What Is A Business Owner's LOC And How Can You Get One?
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From May this year, the Ministry of Manpower (MOM) has stopped issuing Letters of Consent (LOCs) to allow DP holders to work in Singapore. This is part of the Government’s effort to reduce local unemployment, in line with MOM’s mission to ensure Singaporeans were hired into good jobs, strengthening the Singaporean core.
The move has significantly impacted schools, medical specialists and various other organisations who hire a lot of specialist, part-time staff. It has also impacted people who run their own small businesses as consultants, creators or freelance specialists, and whose salaries are too low to qualify for an EP (which must be a minimum of $4,500 per month, but should be significantly more depending on the applicant’s age, experience and industry).
The good news for DP holders who want to run their own business is that they might be able to do so as a business owner, and apply for an LOC to do so. The MOM website states that the DP holder seeking an LOC must be one of the following:
The sole proprietor of an ACRA-registered business.
A partner of an ACRA-registered business.
A company director with at least 30% shareholding in an ACRA-registered business.
In order to register your business with ACRA, you need to have:
1. A Registered Filing Agent
This entity will submit the online business application on your behalf and can be a law firm, accounting firm, or a corporate secretarial firm (like Accela).
2. A Registered Office Address in Singapore
Ideally it will be a business address, and it can’t be a PO box. Many corporate secretary providers, including Accela, offer an address as a “virtual address” for your business. If necessary, they will handle the mail management to ensure any important mail is always brought to your attention.
3. A Bank Account
This is another thing our team can help you navigate! We will help you choose the right bank for your business needs, be it a local bank with a brand, or a neobank like Wise (formerly Transferwise).
4. Someone to oversee your company’s compliance
There are lots of mandatory annual compliance requirements for businesses in Singapore, including holding an Annual General Meeting and filing an Annual Return each year. Your corporate secretary can make sure you submit the necessary paperwork by the deadlines.
When the company’s ACRA records show the DP holder fulfils one of the three criteria (see above) the company can apply firstly for permission to apply for the LOC. With that permission granted, the company can proceed to apply for the LOC, which will be reviewed by MOM. Once it’s approved, the LOC should be valid for one year or the validity of the DP, whichever is shorter.
Before the LOC is renewed, the company must have employed at least one Singaporean for at least three months, at a minimum of $1,400 with CPF contributions.
With this new process starting 1 May 2021, It’s worth noting that almost everyone is new to these changes, and it’s a process we are all navigating together.
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Get in touch with our friendly team to chat through your requirements, and how we can help you bring your business to life: [email protected].