Social Enterprise Law Surveys |
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Singapore |
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| (Asia Pacific) Firm Rajah & Tann Singapore LLP | |
| What jurisdiction(s) do you practice in? | Singapore |
| What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ... | The most common for-profit organizational forms utilized in Singapore are the limited liability company (“LLC”), partnership (most commonly, the limited liability partnership (“LLP”) and sole proprietorship. Limited Liability Company
Limited Liability Partnership
Sole Proprietorship
a. Having a separate legal entity makes it easier for companies to attract investment.[4] As such, the LLC and LLP corporate structures are the most common for-profit organization forms used by Enterprises seeking financing from investors and that will have multiple owners. b. The majority (72%) of social enterprises are incorporated as private limited companies (i.e. LLC corporate form), followed by 9% as LLPs and 8% as sole proprietorships.[5]
[1] https://bbcincorp.sg/business-guide/singapores-most-common-types-of-business-entities [2] https://bbcincorp.sg/business-guide/singapores-most-common-types-of-business-entities [3] https://bbcincorp.sg/business-guide/singapores-most-common-types-of-business-entities [4] https://osome.com/sg/blog/what-structure-should-i-choose-for-my-company/ [5] https://www.raise.sg/images/The-State-of-Social-Enterprise-2021_FINAL.pdf, page 29 |
| Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required... | Section 159(a) of the Companies Act (Cap. 50), which applies to all companies (whether limited by shares or guarantee),[1] states that in exercising their powers, the directors of a company are entitled to have regard to the interests of the company’s employees generally, as well as the interest of its members/shareholders. Directors might also be required to consider any other interests/factors that are specified in the company’s own constitution (i.e. memorandum and articles of association), while bearing in mind that they owe an overarching common law fiduciary duty towards the company to exercise their powers in good faith for the interests of the company. Further, while Environmental, Social and Governance (ESG) reporting is not mandatory in Singapore (except for companies listed on the Singapore Exchange (“SGX”)), ESG considerations could be important to help companies in Singapore attract potential investors.[2]
[1] https://governanceforstakeholders.com/wp-content/uploads/2013/03/social-enterprise-governance-primer.pdf, page 9 [2] https://s3.amazonaws.com/documents.lexology.com/bf46e023-65d0-4df5-9459-f2add5222355.pdf?AWSAccessKeyId=AKIAVYILUYJ754JTDY6T&Expires=1625415570&Signature=GmhaVAvELruZl2Dr%2B86qVrZMVmU%3D, page 2 |
| Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ... | No. |
| Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat... | Yes. Social enterprises can be incorporated as a company limited by guarantee (CLG) or a society, both of which are not for-profit entities.[1] a. and b. Non-profits that are social enterprises are not treated differently under the law as compared to non-profits that are not social enterprises. They enjoy the same tax benefits as other non-profits and have the same burdens and restrictions. c. There is no type of “hybrid” non-profit form that requires less reporting and/or allows for faster formation. d. The use of non-profits for social enterprises in Singapore is not prevalent. In 2021, only 5% of social enterprises were incorporated as a company limited by guarantee, and only 1% were incorporated as a society.[2]
[1] https://www.raise.sg/images/resources/pdf-files/raiSE---State-of-Social-Enterprise-in-Singapore-2017-Report.pdf, page 21 [2] https://www.raise.sg/images/The-State-of-Social-Enterprise-2021_FINAL.pdf, page 29 |
| Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms. | Yes, Singapore allows for a co-operative society to be set up. Yes. Two pre-requisites for the formation of a co-operative in Singapore are that the members of a co-operative must get together to undertake a feasibility study of the society including its objects, constitution and by-laws AND the members have to submit a business plan of the co-operative to the Registry of Co-Operative Societies. The biggest hurdle to forming a co-operative in Singapore is the registration requirements and the reporting requirements. Every year, the co-operative is required to submit to the Registrar of Co-operative Societies an annual report on its activities during the year together with a copy of its audited financial statements and its audit report for that year. Failure to do so would result in a fine. |
| Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to. | There are no unique reporting requirements for social enterprises. Generally, reporting requirements for companies/societies in Singapore focus on accountability to specific stakeholders, in particular, members (who may be shareholders) and regulators. The requirements depend on the organizational form of the social enterprise. The constitution (such as articles of association) may also contain requirements dealing with accountability to members. If a social enterprise is a company, it is then subject to compliance with the requirements in the Companies Act. If a social enterprise is a co-operative society, it is then subject to requirements in the Co-operative Societies Act.[1]
[1] https://governanceforstakeholders.com/wp-content/uploads/2013/03/social-enterprise-governance-primer.pdf, page 33 |
| In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples. | No. |
| Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe. | No. |
| Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe. | No. |
| Does your jurisdiction have any ESG requirements for investors? If it does, please describe. | No. |
| Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi... | No major investor classes are required to look at ESG issues. They are permitted to consider such factors, and in fact, 80% of Singapore investors believe that sustainable, environmental and ethical issues are central to managing their investments. However, there appears to be a significant gap between what investors believe in and their actions, given that only a quarter of their investments consider ESG factors.[1] Other factors that investors take into account (aside from profit motive) are their risk profiles and their knowledge about the past performance of selected market indices.[2]
[1] https://www.businesstimes.com.sg/banking-finance/80-of-singapore-investors-believe-in-esg-but-only-a-quarter-take-action-survey [2] http://www.sciedu.ca/journal/index.php/afr/article/view/12102/7419 |
| What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)? | Social enterprises in Singapore commonly receive donations, grants, equity investments, loans and sponsorships, although these tend to form relatively small revenue sources for non-profit social enterprises. The majority of social enterprises are funded by the personal capital of founders, family or friends.[1]
[1] https://www.raise.sg/images/The-State-of-Social-Enterprise-2021_FINAL.pdf, pages 35-36 |
| How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)? | For-profit impact investments have been increasing in Singapore and parties are becoming more familiar with them. However, Singapore is still at the nascent stage for impact investing. The concept of achieving both financial and social returns at the same time is just slowly gaining traction among the younger generations of wealthy locals as well as ex-pats working in Singapore.[1] For instance, in the single biggest commitment to an impact fund manager, Temasek Holdings, one of the world’s largest state investors, announced a US$500 million allocation to Asia and Africa-focused Leapfrog Investments.[2]
[1] https://cdn.ymaws.com/www.andeglobal.org/resource/resmgr/research_library/jan-2018-impact-investments-.pdf, page 18 [2] https://www.channelnewsasia.com/news/business/temasek-impact-investing-tipping-point-leapfrog-investments-14496468 |
| What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government... | Enterprise Singapore is a government agency under the Ministry of Trade and Industry (MTI). It is responsible for promoting the growth of Singapore enterprises. Enterprise Singapore’s schemes provide support for a wide range of businesses with differing needs, ranging from the development and upgrading of capabilities, and the creation of new market opportunities to the nurturing of innovative start-ups throughout various industries and sectors. Depending on the type of grant scheme, the funds may be given to organizations as a loan, a monetary donation, or in exchange for a share of your enterprise’s ownership (shares) and profits (dividends) The VentureForGood Grant is a funding scheme under the Singapore Centre for Social Enterprise, raiSE, to support social enterprises in various stages of their business. New and existing social enterprises who are starting up or expanding their operations can apply for up to $300,000 in grants.[1] Aside from the VentureForGood Grant, social enterprises can take advantage of the Singapore Government’s grants and incentives that are in place for start-ups and businesses in general.
