In Singapore, the terms “branch” and “company” refer to distinct business structures, each with its own unique characteristics and implications.
Company: A company in Singapore is a separate legal entity that can be locally incorporated or registered as a foreign company. It is treated as an independent entity with its own rights and liabilities. Shareholders own the company, and it has its own management and operational structure. The liability of shareholders is generally limited to the amount they invest in the company, safeguarding their personal assets. Setting up a company in Singapore is a popular choice for entrepreneurs looking for a separate legal identity and limited liability protection.
Branch: A branch, on the other hand, is an extension of a foreign company, not a separate legal entity. It is established to conduct business operations in Singapore while remaining under the control of the parent company. Unlike a company, a branch does not have limited liability protection, and the parent company assumes full responsibility for the branch’s debts and obligations. Registering a branch in Singapore is suitable for foreign companies seeking to expand their presence in the country without going through the process of local incorporation.
In summary, the key difference lies in the legal identity and liability structure: a company is a separate legal entity with limited liability, while a branch is an extension of a foreign company with no legal separation, resulting in unlimited liability. Businesses should carefully consider their operational needs, liability concerns, and long-term goals before deciding whether to set up a company or establish a branch in Singapore. Consulting with legal and financial advisors is essential to making an informed decision tailored to the specific requirements of the business.