Guide on Shareholders’ Agreements
• Rikvin App Updates
• Why Open a Singapore Holding Company?
• Employment Pass Framework to be Tweaked Again!
• BE Sustainable Group Expands in Singapore

This newsletter is available for download in PDF format.

Download RIKVINConnect’s May 2013 Issue

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If you have any feedback on this issue or want to share your ideas for upcoming issues, let us know at info@rikvin.com.

BE Integrative Design, a member of the BE Sustainable Group, has recently set up operations in Singapore and announced its aims in Asia. The consultancy, which is inspired by the work of The Blue Economy proponent Gunter Pauli, aims to create positive environmental, social and economic impact through a new systems design approach to said models.

Commenting further, Mr. Nigel Grier, CEO of BE Integrative Design Pte Ltd said, “Our goal is to transform the design industry. We do so by bringing together entrepreneurs and investors, and enabling them to develop solutions that address our fundamental human needs namely, water, energy, food, waste, shelter, health, education and employment. Our solutions are inspired by nature and can be practically as well as commercially deployed.”

Mr. Grier, who has formerly held the helm at Australian ecological design consultancy Zingspace, stressed on an integrative design approach as a means to explore and implement sustainable design principles effectively without compromising budgetary and scheduling goals of a project. This entails a multidisciplinary and collaborative team that follows the design through the entire project life and shares a holistic understanding of the project.

  The high level of infrastructure, ease of doing business, favorable tax rates and government incentives married with the world class Changi airport, also make servicing clients internationally very simple.”

- Nigel Grier, CEO, BE Integrative Design Pte Ltd

BE Integrative Design’s areas of expertise include Integrative Design, Design Charrettes, Blue Economy Consultancy, Biomimicry, Energy Efficiency, Total Water Cycle Management, Low-pressure Engineering, Sustainable Development, Whole Systems Thinking, and Ecological Engineering.

On the decision to be based in Singapore, Mr. Grier said, “Singapore has been the test bed for the urbanization of Asia while being a model of sustainability. As such, being positioned in Singapore as a point to service Asia and other emerging regions is strategically a wise move.”

“The high level of infrastructure, ease of doing business, favorable tax rates and government incentives married with the world class Changi airport, also make servicing clients internationally very simple,” he added.

To that end, the BE Sustainable Group has engaged the services of Rikvin, a Singapore company registration specialist. Describing the group’s incorporation experience, Mr. Grier said, “Rikvin’s consultants were very responsive to our queries and guided us appropriately. They were very helpful in assisting the company shareholders to incorporate the company in such a way to be able to attract further equity investment while being eligible for a range of Singapore government grants and incentives.”

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Interested in opening a company in Singapore? Learn more about our Singapore company incorporation packages at http://www.rikvin.com/incorporation/packages/.

-END -

ABOUT BE INTEGRATIVE DESIGN:
BE Integrative Design, a member of the BE Sustainable Group, aims to create positive environmental, social and economic impact through a systems design approach. Inspired by the work of The Blue Economy proponent Gunter Pauli, its areas of expertise include integrative design, design charrettes, Blue Economy consultancy, biomimicry, energy efficiency, total water cycle management, low pressure engineering, sustainable development, whole systems thinking, and ecological engineering.

COMPANY NAME

BE Integrative Design Pte. Ltd.

INCORPORATION YEAR

2013

SERVICES RIKVIN PROVIDED

• Singapore Company Incorporation
• Corporate Secretarial Services
• Singapore Work Visa Services

TELL US MORE ABOUT BE INTEGRATIVE DESIGN.

BE Integrative Design Pte Ltd is a member of the “BE Sustainable” group of companies and is inspired by the visionary work of Gunter Pauli. The “BE Sustainable” group of international companies’ combined expertise  is synergised in creating positive environmental, social and economic impact.

We bring together entrepreneurs and investors and enable them to develop solutions inspired by nature that can be practically and commercially deployed to address our fundamental human needs of water, energy, food, waste, shelter, health, education and employment.

