Opening Fintech Company in Singapore
- Roger Pay
- 1 day ago
- 8 min read
Starting a Fintech Company in Singapore
Opening Fintech Company in Singapore
Singapore is a global leader in the fintech sector, known for its pro-business environment, supportive government, and a robust regulatory framework overseen by the Monetary Authority of Singapore (MAS). Starting a fintech company in Singapore involves a structured process that includes both general company incorporation and specific regulatory compliance for financial services.
1. Company Registration
The first step is to establish your company as a legal entity. Most fintech companies in Singapore choose to register as a Private Limited Company (Pte Ltd) due to the benefits of limited liability and scalability. The registration process is managed by the Accounting and Corporate Regulatory Authority (ACRA).
Key Requirements for Company Registration:
Company Name: The name must be unique and approved by ACRA.
Registered Address: You must have a physical, registered office address in Singapore.
Share Capital: A minimum of SGD 1 is required, though regulated businesses may need higher capital.
Directors: At least one director must be a Singapore resident (a Singapore citizen, permanent resident, or an Employment Pass holder).
Shareholders: You can have a single shareholder, and foreigners can hold 100% ownership.
Company Secretary: You must appoint a qualified company secretary within six months of incorporation.
2. Obtaining the Necessary Licenses
After company incorporation, you must secure the appropriate licenses from the MAS, depending on the nature of your fintech activities. The regulatory framework is activity-based, meaning the licenses you need are determined by the specific services you offer.
Key Legislation and Licenses:
Payment Services Act (PSA): This is the main regulatory framework for payment services. It regulates seven types of services:
Account issuance
Domestic money transfer
Cross-border money transfer
Merchant acquisition
E-money issuance
Digital Payment Token (DPT) services
Money-changing
Under the PSA, you may need a Standard Payment Institution (SPI) License or a Major Payment Institution (MPI) License, depending on your transaction volume and other criteria. The MPI license has stricter capital and security requirements (e.g., minimum base capital of SGD 250,000 and a security deposit of SGD 100,000 or SGD 200,000).
Securities and Futures Act (SFA): If your company deals with capital markets products, such as providing investment advice, fund management, or dealing in securities, you will likely need a Capital Markets Services (CMS) License.
Financial Advisers Act (FAA): This applies to companies providing financial advisory services, such as robo-advisors.
Banking Act: This is relevant for companies that take deposits or perform banking functions. Note that MAS has been very selective in issuing digital bank licenses.
3. Fintech Regulatory Sandbox
The MAS offers a Fintech Regulatory Sandbox for companies to test innovative financial products or services in a controlled environment with relaxed regulatory requirements. This is an excellent option for startups with novel solutions that may not fit neatly into existing licensing categories.
Key aspects of the Sandbox:
MAS may relax specific legal and regulatory requirements on a case-by-case basis.
It provides a testing ground to demonstrate the viability and safety of your product.
Upon successfully "graduating" from the sandbox, a company can introduce its services on a broader scale, subject to full regulatory compliance.
4. Other Legal and Compliance Considerations
Beyond licensing, all fintech companies must adhere to a strict set of regulations to ensure consumer protection and financial stability.
Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT): You must implement robust KYC (Know-Your-Customer) and AML/CFT policies and procedures. This is a crucial requirement for MAS license approval.
Data Protection: Compliance with the Personal Data Protection Act (PDPA) is mandatory. This act governs the collection, use, and disclosure of personal data.
Cybersecurity and Technology Risk Management: MAS has stringent guidelines on technology risk management. Companies providing online financial services must conduct penetration tests and implement strong cybersecurity measures.
5. Financial Planning and Funding
Initial Capital: Be prepared for the costs of technology development, legal and compliance fees, and the minimum capital required for licensing.
Grants and Incentives: Singapore offers various government grants and schemes, such as the Startup SG program and MAS-specific grants, to support fintech startups. You can also explore funding from venture capital firms and angel investors within Singapore's vibrant fintech ecosystem.
By following these steps and carefully navigating the regulatory landscape, you can successfully establish a fintech company in Singapore and tap into the region's dynamic financial market. It is highly recommended to engage with a professional corporate services provider to assist with the company incorporation and licensing application process.
Fees
Establishing a fintech company in Singapore involves several fees, which can be categorized into company incorporation fees and ongoing operational costs, as well as specific fees for obtaining and maintaining a license from the Monetary Authority of Singapore (MAS). The total cost can vary significantly depending on your business model, the type of license you require, and whether you use a corporate service provider.
1. Company Incorporation Fees
These are the initial, one-time fees paid to the Accounting and Corporate Regulatory Authority (ACRA) to register your company.
Company Name Application: A non-refundable fee of S$15.
Company Registration: A fee of S$300 for registering a private limited company.
Total ACRA Fee: The total mandatory government fee is S$315.
Keep in mind that if you are a foreign entrepreneur without a local director, you will need to engage a corporate service provider. Their fees for incorporation services can range from a few hundred to a few thousand Singapore dollars, and this often includes services like providing a nominee director, a registered address, and a company secretary.
2. MAS Licensing Fees
The fees for an MAS license depend on the type of license you are applying for under the Payment Services Act (PSA) or other relevant acts. The fees are generally non-refundable application fees and, in some cases, annual fees.
Standard Payment Institution (SPI) License:
Application Fee: S$1,000 or the sum of the fees for each service, whichever is higher.
Annual Fee: Varies based on the services offered. For example, a digital payment token service would incur a fee of S$10,000 per year.
Major Payment Institution (MPI) License:
Application Fee: S$1,500 or the sum of the fees for each service, whichever is higher.