[1] https://www.raise.sg/ventureforgood.html# |
| Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)? | While there are no companies formed as a social enterprise that are listed on the Singapore Exchange, the Impact Investment Exchange (IIX) launched in 2013 in Singapore is one platform that was set up to provide information about select social and impact enterprises to interested investors and facilitates investment to these select enterprises. IIX also includes non-for-profit organisations in its listings.[1]
[1] https://avpn.asia/blog/how-new-social-stock-exchange-will-help-social-purpose-organisations-raise-capital-india/ |
| To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction. | All Singapore Exchange-listed issuers must prepare and publish a sustainability report yearly on several primary components on a comply-or-explain basis, of which one component is the material ESG factors in the context of the issuer’s business and value chain that contribute to its product or serve that act as barriers or enablers to achieving its business goals in the short, medium and long term.[1] For financial institutions (FIs), the Monetary Authority of Singapore (MAS) issued its ‘Guidelines on Environmental Risk Management for FIs’ in December 2020. FIs are expected to, at least on an annual basis, publicly disclose its approach to managing environmental risk in a manner that is clear and meaningful to its stakeholders, in accordance with well-regarded international reporting frameworks. While breach of these guidelines generally does not result in criminal or civil penalties, the guidelines may have an impact of MAS’s overall risk assessment of an institution or person, and MAS also has the power to take stronger action to ensure compliance, such as issuing directives with the force of law.[2] For companies incorporated under the Companies Act, the International Financial Reporting Standards (IFRS) Foundation published ‘educational material’ in November 2020 stating that while the IFRS Standards do not specifically address climate-related risks, companies may need to disclose climate-related information relevant to an understanding of any of the financial statements that they are required to disclose.[3]
[1] https://www.iflr.com/article/b1sgmvnq1ndxc8/a-closer-look-at-singapores-mandatory-corporate-esg-disclosures-and-associated-legal-risks [2] Ibid, n 16 [3] Ibid, n 16 |
| How prevalent, if at all, are impact bonds in your jurisdiction? | Impact bonds are overall not very prevalent in Singapore, although there appears to be a budding market for social and sustainability bonds. In 2017, the world’s first social sustainability bond, the Women’s Livelihood Bonds by Impact Investment Exchange (IIX), was listed on the Singapore Exchange.[1]
[1] https://www.businesstimes.com.sg/companies-markets/worlds-first-listed-social-bond-draws-private-banking-clients |
| In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)? | No. |
| Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a... | Crowdfunding is legal, although all securities-based crowdfunding platforms are licensed and regulated by the Monetary Authority of Singapore. To make it easier for companies to raise funds, MAS has reduced the base capital requirement from $250,000 to $50,000, as well as removed the $100,000 security deposit clause. However, this applies only to platforms catering to accredited and institutional investors.[1] It therefore appears to be harder for smaller businesses or social enterprises to take money from investors that are not accredited.
[1] https://www.mas.gov.sg/news/media-releases/2016/mas-to-improve-access-to-crowdfunding-for-startups-and-smes |
| Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe... | There are tax exemptions available for non-profits generally, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form. General tax exemptions for a company limited by guarantee and a society are the same. Both are exempt from income tax if surplus funds are from members’ contributions; or if 50% or less of the gross revenue are generated through its Singapore members that are entitled to tax-deduction.[1]
[1] https://www.guidemesingapore.com/business-guides/incorporation/other-business-entity-types/setting-up-a-non-profit-entity-in-singapore---part-1 |
| Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations? | No. |
| Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.) | No. |
| Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions? | No. |
| Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe. | No. |
| What government operational support, resources, training or services, are available for small businesses or Social Enterprises? | Enterprise Singapore is a government agency under the Ministry of Trade and Industry (MTI). It is responsible for promoting the growth of Singapore enterprises. Enterprise Singapore’s schemes provide support for a wide range of businesses with differing needs, ranging from the development and upgrading of capabilities, and the creation of new market opportunities to the nurturing of innovative start-ups throughout various industries and sectors. Depending on the type of grant scheme, the funds may be given to organizations as a loan, a monetary donation, or in exchange for a share of your enterprise’s ownership (shares) and profits (dividends) Currently, there are several government grants schemes available to start-up companies and entrepreneurs, however these schemes are often renamed, augmented over time, superseded by new schemes or abolished altogether, so organizations must check on the continued applicability of any schemes. Regardless, the grants usually fall into 2 main categories; fixed sum cash grant or a co-contribution scheme:
The Singapore Centre for Social Enterprise, raiSE, was set up in 2015 to develop the Social Enterprise sector in Singapore through a cross-border collaboration between the Ministry of Social and Family Development, National Council of Social Service, Social Enterprise Association and Tote Board. raiSE provides funding supporting through two main means.[1] First, the VentureForGood Grant is a funding scheme under raiSE to support social enterprises in various stages of their business. New and existing social enterprises who are starting up or expanding their operations can apply for up to $300,000 in grants.[2] Second, the raiSE Impact Finance Plus is focused on providing capital to Singapore-based Social Enterprises with a clear social mission to address human-centred social gaps and needs with a sustainable business model and a clear intent and motivation among founder(s) and management team to achieve the social mission.[3] Aside from the VentureForGood Grant, social enterprises can take advantage of the Singapore Government’s grants and incentives that are in place for start-ups and businesses in general.