Utilising an integrative design approach provides a means to explore and implement sustainable design principles effectively on a project. At the same time, it allows one to stay within budgetary and scheduling constraints. It relies upon a multidisciplinary and collaborative team whose members make decisions together based on a shared vision and a holistic understanding of the project. It follows the design through the entire project life, from pre-design through occupancy and into operation.

Services recognised for:

• Integrative Design
• Design Charrettes
• Blue Economy
• Biomimicry
• Energy Efficiency
• Total Water Cycle management
• Low pressure Engineering
• Energy Efficiency
• Sustainable Development
• Whole Systems thinking
• Ecological Engineering

WHY DID YOU SET UP IN SINGAPORE?

Singapore has been the test bed for the urbanisation of Asia while being a model of sustainability. As such, being positioned in Singapore in a bid to service Asia and the other emerging regions is strategically a wise move. The high level of infrastructure, ease of doing business, favourable tax rates and government incentives all married with the world class Changi airport makes servicing clients internationally very simple.

WHAT ARE YOUR BUSINESS GOALS?

To transform the design industry through vision and action to a new systems design and thinking approach to our models of development, economy and society.

WHAT WAS YOUR EXPERIENCE OF RIKVIN?

• Responsiveness to queries……………………………Excellent
• Knowledge and advisory skills………………………Excellent
• Clarity of email correspondence……………………Good
• Timeliness of completing tasks, reminders…..Good
• Overall quality of service……………………………..Excellent

Rikvin was very helpful in assisting the company shareholders to incorporate the company in such a way to be able to attract further equity investment while being eligible for a range of Singapore government grants and incentives.

According to a report titled Global Professionals on the Move 2013 issued by Hydrogen, Singapore was the fourth most attractive location in the world, and the top in Asia for high-flying professionals.

The report, which consolidated responses from 2,146 respondents in 90 countries, revealed that Singapore is the top third location for technology professionals and the second in the world for finance professionals. The United States remains as the destination of choice for the highest number (24%) of respondents, followed by UK (13%) and Australia (13%). Other cities that emerged in the top 10 include Canada, Switzerland, France, Hong Kong, UAE and Germany.

In addition, Asian professionals with overseas experience are considered assets when they return to their home countries. According to Hydrogen, when home countries become economic powerhouses such as Singapore, returning professionals with international training as well as a profound understanding of local culture, language and customs become highly sought.

Singapore work pass specialist Rikvin recognizes the report as affirming Singapore’s reputation as a talent magnet. Commenting further, Mr. Satish Bakhda, Head of Operations at Rikvin said, “Even though there are many challenges to moving abroad, there are sound and overwhelming advantages to a career when one makes that leap.”

  Due to a new economic shift, Singapore has recently raised the bar for professionals wishing to relocate to Singapore. Nevertheless, candidates with extensive experience, add value to companies and complement the core Singaporean workforce stand a good chance of having their Singapore work visas approved.”

“Due to a new economic shift, Singapore has recently raised the bar for professionals wishing to relocate to Singapore. Nevertheless, candidates with extensive experience, add value to companies and complement the core Singaporean workforce stand a good chance of having their Singapore work visas approved.”

Analysis by Rikvin shows that as Singapore moves towards the next phase of its development, it will continue to maintain its reputation for openness. Therefore, it will not shut its doors to talented professionals who could bring it forward to the next stage of its growth.

“Although more adjustments will be made to the Singapore employment pass, we are optimistic that high-flying professionals will not be deterred from trying for an opportunity to work in Singapore. The prospect of having Singapore experience on the resume is fast becoming an asset to many professionals all over the world, and this is especially true for those in the finance or technology sectors,” affirmed Mr. Bakhda.

In a bid to combat cross-border tax offences and maintain its name as a reputable financial center, Singapore has updated its Income Tax Act. The changes therein will trump the confidentiality provisions in the Banking Act, which has been highlighted for making the city-state the world’s fourth largest offshore financial center. Singapore company formation specialist Rikvin recognizes this as a step in the right direction.

