Remote Incorporation: How to Prove Your Business Isn't Just a 'Shell' Company

Quick Answer: Singapore makes it incredibly easy for foreigners to incorporate a company, often in under  an hour. However, there is a critical distinction  between having a legal entity and operating a visa-qualifying business.. To get your Singapore PR application or work pass approved, authorities need to see that your company has a pulse. They call this “Economic Substance.” In plain English? You need a real office, real local employees, and real customers rather than just a folder on a shelf.

The “Too Good to Be True” Phase

If you have been researching Singapore business setup, you have probably heard the sales pitch: Incorporate in 15 minutes. Low taxes. 100% foreign ownership.

And to be fair, that part is true. Singapore is arguably the easiest place on earth to start a company. You can likely register your entity today without even stepping foot in Changi Airport.

But here is the part the brochures often leave out. Incorporation is just paperwork. It isn’t a ticket into the country.

The moment you try to move here, specifically when you file an Employment Pass application to become the working director of your new company, the tone changes. The Ministry of Manpower (MOM) isn’t interested in how fast you registered the company. They are interested in whether the company is real.

In recent years, we have seen a crackdown on “shell” companies. These are entities set up by foreigners solely to sponsor a visa. If your new company looks like an empty shell, your visa will be rejected. Worse, it leaves a black mark on your record that can haunt your future Singapore PR application.

At The Immigration People (TIP), we guide foreign founders through this minefield every day. Here is how to navigate the gap between “technically legal” and “immigration ready.”

1. Navigating Local Directorship and Capital Requirements

Here is the first hurdle every foreigner faces. By law, every Singapore company must have at least one director who lives in Singapore locally. Yet as a foreigner, you cannot reside in Singapore until you obtain a valid work pass. At the same time, you need a company to sponsor your work pass, but you can’t start that company without a local director.

The standard solution is hiring a Nominee Director. This is usually a local professional who lends their name to your paperwork to satisfy the law. Treat this as a temporary bridge, not a permanent solution. Banks and regulatory authorities generally place greater scrutiny on companies that rely solely on nominee directors for extended periods. Your goal should be to get your own Employment Pass approved as soon as possible so you can take over that role.

You also need to address your capital. While it is legally possible to start a company with S$1, trying to get an Employment Pass using a S$1 company is almost a guaranteed rejection. A company with S$1 cannot pay your salary next month or pay rent. To demonstrate commitment and financial stability, we generally recommend a paid-up capital of at least **S$50,000**. This helps signal to the authorities that the company has sufficient liquidity to sustain its operations during the first year.

2. Establish a Real Physical Presence

In the era of Zoom calls and digital nomads, paying for a physical office feels unnecessary. You might be running a million-dollar empire from your kitchen table. However, immigration authorities still place strong emphasis on physical presence. Maintaining a local office signals stability, commitment, and long-term intention to establish operations in Singapore. 

If your company address is a “Virtual Office” used by 5,000 other companies for mail forwarding, it raises a red flag. It begs the question of whether this is a real business or just a paper entity.

You don’t need to lease a floor in Marina Bay Financial Centre, but you must establish a verifiable physical presence. A dedicated desk in a co-working space with a contract is a good start. The gold standard is a small, physical office with a tenancy agreement stamped by IRAS. This demonstrates that the company is genuinely based in Singapore, contributing to the rental market, and has a place where your team eventually sits.

3. Hiring Locals is the Ultimate “Proof of Life”

This is the single most powerful lever you can pull. Singapore’s government welcomes foreign businesses because they create jobs for Singaporeans. If your company has only one individual – yourself, it looks like a vanity project created to get you a visa.

You might think you will hire locals after you get your visa. But often, doing it in reverse works better.

When you hire a Singaporean or Permanent Resident, even for a part-time admin role, you are required to make Central Provident Fund (CPF) contributions on their wages. This data is automatically shared with the government. When MOM reviews your file and sees active CPF contributions, they know the business is active. They know you are contributing to the local workforce. It instantly separates you from the thousands of shell companies that exist only on paper.

4. Demonstrate Real Commercial Activity

A legitimate business has a heartbeat, and that heartbeat is cash flow. We often see foreign-owned companies where the only transaction is a monthly wire transfer from the overseas parent company to cover the director’s salary. To an outsider, that looks like a Representative Office, not a standalone private limited company.

To support a strong application, your bank statements need to tell a story. Are you invoicing clients? Are you paying local vendors for software, insurance, or marketing? Are you signing contracts with Singaporean partners?

You need to show that the business is economically active in this region, independent of the funds you inject personally.

5. Overcoming Banking and Tax Hurdles

We can’t talk about incorporation without mentioning banking. Ten years ago, opening a corporate account was easy. Today, Singapore banks apply stringent Anti-Money Laundering (AML) and Know Your Customer (KYC) standards. They frequently reject accounts for foreign-owned companies that look like “shells.” If you have a Nominee Director, no office, no staff, and a complex shareholding arrangement, you might find yourself with a registered company that cannot open a bank account. Without a bank account, you can’t pay salary or CPF.

Furthermore, just because you are incorporated here doesn’t mean you are a “Tax Resident” eligible for Singapore’s treaty benefits. The tax authority (IRAS) looks at where the control and management of business is exercised. If you live in London and hold Board of Directors meetings and make all strategic decisions abroad, your company might be viewed as a UK entity for tax purposes. To be a true Singapore business, the strategic decisions need to happen here. This means holding Board Meetings in Singapore and having the key executive physically present.

Why This Matters for Your Long-Term Future

Many entrepreneurs treat the initial work pass as the finish line. In reality, it’s just the starting point. If your plan is to eventually make Singapore your permanent home, the Immigration & Checkpoints Authority (ICA) will eventually audit your company’s entire history.

A “bare minimum” structure may be sufficient to secure a work pass today, but it is unlikely to withstand scrutiny at the Singapore PR stage. Authorities are assessing whether applicants are genuine assets to the nation.  A business that hires locals, pays taxes, and integrates into the economy demonstrates long-term commitment to building in Singapore,, not just to pass through.

Ready to Do This the Right Way?

Navigating the difference between “technically legal” and “immigration compliant” is tricky for foreigners. You don’t want to find out you missed a requirement after a rejection letter arrives.

Whether you are looking to restructure a remote business to meet these standards or just starting to plan your move, we can help you build a case that stands up to scrutiny.

Secure your foothold in Singapore by booking a complimentary consultation today, and let our experienced consultants guide you through every step of building a business that qualifies for residency.