[1] https://www.raise.sg/about/about-menu/about-us.html [2] https://www.raise.sg/ventureforgood.html# [3] https://www.raise.sg/rif.html |
| Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are. | Charity: The annual report and statement of accounts of the charity must be filed with the Commissioner of Charities. The annual report must set out certain required information, including a review of the policies, activities, and financials of the charity for that financial year. If the organization is set up as a CLG, and/ or has annual income/expenditure over S$500,000, a summary of the organization’s financial information must also be posted online on the Charity Portal. |
| Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness. | No. |
| Is there a different bankruptcy system available for Social Enterprises? | No. |
| What are the average time and filing fees to form an Enterprise in your jurisdiction? | The procedure for company registration is fully computerized by the Accounting and Corporate Regulatory Authority (ACRA) in Singapore. A company can therefore be incorporated usually in 1-2 days, assuming that all required documents are on hand. To register sole proprietors, partnerships and LLPs, the registration fees for a 1-year registration is $115 while the registration fees for a 3-year registration is $175. For a company, it is a standard incorporation fee of $315 which includes the registration of a business name. |
| What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well... | There are no government or third-party certificates/accreditations that are available to social enterprises that allow for access to benefits. |
| Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction. | Yes, startups can easily form and flourish in Singapore. Singapore has quickly developed into a hub for startups due to its business-friendly nature. Incorporating a new business venture in Singapore is simple and efficient, and the corporate compliance rules are straightforward and easy to follow. |
| Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction. | Yes, social enterprises can easily form and flourish in Singapore. In Singapore, the access to funding, access to big markets such as China, India and Indonesia and the good business climate are factors that contribute towards it being a place for social enterprises to flourish.[1] The increase of social enterprises in recent years in Singapore also could be attributed to higher awareness and a more conducive and robust social enterprise ecosystem being put in place for social enterprises to flourish.[2]
[1] https://www.techinasia.com/best-places-for-social-entrepreneurs-singapore-silicon-valley-london [2] https://www.raise.sg/images/resources/pdf-files/raiSE---State-of-Social-Enterprise-in-Singapore-2017-Report.pdf, page 22 |
| Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc... | In the general corporate form, directors and officers must use their powers in the best interests of the company and shareholders. While they are not prevented from considering other interests, such as the environment or the larger community, it would be better were the laws to expressly allow social enterprises to consider such interests. |
| In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects. | No. |
| What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction? | 1. Promote awareness of social entrepreneurship through campaigns, education and research initiatives etc., and encourage the youth to create and uphold sustainable economic systems that elevate social problems[1] 2. Develop more funding options for social enterprises, and make crowdfunding easier, cheaper and more accessible to broader public investment in social enterprises. 3. Develop business consultancy services, mentorship schemes, business development masterclasses etc. for social enterprises. 4. Providing tax benefits to social enterprises utilizing for-profit corporate forms.
[1] https://lkyspp.nus.edu.sg/gia/article/social-enterprises-a-possible-cure-for-the-world-s-societal-problems |
| What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)? | Implementing a uniform set of standards for ESG policies and reporting of public companies would make it easier for investors and consumers to compare and evaluate which enterprises are in fact doing good in the world, which would drive companies to perform better. In fact, in March 2021, the Monetary Authority of Singapore has announced a slew of upcoming ESG initiatives, including an upcoming review of the Singapore Stewardship Principles to provide specific guidance on company stewardship for environmental considerations and an ongoing consultation led by the Green Finance Industry Taskforce, which aims to ultimately create a standardized set of criteria to classify the environmental friendliness of economic activities. |
| Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not? | No. |
Social Enterprise Law Surveys
Singapore
The most common for-profit organizational forms utilized in Singapore are the limited liability company (“LLC”), partnership (most commonly, the limited liability partnership (“LLP”) and sole proprietorship.
