How Much Paid-Up Capital Should Foreign Investors Commit in Singapore?

Deciding how much paid-up capital to inject is one of the earliest choices that determines how credible, bankable, and scalable your Singapore entity will be. The Companies Act allows you to incorporate with a token amount, but sector rules, market expectations, and financing design often push the real number higher.

The goal is to size capital once in the right way so you can open accounts, hire, license, and expand without rework.

What paid-up capital is and what it is not

Paid-up capital is the equity you pay into the company for issued shares. It is different from base capital or financial resources requirements that some regulators impose to ensure an entity’s solvency. Those regulatory metrics can be met with a mix of equity and reserves and are not the same thing as share capital. Singapore permits incorporation with as little as S$1 (US$0.74) of paid-up capital. That legal minimum is rarely sufficient for banking, hiring, or licensing in practice.

When the legal minimum is not enough

Several regimes raise the practical floor above S$1 (US$0.74). Under the Payment Services Act, standard payment institutions must maintain at least S$100,000 (US$74,000) in base capital, and major payment institutions at least S$250,000 (US$185,000). They also must provide a security deposit to the Monetary Authority of Singapore.

In capital markets, MAS requires base capital that varies by activity, ranging from tens of thousands to several million Singapore dollars for full broker-dealers and other CMS licensed firms.

Registered fund management companies and certain licensed fund managers are subject to at least S$250,000 (US$185,000) in base capital with additional risk-based capital overlays. Businesses need to fund so that equity plus retained reserves keep them above the line through stress.

Credibility with banks and immigration

Banks evaluate whether initial capital is consistent with your stated business model and first-year costs. A token S$1 (US$0.74) rarely passes muster for operating accounts, trade facilities, or card acquiring.

For work passes, there is no fixed paid-up capital threshold in the Employment Pass framework. Candidates must meet salary and COMPASS points criteria. The Ministry of Manpower treats company viability in a holistic way rather than through a statutory capital number. Any updates you file with ACRA will be reflected automatically in MOM systems, so there is no need to separately notify MOM unless you have an urgent transaction pending.

A practical method to size capital

Treat capitalization as a runway calculation. First, total your pre-revenue or low revenue burn for 12 to 18 months, including payroll, premises, technology, professional fees, and regulatory costs. Second, add any regime-specific base capital or security deposit amounts you must maintain, and set those funds aside. Third, add a banking cushion that keeps average balances healthy after normal working capital swings. Finally, decide how much of the total to meet with equity and how much to meet with a shareholder loan.

Equity is not repayable and signals permanence. Shareholder loans preserve flexibility and can be serviced with interest under Singapore’s transfer pricing rules, which require market rate pricing from January 2025 for domestic related party loans.

Equity versus shareholder loans and tax implications

Singapore has no statutory thin capitalization ratio. However, interest deductibility and intercompany funding are policed under transfer pricing law. The arm’s length principle applies to related party loans. From 2025, domestic related party loans generally need arm’s length interest or use of IRAS’ indicative margin.

Dividends can only be paid out of retained profits, not out of paid-up capital. This is why many groups blend an initial equity core with a documented shareholder loan line for flexibility.

Changing capital after incorporation

If you under- or overshoot, you can adjust. To increase capital, you issue and allot new shares and file the Return of Allotment through BizFile+. For private companies, lodging the allotment in BizFile+ is part of the issuance workflow and updates the public record.

Public companies have a defined filing window. Reductions are possible but more procedural, so it is usually more efficient to size correctly the first time.

Case example: Payments company seeking mpi license

A cross-border payments startup plans to apply for a Major Payment Institution license. The leadership forecasts S$110,000 (US$81,000) monthly cash burn for the first year, tapering to S$80,000 (US$59,000) as revenue ramps. The MPI base capital minimum is S$250,000 (US$185,000) and the firm expects to post a MAS security deposit according to license conditions.

The board decides to inject S$1.8 million (US$1.3 million) of total funding at launch, split into S$600,000 (US$444,000) paid-up capital and S$1.2 million (US$889,000) as a shareholder loan documented at arm’s length terms. The equity portion signals permanence and comfortably clears the MPI base capital requirement even after initial losses. The loan preserves flexibility for group treasury.

Twelve months in, after revenue stabilizes, the company can either capitalize part of the loan or begin repayments without affecting its regulatory buffers.

Case example: Regional headquarters setup

A European manufacturing group decides to establish a regional headquarters in Singapore to coordinate ASEAN operations. The entity will employ 25 staff in the first year, including expatriates on Employment Passes. Forecast operating costs are S$3 million (US$2.2 million) annually, with steady revenue expected only from the third year.

The board approves paid-up capital of S$500,000 (US$370,000). This amount ensures automatic membership in the Singapore Business Federation, provides a credible signal to banks and regulators, and demonstrates a serious long-term commitment. The group covers the remaining working capital with a shareholder loan of S$2 million (US$1.5 million).

This mix gives the headquarters sufficient runway and banking strength while allowing future flexibility.

Strategic signals beyond compliance

For many companies, paid-up capital functions as more than a statutory line item. It conveys seriousness to regulators, suppliers, clients, and financial institutions.

Reaching S$500,000 (US$370,000) automatically places a company in the Singapore Business Federation, strengthening its market presence.

More broadly, a figure that clearly matches business scale shortens due diligence, builds confidence with stakeholders, and reduces the need to revisit capitalization mid-year.

Regional perspective for board-level decisions

Boards often compare Singapore with neighboring jurisdictions before finalizing the structure. Hong Kong allows token incorporation, but banks now expect higher capitalization before granting facilities. Malaysia requires a minimum of RM500,000 (S$156,000 or US$116,000) for many foreign-owned companies, which can be a barrier to entry. Singapore’s approach strikes a middle path, keeping statutory requirements flexible while supporting credibility in international markets.

Setting the right capital for Singapore entry

Undercapitalizing with S$1 (US$0.74) slows down banking, hiring, and licensing, while overcapitalizing traps cash that could be used elsewhere. The right figure is the one that covers the operating runway, satisfies any regulatory buffers, and allows the company to meet immigration and banking requirements without adjustments in the first year. Once determined, document the equity-loan mix clearly and update filings as business scale changes.

This article first appeared on ASEAN Briefing, our sister platform.