A major change in the Income Tax Act would see the Inland Revenue Authority of Singapore (IRAS) able to directly obtain bank and trust information from financial institutions without seeking an Order from the High Court.

In the same vein, Singapore will sign the Convention on Mutual Administrative Assistance in Tax Matters, which was first developed as an OECD-Council of Europe agreement. The Convention has 45 signatories and will expand Singapore’s EOI network by 11 jurisdictions.

To enhance international tax cooperation, Singapore will have exchange of information (EOI) agreements with its existing tax agreement partners. Hence, its network of EOI partners will be increased to 83 jurisdictions, up from 41 jurisdictions by January 2014.

 Although these measures may seem to encroach the privacy of account holders and may not sit comfortably even with law-abiding persons, the new focus on transparency is necessary.

It will not only give impetus to anti-money laundering efforts globally, but ensure that Singapore will not be used to harbor illicit funds or siphon undeclared assets.”

In addition, Singapore will also conclude an intergovernmental agreement with the United States. The agreement will ensure that financial institutions in Singapore will provide automatic information sharing and comply with the Foreign Account Tax Compliance Act (FATCA), which will come into effect January 2014. Non-compliance would mean no access to US financial markets.

Commenting on the measures, Mr. Satish Bakhda, Head of Operations at Rikvin said, “Although these measures may seem to encroach the privacy of account holders and may not sit comfortably even with law-abiding persons, the new focus on transparency is necessary. It will not only give impetus to anti-money laundering efforts globally, but ensure that Singapore will not be used to harbor illicit funds or siphon undeclared assets.”

“These measures in turn indicate that Singapore is serious about maintaining its reputation as a vibrant financial and wealth management center. It also wants to send the message that Singapore is safe and wishes to maintain high standards of financial integrity to safeguard legitimate funds. We anticipate more genuine firms will be encouraged to setup Singapore companies,” affirmed Mr. Bakhda.

Even though many startup owners agree that a shareholders’ agreement is important, many delay putting it in place early in the business process. Two popular reasons cited include lack of time due to getting the business up and running and that all shareholders are getting along really well. To that end, Singapore company registration specialist Rikvin has today published a guide on Shareholders’ Agreements.

The guide covers the purposes of a Shareholders’ Agreement as well as salient aspects that should be considered when drafting the agreement. A shareholders’ agreement governs the relationship between shareholders and determine their rights and obligations. Important aspects covered in a Shareholders’ Agreement include Dispute resolution, Third party offers, Death, Short and Long Term Disabilities, Management of decisions, Puts and calls, Financing, Defaults and Employment.

Analysis by Rikvin shows that the value of a shareholders’ agreement far exceeds the initial cost and as such, is worth the investment. Commenting further, Mr. Satish Bakhda, Head of Operations at Rikvin said, “The busy-ness of running a small business should not distract business owners from seeing the importance of a shareholders’ agreement. Shareholders’ agreements serve a wide range of purposes and can protect a company from unprecedented disputes and losses.”

  Many new business owners take their relationships for granted, especially when doing business with people they trust. Like marriages or relationships, the initial stages are almost always pleasant.

However, disputes may arise during the course of the relationship and unfortunately, the goodwill and trust may deteriorate to a point where it is not possible to sign a shareholders’ agreement. The business is then lost.”

“Furthermore, many new business owners take their relationships for granted, especially when doing business with people they trust. Like marriages or relationships, the initial stages are almost always pleasant. However, disputes may arise during the course of the relationship and unfortunately, the goodwill and trust may deteriorate to a point where it is not possible to sign a shareholders’ agreement. The business is then lost,” he added.

Rikvin’s recently launched Document Drafting and Vetting Service includes the drafting and reviewing of a shareholders’ agreement. The service, which is offered at an affordable price, is rendered by Rikvin’s legally-trained consultants.