Limited Liability Company
- An LLC is the most widespread and recommended type of business entity in Singapore. There are three main characteristics that make this form of company preferred by most business owners: a separate legal status, members’ limited liabilities and tax advantages.[1]
Limited Liability Partnership
- An LLP is a separate legal entity with at least 2 partners (with partners being either individuals or corporations), which has a separate legal status and member’s limited liabilities. Compared to an LLC, an LLP has fewer statutory restrictions to comply with. However, it cannot apply for many tax-cut schemes or other available beneficial programs that are designated only for companies in Singapore.[2]
Sole Proprietorship
- A sole proprietorship is perceived as the simplest yet riskiest type of entity to set up in Singapore. This business form is owned wholly by a single person, does not have a separate legal entity, and the owner will have unlimited liability for all debts and liabilities in the event of insolvency. The trade-off is that the owner has the privilege to reap all the earned profits.[3]
a. Having a separate legal entity makes it easier for companies to attract investment.[4] As such, the LLC and LLP corporate structures are the most common for-profit organization forms used by Enterprises seeking financing from investors and that will have multiple owners.
b. The majority (72%) of social enterprises are incorporated as private limited companies (i.e. LLC corporate form), followed by 9% as LLPs and 8% as sole proprietorships.[5]
[1] https://bbcincorp.sg/business-guide/singapores-most-common-types-of-business-entities
[2] https://bbcincorp.sg/business-guide/singapores-most-common-types-of-business-entities
[3] https://bbcincorp.sg/business-guide/singapores-most-common-types-of-business-entities
[4] https://osome.com/sg/blog/what-structure-should-i-choose-for-my-company/
[5] https://www.raise.sg/images/The-State-of-Social-Enterprise-2021_FINAL.pdf, page 29
Section 159(a) of the Companies Act (Cap. 50), which applies to all companies (whether limited by shares or guarantee),[1] states that in exercising their powers, the directors of a company are entitled to have regard to the interests of the company’s employees generally, as well as the interest of its members/shareholders.
Directors might also be required to consider any other interests/factors that are specified in the company’s own constitution (i.e. memorandum and articles of association), while bearing in mind that they owe an overarching common law fiduciary duty towards the company to exercise their powers in good faith for the interests of the company.
Further, while Environmental, Social and Governance (ESG) reporting is not mandatory in Singapore (except for companies listed on the Singapore Exchange (“SGX”)), ESG considerations could be important to help companies in Singapore attract potential investors.[2]
[1] https://governanceforstakeholders.com/wp-content/uploads/2013/03/social-enterprise-governance-primer.pdf, page 9
[2] https://s3.amazonaws.com/documents.lexology.com/bf46e023-65d0-4df5-9459-f2add5222355.pdf?AWSAccessKeyId=AKIAVYILUYJ754JTDY6T&Expires=1625415570&Signature=GmhaVAvELruZl2Dr%2B86qVrZMVmU%3D, page 2
No.
Yes. Social enterprises can be incorporated as a company limited by guarantee (CLG) or a society, both of which are not for-profit entities.[1]
a. and b. Non-profits that are social enterprises are not treated differently under the law as compared to non-profits that are not social enterprises. They enjoy the same tax benefits as other non-profits and have the same burdens and restrictions.
c. There is no type of “hybrid” non-profit form that requires less reporting and/or allows for faster formation.
d. The use of non-profits for social enterprises in Singapore is not prevalent. In 2021, only 5% of social enterprises were incorporated as a company limited by guarantee, and only 1% were incorporated as a society.[2]
[1] https://www.raise.sg/images/resources/pdf-files/raiSE---State-of-Social-Enterprise-in-Singapore-2017-Report.pdf, page 21
[2] https://www.raise.sg/images/The-State-of-Social-Enterprise-2021_FINAL.pdf, page 29
Yes, Singapore allows for a co-operative society to be set up.
Yes. Two pre-requisites for the formation of a co-operative in Singapore are that the members of a co-operative must get together to undertake a feasibility study of the society including its objects, constitution and by-laws AND the members have to submit a business plan of the co-operative to the Registry of Co-Operative Societies.
