Perhaps, the best approach to understanding the concept of a subsidiary company is by looking up the generic meaning of the word subsidiary. By definition, subsidiary means subordinate. Applying that meaning to the world of business, a subsidiary company is that which is controlled or owned by another company, usually, a parent company.
The relationship between a subsidiary company and a parent company can be expressed in several ways. Among them is when the parent company becomes the holding company. This involves the primary function of the parent companyto concern itself in controlling other businesses or firm than in engaging in its own business. Majority of the shares in a subsidiary company are owned by the holding company. Nonetheless, in case the parent company is the sole owner of all stock, the subsidiary company is known to be a wholly-owned subsidiary.
The unique features and characteristics of a subsidiary company are enough reason why many entrepreneurs prefer this type of business when considering a business expansion offshore. For one thing, both the parent company and the subsidiary company are not necessarily required to operate on the same business nature, nor do they have to operate on the same area, although when such thing happens, they can be competitors in the marketplace and still remain to be connected and benefit from such competition.
For another thing, as both the parent company and the subsidiary company are treated as a separate entity, one of them can be involved in legal proceedingssuch as indictment, investigation, bankruptcy, and tax delinquencywhile the other cannot.
A business enterprise can become a subsidiary by acquisition or be established as a subsidiary from its inception. Gaining control over a companys stock is possible through a purchase of such stock or through an exchange of its stock for shares of stock in a parent company. A company may constitute a subsidiary through a formation of a new corporation, thereby, preserving all or a part of its stock.
In Singapore, a subsidiary company is recognized as a Private Limited company having corporate shareholders and which is accorded as a legal and separate entity. The shareholder can be the parent company, which may be a foreign company for that matter and which may own 100% of the subsidiarys shares.
Singapore is a giant city-state economic wise. In the recent twice-a-year review of the economy facilitated by the Monetary Authority of Singapore, Singapores economy is slated to a growth of 15% by end of this year. In 2011, MAS is positive that the services sector could attribute 2/3 of its Gross Domestic Product. Thus, sectors from tourism, financial and trade shall be seeing stronger economic growth.
For entrepreneurs to experience Singapores economic development, they may consider registering a company or a subsidiary company. Having the reputation as the easiest place to do business in the 2010 report of Ease of Doing Business, Singapores corporate tax rates are relatively lower than most developed countries. There are tax incentives and or exemptions given by the authorities in Singapore as well. For example, for the first S$100,000 taxable annual income, subsidiary companies enjoy tax exemption for the first 3 years following a successful registration. In addition, there are no taxes on dividends and capital. For a taxable annual income of up to S$300,000, a mere 9% tax rate is given.
Registering for a Singapore subsidiary company can be done by another separate company in which nature is to extend assistance and services such as incorporating a company or registering a subsidiary. Processing of working visas can also be done by an independent firm for foreign investors.
Registering for a subsidiary company can be rewarding in many ways. Registering for a subsidiary company in Singapore puts the entrepreneur a step closer to achieving his business dream.
About the Publisher:
Rikvin is the leading Singapore Company Registration Specialist and has successfully helped thousands of foreign entrepreneurs Form a Singapore Company. The firm provides a complete corporate solution under one roof for Singapore subsidiary company registration of private limited companies with the opening of corporate accounts, business registration including accounting, tax, immigration related to work passes visa and compliance services in Singapore.
Our office is located at Raffles Place, in the heart of the Singapore business district. ("CBD") If youre in our neighborhood and want to discuss any aspect of our service then feel free to come in to our offices during business hours.
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