“Once all company’s shareholders have agreed on the material terms to govern the relationship, our consultants will advise on how best to protect everyone’s interest,” affirmed Mr. Bakhda.

To learn more about the Shareholders’ Agreement Guide, please visit
http://www.rikvin.com/incorporation/shareholder-agreement/.

According to Mr. Balakrishnan Kunnambath, Societe Generale Private Banking’s Managing Director, Singapore is becoming increasingly attractive to non-resident Indians (NRIs). In an interview with the Business Times, he said that there has been an uptrend of large investor families moving to Singapore and that the city-state is fast becoming a preferred jurisdiction over the years.

He explained that one of the routes taken by many well-heeled individuals is the Global Investor Programme (GIP). Under the GIP, an investor may gain the Singapore Permanent Residence status provided that he fulfils certain requirements. These include a substantial business track record as well as a successful entrepreneurial background and interest in starting a business or investing in Singapore.

Large investors also tend to invest in high-end property for the longer term after they relocate their family members to Singapore. He explained that the group represents serious investors who plan to keep their property for at least over half a generation (15, 16 years).

Therefore, recent property cooling measures introduced by the Singapore government, such as the additional 1% stamp duty, are not deterring them from purchasing property and relocating to Singapore. Instead, this duty will only be an issue for speculators.

Global Investor Programme from Rikvin Singapore on Vimeo.

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Interested in assessing your candidacy for the Global Investor Program? Please email us @ info@rikvin.com with your profile and company’s Profit & Loss statement for the past 3 years. Upon evaluation, we will contact you on the necessary GIP application proceedings.

In a recent article in TechinAsia, Streetdirectory founder Firdhaus Akber accounted how he was voted out of his own company when the board felt that he wasn’t contributing enough.

This story spells a cautionary tale for all business owners and highlights the various dangers of an entrepreneurial journey.

At Rikvin, our legal consultants have come up with a list of fail-safe measures that could potentially protect your interests, as well as sanity.

Here are some tips/safety features that you should consider:

Let the right one in

Carefully consider who you approach as potential investors. Typically, a venture capitalist (VC) firm would require a certain amount of operational and management control, whereas small angel investors may be happy to have no control. Choose investors that are a good match to your company with experience in similar businesses and industries. This is particularly important if they will be involved in the management of the business.

Cover your backside

It is important that relationship between the entrepreneur and investor is governed by a carefully drafted shareholders’ agreement.

Diversify your shares

Consider using different classes of shares. For example, ordinary shares and preferential shares, or create classes that create rights for the shareholder as agreed between the parties. In this regard what is important is the voting rights attached to the shares.

Preferential shares do not have voting rights, but will receive payment of dividends first. Ordinary shares have voting rights. A class of shares could be created whereby those shares carry extra weight. Having the majority vote will help you retain control of the company.

Be aware of the dangers of share dilution

There are several situations where shares may be diluted: stock options (eg. employee stock options) may be converted into ordinary shares boosting total share count; additional shares issued to increase capital; new shares offered for services provided.

Mechanisms to prevent or minimise share dilution

• Right of first offer gives existing shareholders the right to buy shares in any new issue before the shares are offered to external parties. In other words, this is the right to buy new shares before outsiders can, but this is limited pro rata to the proportion he already holds.
• Create different classes of shares.

Case studies

Facebook

How did Mark Zuckerberg keep control when he only owns about 28% of Facebook post-IPO?

He did so through two corporate mechanisms: one is fairly common — dual classes of stock; and the other is voting agreements.

It is structured so as to have two classes of stock, Class A shares and Class B shares. The Class A shares you will get if you buy shares in the market have one vote per share. The supervoting Class B Shares, which are almost all of the shares that have previously been issued and all of the shares owned by Zuckerberg, get 10 votes per share.

Class B shares each carry 10 times the voting weight of Class A shares. When an owner of Class B shares sells his or her shares to someone else, they transform into Class A shares. That means that if any other Class B shareholder liquidates any shares, Zuckerberg’s degree of control goes up.