The biggest hurdle to forming a co-operative in Singapore is the registration requirements and the reporting requirements. Every year, the co-operative is required to submit to the Registrar of Co-operative Societies an annual report on its activities during the year together with a copy of its audited financial statements and its audit report for that year. Failure to do so would result in a fine.
There are no unique reporting requirements for social enterprises. Generally, reporting requirements for companies/societies in Singapore focus on accountability to specific stakeholders, in particular, members (who may be shareholders) and regulators. The requirements depend on the organizational form of the social enterprise. The constitution (such as articles of association) may also contain requirements dealing with accountability to members. If a social enterprise is a company, it is then subject to compliance with the requirements in the Companies Act. If a social enterprise is a co-operative society, it is then subject to requirements in the Co-operative Societies Act.[1]
[1] https://governanceforstakeholders.com/wp-content/uploads/2013/03/social-enterprise-governance-primer.pdf, page 33
No.
No.
No.
No.
No major investor classes are required to look at ESG issues. They are permitted to consider such factors, and in fact, 80% of Singapore investors believe that sustainable, environmental and ethical issues are central to managing their investments. However, there appears to be a significant gap between what investors believe in and their actions, given that only a quarter of their investments consider ESG factors.[1]
Other factors that investors take into account (aside from profit motive) are their risk profiles and their knowledge about the past performance of selected market indices.[2]
[1] https://www.businesstimes.com.sg/banking-finance/80-of-singapore-investors-believe-in-esg-but-only-a-quarter-take-action-survey
[2] http://www.sciedu.ca/journal/index.php/afr/article/view/12102/7419
Social enterprises in Singapore commonly receive donations, grants, equity investments, loans and sponsorships, although these tend to form relatively small revenue sources for non-profit social enterprises. The majority of social enterprises are funded by the personal capital of founders, family or friends.[1]
[1] https://www.raise.sg/images/The-State-of-Social-Enterprise-2021_FINAL.pdf, pages 35-36
For-profit impact investments have been increasing in Singapore and parties are becoming more familiar with them. However, Singapore is still at the nascent stage for impact investing. The concept of achieving both financial and social returns at the same time is just slowly gaining traction among the younger generations of wealthy locals as well as ex-pats working in Singapore.[1] For instance, in the single biggest commitment to an impact fund manager, Temasek Holdings, one of the world’s largest state investors, announced a US$500 million allocation to Asia and Africa-focused Leapfrog Investments.[2]
[1] https://cdn.ymaws.com/www.andeglobal.org/resource/resmgr/research_library/jan-2018-impact-investments-.pdf, page 18
[2] https://www.channelnewsasia.com/news/business/temasek-impact-investing-tipping-point-leapfrog-investments-14496468
Enterprise Singapore is a government agency under the Ministry of Trade and Industry (MTI). It is responsible for promoting the growth of Singapore enterprises. Enterprise Singapore’s schemes provide support for a wide range of businesses with differing needs, ranging from the development and upgrading of capabilities, and the creation of new market opportunities to the nurturing of innovative start-ups throughout various industries and sectors. Depending on the type of grant scheme, the funds may be given to organizations as a loan, a monetary donation, or in exchange for a share of your enterprise’s ownership (shares) and profits (dividends)
The VentureForGood Grant is a funding scheme under the Singapore Centre for Social Enterprise, raiSE, to support social enterprises in various stages of their business. New and existing social enterprises who are starting up or expanding their operations can apply for up to $300,000 in grants.[1]
Aside from the VentureForGood Grant, social enterprises can take advantage of the Singapore Government’s grants and incentives that are in place for start-ups and businesses in general.