Annual Fee: S$10,000 or the sum of fees for each service, whichever is higher.
For an MPI license, you also have to provide a security deposit to the MAS, which is not an application fee but a crucial financial requirement:
S$100,000 if your monthly transactions do not exceed S$6 million.
S$200,000 for all other cases.
3. Other Significant Costs
Beyond the direct government and regulatory fees, starting a fintech company in Singapore involves several other substantial expenses:
Minimum Base Capital: You must maintain a minimum base capital, as required by the MAS.
Standard Payment Institution: No minimum base capital specified, but a sufficient capital buffer is needed.
Major Payment Institution: S$250,000.
Professional Services: These are essential for navigating the complex regulatory landscape.
Legal Fees: For drafting legal opinions, application documents, and compliance frameworks. These can be very high, often in the tens of thousands of dollars.
Corporate Secretarial Fees: Mandatory for all companies. This can range from S$600 to S$1,200 annually.
Accounting and Auditing Fees: Mandatory for financial reporting and annual returns. Costs can vary depending on the volume of transactions but typically start from a few thousand dollars annually.
Technology and Infrastructure:
Platform Development: The cost of building a secure, compliant, and user-friendly platform is one of the most significant expenses for a fintech startup.
Cybersecurity: Implementing robust cybersecurity measures is not optional. This includes penetration testing, security audits, and ongoing monitoring.
Human Resources:
Salaries: Hiring a qualified team, including compliance officers, engineers, and a CEO with relevant experience, is crucial and expensive. A CEO and directors must meet the "fit and proper" criteria set by MAS.
Work Passes: If you are hiring foreign talent, you will incur fees for applying for Employment Passes or other work passes.
Office Space: While a virtual office can be a cost-effective option initially, having a physical, registered office address is mandatory.
In summary, while the direct government fees for incorporation are minimal, the overall cost of setting up and operating a fintech company in Singapore, including legal, compliance, and technology expenses, can easily run into the hundreds of thousands of dollars, if not more, before you even launch your service.
How Bestar can Help
Opening Fintech Company in Singapore
Establishing a fintech company in Singapore is a complex process that involves much more than just incorporating a business. The intricate regulatory framework, overseen by the Monetary Authority of Singapore (MAS), requires specialized knowledge and meticulous attention to detail. This is where Bestar becomes invaluable. We can help navigate the complexities, ensuring compliance and setting the company on a solid foundation for growth.
Here's how Bestar can help:
1. Corporate Service
Bestar is a one-stop shop for many administrative and compliance needs. Our expertise is particularly crucial for foreign founders.
Company Incorporation: Bestar streamlines the process of company registration with ACRA. We handle all the paperwork, including reserving the company name and filing the necessary documents.
Nominee Director Services: Singapore law requires every company to have at least one director who is an "ordinarily resident" in Singapore (a citizen, permanent resident, or Employment Pass holder). For foreign founders who do not meet this requirement, Bestar can provide a professional nominee director. This individual acts as a passive director, fulfilling the legal requirement without being involved in the day-to-day operations of the business.
Corporate Secretarial Services: All companies in Singapore must appoint a company secretary within six months of incorporation. Bestar can provide a qualified corporate secretary who will manage statutory records, file annual returns, and ensure ongoing compliance with the Companies Act.
Registered Office Address: A company must have a physical, registered office address in Singapore. Bestar can provide this service, which is a cost-effective alternative to renting an office space, especially in the early stages.
Bank Account Opening: Bestar has established relationships with local and international banks, which can simplify the process of opening a corporate bank account. This is a critical step for a fintech company to handle transactions and fulfill financial requirements.
2. Fintech Advisory
Bestar is essential for navigating the complex regulatory landscape and protecting the company's legal interests.
Licensing and Regulatory Compliance: The most critical role of Bestar is to guide you through the MAS licensing process. We will help you determine the appropriate license (e.g., under the Payment Services Act or Securities and Futures Act), prepare the extensive application, and ensure your business model and policies comply with all regulatory requirements.
Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) Frameworks: Bestar assists in drafting and implementing robust AML/CFT policies and procedures, which are mandatory for MAS-regulated activities. This includes developing "Know-Your-Customer" (KYC) protocols and risk-based controls.
Data Protection: Bestar ensures your company's operations comply with Singapore's Personal Data Protection Act (PDPA). We help draft privacy policies, data usage agreements, and establish protocols for data handling and cybersecurity.
Commercial Contracts and Intellectual Property (IP): Fintech companies are built on innovative technology. Bestar can draft essential commercial agreements, such as user agreements, vendor contracts, and partnership agreements. We also provide crucial advice on how to protect your intellectual property, including patents, copyrights, and trademarks for your software and brand.
3. Accounting
Bestar provides financial expertise that is critical for a startup's longevity and compliance.
Financial Planning and Strategy: Bestar helps with initial financial modeling, projections, and budgeting. This is vital for fundraising and demonstrating financial viability to investors and regulators.
Bookkeeping and Financial Reporting: We manage day-to-day bookkeeping, prepare financial statements, and ensure compliance with the Singapore Financial Reporting Standards (SFRS).
Tax Compliance: Bestar assists with corporate tax registration and filing, and we can provide advice on how to leverage tax incentives and grants available to startups and technology companies.
Audit Services: Depending on your company's revenue and assets, an audit may be required. Bestar can prepare the necessary documents and facilitate a smooth audit process.
In summary, engaging Bestar is not just a convenience; it's a strategic necessity. Our combined expertise allows entrepreneurs to focus on building their product and business, confident that the complex legal, administrative, and financial foundations are being handled competently and in full compliance with Singapore's strict regulations.
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