There are 100s of documents every new and existing business should keep well-documented for commencing, operating, and expanding their firm in Singapore. However, it is challenging to remember each of them and save multiple links or images to store the information.
This blog will simplify your task by walking you through all key legal documents you must consider for business formation in Singapore, raising funding, and commencement of online business.
Note: You can bookmark or save this blog link as it contains comprehensive information in one place, and you can refer to it whenever you want to obtain any details.
Necessary Legal Documents for Business Formation
Let us first walk you through the necessary legal documents you must consider for Business Formation in Singapore. Before that, you must decide the business structure you want for your organization.
For instance, a sole proprietorship is ideal if you wish single ownership, authority, and individual supervising the whole business. A partnership firm is suitable if you want to involve partners (2-20). Company incorporation is your correct path if you have more than 20 partners.
You can determine the right business structure depending on the size and scale of the organization you want to incorporate. Sole proprietor and partnership setup and administration costs are relatively lower than a company.
However, the partnership has the added advantage of risk sharing amongst partners, whereas in the former, the owner has to bear all losses. Both have less regulatory compliance compared to a company.
Based on your chosen business structure type, the following are the essential legal documents you will be required:
- Shareholders’ agreement for companies specifying their stake, capital structure, dividends percentage, board composition, and other relevant information
- Partnership’s agreement for a partnership, specifying their respective roles, responsibilities, authority, profit and risk sharing, assets and liabilities, debt, and other details
Note: It is wiser to have an agreement in the above two structures to avoid conflict of interest and mention dispute resolution methods.
No legal documents are required for a sole proprietorship firm. You can set up one by selecting a business name not taken by another business, filling out the application form, and submitting it with the needed documents.
Salient Legal Documents for Your Business Funding
Businesses can’t rely solely on internal funding to operate and grow. It is important to borrow/raise funds externally. The following are the salient legal documents required for funding your business for capital inflow management and protecting the company’s interest:
Commercial Loan Agreement
While borrowing funds through a financial institution or bank, it is vital to establish a formal commercial loan agreement outlining the details, monthly installments, and loan terms to ensure transparency and sound clarity.
Compared to a Commercial Loan Agreement, it is a simple written and signed document specifying an unconditional promise made by a borrower to pay a certain amount as an installment to the lender.
To summarize, it contains terms of loans and repayment, amount borrowed, tenure, and installments. The primary difference between a promissory note and a commercial loan agreement is that the former is a formal IOU document generally borrowed from friends, family members, or acquaintances.
If you are raising and obtaining funding from private/angel investors like Venture Capitalists, it is vital to establish a term sheet outlining the salient commercial terms on which you have agreed with investors to invest in your business.
It functions as a well-documented guide and can be amended/revised if changes are made in original terms. A term sheet facilitates as an intermediator for negotiations and resolving issues.
Refer to our other blog, “How to Raise Funding for starting a New Business in Singapore,” for your reference.
Essential Legal Documents for Commencing Online Business
It is crucial to protect your business website’s online presence in the modern-day world of identity theft and cybercrime. Hence, we recommend keeping the following essential legal documents for online business:
NDA with website third-party vendors
And lastly, you must establish NDAs with third-party website vendors hired for website development to protect proprietary information. An NDA ensures that this legally binding contract will keep sensitive information, knowledge, and materials confidential between provider and recipient.
The vendor undertakes an oath through this NDA to not disclose provided information publicly or to a publication. This information contains business plans and strategies, passwords, client and customer databases, and other critical data.
Refer to our other blog, “How to Start an Online Business in Singapore in 7 Easy Steps?” for your reference.
After reading the blog, you will have firm clarification regarding the salient legal documents necessary to start a Singapore business. We recommend saving this blog link as it will be beneficial while commencing business. However, if you have any questions regarding any document, form, certificate, or license, feel free to contact us.
At Bestar Services, we provide comprehensive Company Incorporation Services to all scales and sizes of organizations in Singapore. Whether you are a start-up or an existing firm looking for guidance about essential business legal documents to keep handy, our Business Advisory Consultants will assist you.
They have expertise in helping individuals start their businesses in Singapore and knowledge of all legal documents and certifications required. You will get proper guidance to ensure you don’t miss out on a single aspect.
Contact us for a consultation with our Singapore Business Incorporation Consultants by calling us at +65 62994730 or emailing email@example.com
Refer to our blog, “Essential Must-Have Certificates for Company Incorporation in Singapore,” for your reference.