[1] https://www.raise.sg/ventureforgood.html#
While there are no companies formed as a social enterprise that are listed on the Singapore Exchange, the Impact Investment Exchange (IIX) launched in 2013 in Singapore is one platform that was set up to provide information about select social and impact enterprises to interested investors and facilitates investment to these select enterprises. IIX also includes non-for-profit organisations in its listings.[1]
[1] https://avpn.asia/blog/how-new-social-stock-exchange-will-help-social-purpose-organisations-raise-capital-india/
All Singapore Exchange-listed issuers must prepare and publish a sustainability report yearly on several primary components on a comply-or-explain basis, of which one component is the material ESG factors in the context of the issuer’s business and value chain that contribute to its product or serve that act as barriers or enablers to achieving its business goals in the short, medium and long term.[1]
For financial institutions (FIs), the Monetary Authority of Singapore (MAS) issued its ‘Guidelines on Environmental Risk Management for FIs’ in December 2020. FIs are expected to, at least on an annual basis, publicly disclose its approach to managing environmental risk in a manner that is clear and meaningful to its stakeholders, in accordance with well-regarded international reporting frameworks. While breach of these guidelines generally does not result in criminal or civil penalties, the guidelines may have an impact of MAS’s overall risk assessment of an institution or person, and MAS also has the power to take stronger action to ensure compliance, such as issuing directives with the force of law.[2]
For companies incorporated under the Companies Act, the International Financial Reporting Standards (IFRS) Foundation published ‘educational material’ in November 2020 stating that while the IFRS Standards do not specifically address climate-related risks, companies may need to disclose climate-related information relevant to an understanding of any of the financial statements that they are required to disclose.[3]
[1] https://www.iflr.com/article/b1sgmvnq1ndxc8/a-closer-look-at-singapores-mandatory-corporate-esg-disclosures-and-associated-legal-risks
[2] Ibid, n 16
[3] Ibid, n 16
Impact bonds are overall not very prevalent in Singapore, although there appears to be a budding market for social and sustainability bonds. In 2017, the world’s first social sustainability bond, the Women’s Livelihood Bonds by Impact Investment Exchange (IIX), was listed on the Singapore Exchange.[1]
[1] https://www.businesstimes.com.sg/companies-markets/worlds-first-listed-social-bond-draws-private-banking-clients
No.
Crowdfunding is legal, although all securities-based crowdfunding platforms are licensed and regulated by the Monetary Authority of Singapore.
To make it easier for companies to raise funds, MAS has reduced the base capital requirement from $250,000 to $50,000, as well as removed the $100,000 security deposit clause. However, this applies only to platforms catering to accredited and institutional investors.[1] It therefore appears to be harder for smaller businesses or social enterprises to take money from investors that are not accredited.
[1] https://www.mas.gov.sg/news/media-releases/2016/mas-to-improve-access-to-crowdfunding-for-startups-and-smes
There are tax exemptions available for non-profits generally, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form.
General tax exemptions for a company limited by guarantee and a society are the same. Both are exempt from income tax if surplus funds are from members’ contributions; or if 50% or less of the gross revenue are generated through its Singapore members that are entitled to tax-deduction.[1]
[1] https://www.guidemesingapore.com/business-guides/incorporation/other-business-entity-types/setting-up-a-non-profit-entity-in-singapore---part-1
No.
No.
No.
No.
Enterprise Singapore is a government agency under the Ministry of Trade and Industry (MTI). It is responsible for promoting the growth of Singapore enterprises. Enterprise Singapore’s schemes provide support for a wide range of businesses with differing needs, ranging from the development and upgrading of capabilities, and the creation of new market opportunities to the nurturing of innovative start-ups throughout various industries and sectors. Depending on the type of grant scheme, the funds may be given to organizations as a loan, a monetary donation, or in exchange for a share of your enterprise’s ownership (shares) and profits (dividends)
Currently, there are several government grants schemes available to start-up companies and entrepreneurs, however these schemes are often renamed, augmented over time, superseded by new schemes or abolished altogether, so organizations must check on the continued applicability of any schemes. Regardless, the grants usually fall into 2 main categories; fixed sum cash grant or a co-contribution scheme:
- A fixed sum cash grant is simply a set amount of money given to a finite number of selected applicants.
- Co-contribution schemes are more common, whereby the organization will be given $X for every $Y that it raises in capital, often limited up to a specified amount. Co-contribution schemes act as less of a one-off handout and more of an incentive for organizations to raise capital themselves. If eligible, organizations can expect the co-contribution made by the government agency to be contingent upon meeting certain conditions of the scheme, such as performance indicators, timelines and capital targets.
