Singapore As The Next Destination For Family Empires

 With the establishment of a successful business empire, ultra-high net worth families often rightly focus on attaining stability as their next priority. The heads of these families want to ensure that their hard-earned wealth is preserved for their future generations’ continued advancement and prosperity. For the well-advised, this entails educating family members, investing in stable assets, and diversifying into different countries.

Singapore is an extremely viable country to enable this next step for the next generation of business owners: as a stable home for UHNW families’ personal affairs as well as a headquarters for further expansion in the region.

The city’s HNW and UHNW residents maintain a high quality of life, with access to excellent healthcare, education, and housing.  In the Economist’s “Safe Cities Index 2021” which ranked 60 cities over 76 indicators including health, infrastructure and personal security, Singapore was ranked third place after Copenhagen and Toronto.  Other wider benefits include Singapore being a food capital for both casual and fine-dining restaurants, a multi-lingual society and having established leading private banking and wealth management institutions.

Business-wise, the city is consistently ranked among the topmost politically and operationally safe countries in the world, as one of the world’s most connected countries with access to major trade, shipping and aviation routes, and a highly educated workforce. Singapore leads as the top Asia location for the regional headquarters of top 100 technology MNCs, hosts global R&D labs for leading Fortune 500 companies and is the world’s fourth largest exporter of high-tech products.

Global Investor Programme

For business owners who are interested in relocating and investing in Singapore, the Global Investor Programme (“GIP”) presents itself as the principal means to do so. The Programme is administered by the Economic Development Board (“EDB”) and grants Singapore Permanent Residency (“SPR”) status to qualifying investors. EDB provides four different categories under which interested investors can qualify for the program: Established Business Owners, Next Generation Business Owners, Founders of Fast Growth Companies and Family Office Principals.

Specifically, the Next Generation Business Owners (“NGBO”) category is targeted at high-net-worth individuals who have not yet fully inherited their parents’ stakeholding in their main business. For many families, patriarchs/matriarchs may not want to move to Singapore themselves but prefer for their next generation to lead the transition into the city instead.

To qualify for GIP, the NGBO applicant must fulfil the following criteria:

1. The NGBO’s immediate family should have at least 30% shareholding, or be the largest shareholder, in the company which he uses to qualify (“the Main Business”);
2. The Main Business’s annual turnover must be at least S$500m in the year immediately preceding the NGBO’s GIP application;
3. The Main Business’s annual turnover averages at least S$500m per annum for the 3 years immediately preceding the NGBO’s GIP application;
4. The NGBO must be part of the Main Business’s management team (e.g. C-Suite, Board of Directors); and
5. The Main Business must be engaged in one or more of EDB’s “Annex B businesses”*

Where the NGBO applicant fulfils the above criteria, they will have to invest S$2.5 million into Singapore through three options:

1. Personally invest in a new business entity or in the expansion of an existing business operation engaged in one of the industries listed in Annex B; or
   • A detailed 5-year business plan must be submitted to EDB for assessment based on its feasibility, applicant’s role in the company, business activities and creation of local jobs.
   • Applicant must have at least 30% shareholding in the company and must be part of the company’s management team.
2. Invest in a GIP fund that invests in Singapore-based companies; or
   • There are currently two VC funds approved for investment under GIP*.
3. Invest in a new or existing Singapore-based family office having Assets-Under Management of at least S$200 million.

Beyond the required investment above, EDB expects GIP applicants to have business plans in Singapore which will incur an (incremental) annual total business expenditure of at least S$ 2 million and employ 10 (more) employees with at least 5 Singapore Citizens by year 5 of their permanent residency. Business plans reflecting the same should be submitted to EDB during the application phase in order to facilitate GIP approval.

A successful application under GIP grants investors SPR status, allowing the investor to live, work and conduct business in Singapore.  Apart from obtaining SPR for themselves, main applicants can also opt to apply for SPR for their spouse and children*. A five-year Re-Entry Permit (“REP”) will also be granted, which allows for SPRs to travel overseas without losing their SPR status.

This REP will be renewed, if the following conditions are met by the 5^th year of the SPR status, for either another 5 or 3 years depending on the following:

1. The applicant has fulfilled the investment conditions of the GIP;
2. The Singapore business that the applicant invested in must employ at least 10 employees with at least 5 Singapore Citizens, and incurs an annual total business expenditure of at least S$2 million by its 5^th year;
3. The applicant or all their dependants, who obtained PR under the GIP application, must have resided in Singapore for more than half of the time during the last 5 years.

For a 5-year renewal, the applicant must have fulfilled all three of the above criteria. For a 3-year renewal, the applicant must have fulfilled criteria (i), and either criteria (ii) or (iii).

How SMTP Can Help

For some next-generation business owners, applying for GIP represents a point of transition in their role in the family business as the business diversifies into Singapore. As immigration is a key change in lifestyle, applicants are advised to carefully plan out their business plans in Singapore in order to ensure that their transition into Singapore is both sustainable and stress-free in the long run.

Our private client practice has a wealth of experience in assisting HNW and UHNW clients with their immigration and residency plans in Singapore.  With our years of expertise in navigating the GIP process, our lawyers are well-equipped to guide our clients in their applications and provide advice on the next steps required to reach their holistic needs and goals.

Should you or your clients require any assistance or advice, please feel free to contact our Business Development Team to schedule a consultation with our team.

*Annex B (List of Industries) refer to:

1. Aerospace Engineering
2. Alternative Energy / Clean Technology
3. Automotive
4. Chemicals
5. Consumer Business (e.g. flavors and fragrances, food ingredients, nutrition, home and personal care)
6. Electronics
7. Energy
8. Engineering Services
9. Healthcare
10. Infocomm Products & Services
11. Logistics & Supply Chain Management
12. Marine & Offshore Engineering
13. Media & Entertainment
14. Medical Technology
15. Nanotechnology
16. Natural Resources (e.g. metals, mining, agri-commodities)
17. Safety & Security
18. Space
19. Shipping
20. Pharmaceuticals & Biotechnology
21. Precision Engineering
22. Professional Services (e.g. consulting, design)
23. Arts Businesses
    1. Visual arts businesses (e.g. auction houses, art logistics / storage
    2. Performing arts businesses
24. Sports Businesses
25. Family Office & Financial Services

**It is insufficient to simply invest in the GIP funds. In addition to this, applicants are also expected to establish a new business or expand an existing one, but unlike GIP applicants proceeding under Option A, they can have their Main Business capitalise the new/existing business in exchange for equity.

***For those with concerns about national service liabilities for male SPRs under the age of 21 years old, applicants may choose to not apply for SPR status for their son(s).