He has voting agreements with many of his fellow shareholders that give him a proxy to vote enough additional shares to give him voting rights to a total of around 57% of the super-voting stock.

Groupon

Groupon also has dual classes of stock enabling the founders to retain control. The founders own a percentage of Class A common stock, each share of which gets one vote, and 100% of supervoting Class B shares, which each get 150 votes.

Set aside equity for future employees, particularly early-stage ones. Usually when setting up equity at the beginning, it’s a good idea to leave between 10% to 20% in the pie for employees. If you plan on raising funding at some point, your investors may require you to have this. If this equity has already been set aside at the beginning, you won’t have to further dilute your shares.

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To learn more about shareholders’ agreements, please visit http://www.rikvin.com/incorporation/shareholder-agreement/.

If you’d like to find out more about our Shareholders’ Agreement drafting and vetting services, please email us at info@rikvin.com.

 

 

According to a forum letter posted on Straits Times, some consultants and vendors may be wrongfully benefitting from the Productivity and Innovation Credit (PIC) scheme. The PIC bonus and cash payout were created to encourage business owners who hire at least three local employees to spend on approved PIC activities.

We have come up with four tips on how to avoid falling prey to such vendors.

Know how much you can claim

Knowing how much PIC deductions you can claim helps you determine what your expenditure budget should be and what costs you can offset.

It also helps you determine if a vendor is quoting you excessively.

Do some research

Do not be pressured into buying from a friend or family member if it does not make sense to your budget.

Take some time to check what the market rates are for a particular service/good you are looking to acquire.

Get at least 3 quotes and determine which are reasonable and make sense to you. Insist on a quote that is itemized and check it against your own findings. Be careful if you see a quote you suspect is inflated.

Read before you sign

The PIC Scheme is part and parcel of the accounting services that you have employed. Be wary if your consultant approaches you and insists that you sign an agreement that accords them access to a part of your PIC cash payout.

The cash payout is for your PIC activities only and your accounting services provider does not have to pay for your PIC application.

Never pay in full upfront

Instead of paying for your PIC equipment in full and upfront, it is more prudent to place a down payment first.

Fulfil the rest of the payment only upon ensuring that your goods are goods are delivered to you safely and are not defected.

Singapore company incorporation specialist Rikvin has today published a guide on Singapore Payroll Management. The guide aims to help enterprises navigate their way through the payroll management process and avoid errors that could potentially be detrimental to their brand.

“The prompt and correct payment of salaries is the responsibility of all employers. In Singapore, the Ministry of Manpower has recently effected the Workright Campaign, to allow employees to act as whistleblowers should their employers not contribute to their Central Provident Fund (CPF) or allowances and overtime payments, for example,” explained Mr. Satish Bakhda, Head of Operations at Rikvin.

“Our guide provides a checklist of the salient components of the payroll management process. By checking against the list and fully complying with the Employment Act as well as the CPF Act, an enterprise may avoid unwittingly committing mistakes that could hurt its good name,” he continued.

The concise guide covers salient components of a payroll management process in Singapore. These components include statutory contributions such as the CPF contributions, Skills Development Levy, community-related funds and the Foreign Worker Levy. It also includes other important payroll elements such as unpaid leave, overtime pay, public holidays and tax clearance.

  “Our guide provides a checklist of the salient components of the payroll management process. By checking against the list and fully complying with the Employment Act as well as the CPF Act, an enterprise may avoid unwittingly committing mistakes that could hurt its good name.”

In addition, the guide details the right way to compute salaries and expounds on other obligations of an employer when it comes to the filing of income tax returns or tax clearances.

“This list also illustrates that payroll management requires care and great attention to detail. As a one-stop business solutions provider, we also help growing enterprises manage their payroll services, so that they align themselves with statutory requirements. We hope our guide and services will help more smaller enterprises maintain their good standing with the authorities,” affirmed Mr. Bakhda.

To view the guide, please visit http://www.rikvin.com/learn/singapore-payroll/.