The Singapore Centre for Social Enterprise, raiSE, was set up in 2015 to develop the Social Enterprise sector in Singapore through a cross-border collaboration between the Ministry of Social and Family Development, National Council of Social Service, Social Enterprise Association and Tote Board. raiSE provides funding supporting through two main means.[1]
First, the VentureForGood Grant is a funding scheme under raiSE to support social enterprises in various stages of their business. New and existing social enterprises who are starting up or expanding their operations can apply for up to $300,000 in grants.[2]
Second, the raiSE Impact Finance Plus is focused on providing capital to Singapore-based Social Enterprises with a clear social mission to address human-centred social gaps and needs with a sustainable business model and a clear intent and motivation among founder(s) and management team to achieve the social mission.[3]
Aside from the VentureForGood Grant, social enterprises can take advantage of the Singapore Government’s grants and incentives that are in place for start-ups and businesses in general.
[1] https://www.raise.sg/about/about-menu/about-us.html
[2] https://www.raise.sg/ventureforgood.html#
[3] https://www.raise.sg/rif.html
Charity: The annual report and statement of accounts of the charity must be filed with the Commissioner of Charities. The annual report must set out certain required information, including a review of the policies, activities, and financials of the charity for that financial year. If the organization is set up as a CLG, and/ or has annual income/expenditure over S$500,000, a summary of the organization’s financial information must also be posted online on the Charity Portal.
No.
No.
The procedure for company registration is fully computerized by the Accounting and Corporate Regulatory Authority (ACRA) in Singapore. A company can therefore be incorporated usually in 1-2 days, assuming that all required documents are on hand.
To register sole proprietors, partnerships and LLPs, the registration fees for a 1-year registration is $115 while the registration fees for a 3-year registration is $175. For a company, it is a standard incorporation fee of $315 which includes the registration of a business name.
There are no government or third-party certificates/accreditations that are available to social enterprises that allow for access to benefits.
Yes, startups can easily form and flourish in Singapore. Singapore has quickly developed into a hub for startups due to its business-friendly nature. Incorporating a new business venture in Singapore is simple and efficient, and the corporate compliance rules are straightforward and easy to follow.
Yes, social enterprises can easily form and flourish in Singapore. In Singapore, the access to funding, access to big markets such as China, India and Indonesia and the good business climate are factors that contribute towards it being a place for social enterprises to flourish.[1]
The increase of social enterprises in recent years in Singapore also could be attributed to higher awareness and a more conducive and robust social enterprise ecosystem being put in place for social enterprises to flourish.[2]
[1] https://www.techinasia.com/best-places-for-social-entrepreneurs-singapore-silicon-valley-london
[2] https://www.raise.sg/images/resources/pdf-files/raiSE---State-of-Social-Enterprise-in-Singapore-2017-Report.pdf, page 22
In the general corporate form, directors and officers must use their powers in the best interests of the company and shareholders. While they are not prevented from considering other interests, such as the environment or the larger community, it would be better were the laws to expressly allow social enterprises to consider such interests.
No.
1. Promote awareness of social entrepreneurship through campaigns, education and research initiatives etc., and encourage the youth to create and uphold sustainable economic systems that elevate social problems[1]
2. Develop more funding options for social enterprises, and make crowdfunding easier, cheaper and more accessible to broader public investment in social enterprises.
3. Develop business consultancy services, mentorship schemes, business development masterclasses etc. for social enterprises.
4. Providing tax benefits to social enterprises utilizing for-profit corporate forms.
[1] https://lkyspp.nus.edu.sg/gia/article/social-enterprises-a-possible-cure-for-the-world-s-societal-problems
Implementing a uniform set of standards for ESG policies and reporting of public companies would make it easier for investors and consumers to compare and evaluate which enterprises are in fact doing good in the world, which would drive companies to perform better.
In fact, in March 2021, the Monetary Authority of Singapore has announced a slew of upcoming ESG initiatives, including an upcoming review of the Singapore Stewardship Principles to provide specific guidance on company stewardship for environmental considerations and an ongoing consultation led by the Green Finance Industry Taskforce, which aims to ultimately create a standardized set of criteria to classify the environmental friendliness of economic activities.
No.