When you buy a business in Singapore, you either buy the shares of the company that owns it (a share purchase) or have your own company buy the assets and contracts you want (an asset purchase). In a share purchase you take the company with its whole history, so you rely on due diligence, warranties and indemnities to protect yourself. In an asset purchase you choose what to take, but each contract, lease, licence and employee transfer needs separate work. Let the due diligence findings decide the structure, then agree the price mechanism, the protections and the completion steps before you sign.
This guide is written for the buyer: a Singapore company owner, a foreign group or a founder buying an existing business. If you are the seller, see our companion guide on selling your business by asset sale or share sale.
What does the buyer actually end up owning?
| Point | Share purchase | Asset purchase |
|---|---|---|
| What you buy | The shares, so the whole company comes with you, including past tax, claims and contracts | Only the assets, contracts and liabilities listed in the agreement |
| Who signs as buyer | You or your holding company, buying from the shareholders | Usually a new or existing company of yours, buying from the target company |
| Hidden liabilities | Stay inside the company you now own | Generally stay with the seller unless you agree to take them |
| Customer and supplier contracts | Continue, subject to change of control clauses | Must be assigned or novated, often with consent |
| Licences and permits | Stay with the company, but check conditions on changes in ownership or key officers | Often need fresh applications in your company’s name |
| Employees | Same employer, no transfer needed | Transfer under the Employment Act if the business is transferred as a going concern |
| Main stamp duty | On the share transfer | On any property or lease conveyed |
| Tax history | Inherited, including any unutilised losses (subject to tests) | Not inherited; you start a fresh tax position |
How should due diligence shape the structure?
Many buyers start with a preference, often an asset purchase because it feels safer. A better approach is to run due diligence and let the findings decide. The table shows common findings and how a buyer typically responds.
| Due diligence finding | Typical buyer response |
|---|---|
| Possible unpaid tax, GST or CPF, or a threatened lawsuit | Asset purchase, or a share purchase with a specific indemnity and a retention from the price |
| A key licence that cannot be transferred or reissued quickly | Share purchase, with a condition that any required regulator approval of the change in ownership is obtained |
| Major customer contracts with change of control clauses | Make customer consent a condition before completion, whichever structure is used |
| A lease the landlord must approve before assignment | Make landlord consent a condition; in a share purchase, check whether the lease treats a change of control as an assignment |
| Unstamped share transfers or leases in the company’s history | Require the seller to regularise them before completion with IRAS |
| The company owns residential property | Check whether additional conveyance duties apply to the share transfer before agreeing the price |
| Messy statutory registers or missing ACRA filings | Require the seller to rectify them as a completion deliverable |
Basic checks should include the target’s ACRA business profile, constitution, registers (members, directors, registrable controllers), charges, the last few years of financial statements and tax returns, GST returns if registered, material contracts, leases, licences, employment contracts and any disputes. Older documents that were never stamped are a common finding, and the seller should regularise them with IRAS before completion.
What are the steps from first offer to completion?
- Letter of intent or term sheet. Set out price, structure, timetable and key conditions. Make confidentiality, exclusivity and costs clauses binding if you want them to be, and keep the commercial terms “subject to contract”. Our guide on whether an MOU or letter of intent is binding explains the split.
- Due diligence. Legal, financial, tax and employment reviews, scaled to the size of the deal.
- Choose the structure and price mechanism. Decide share or asset purchase, and whether the price is fixed by locked box or adjusted by completion accounts.
- Negotiate the agreement. A share purchase agreement (SPA) or asset purchase agreement (APA), with the disclosure letter.
- Sign and satisfy conditions. Consents from landlords, customers, financiers or regulators, and any approvals your own board or shareholders need.
- Complete. Pay the price (less any retention) against delivery of the completion documents.
- Post-completion filings and integration. ACRA filings, registers, bank mandates, tax registrations and employee communications.
Locked box or completion accounts?
| Feature | Locked box | Completion accounts |
|---|---|---|
| How the price is set | Fixed by reference to accounts at an agreed past date | Estimated at completion, then adjusted once accounts at the completion date are prepared |
| Main buyer protection | A promise that no value has “leaked” to the seller since the locked box date, with a refund for leakage | A true-up to actual cash, debt and working capital at completion |
| Certainty | Price known at signing | Final price known only after completion |
| Suits | Businesses with reliable recent accounts | Businesses with fluctuating working capital or weaker accounts |
| Risk of dispute | Mostly about what counts as leakage | About accounting policies and the adjustment calculation |
Which clauses protect the buyer most?
- Warranties. Statements of fact about the company or business (accounts, tax, contracts, employees, disputes, compliance). The seller qualifies them in a disclosure letter, so read that letter as carefully as the agreement.
- Specific indemnities. Pound-for-pound reimbursement for known risks found in due diligence, such as a tax exposure or a pending claim. Warranties are a poor tool for risks you already know about.
- Retention or escrow. Part of the price held back for an agreed period to meet claims.
- Limitations. Expect the seller to ask for a cap, a minimum claim size and a short claims period. Negotiate these now; after completion, the notice clause often decides whether a claim survives. Our guide to a breach of warranty claim after buying a Singapore company shows how these clauses operate.
- Conditions precedent. Consents and approvals that must be obtained before you are obliged to complete, with a long-stop date.
- Seller restrictive covenants. A non-compete and non-solicitation from the seller protects the goodwill you are paying for. Keep them reasonable in duration, geography and scope, because unreasonable restraints risk being unenforceable.
If you plan to use the target company’s own money or assets to fund or secure the purchase, check the financial assistance rules in section 76 of the Companies Act 1967. They mainly affect public companies and companies with a public holding company, but you should confirm the position before agreeing any bank security package.
How do stamp duty, GST and tax differ for the buyer?
Share purchase. IRAS charges stamp duty on the share transfer at 0.2% of the purchase price or the value of the shares, whichever is higher. For a private company, value is generally based on net asset value from recent accounts, with special rules where the company owns property. The document must be stamped within 14 days if signed in Singapore, or 30 days after receipt if signed overseas. The buyer normally pays. Our guide to stamp duty and share certificates on a share transfer explains the valuation. If the target holds residential property, additional conveyance duties may apply, so check this before signing.
Asset purchase. Stamp duty applies to any transfer of property or assignment of a lease, at the rates that apply to that property. For GST, a transfer of a business as a going concern can be an excluded transaction, so no GST is charged on the assets, but only if every condition in IRAS’s guidance on transferring businesses is met. These include that the business, not just assets, is transferred; that it is a going concern; that you will use the assets to carry on the same kind of business; and that your company is, or becomes on the transfer, GST-registered. If a condition fails, the seller must charge GST, so confirm the position in the agreement.
Tax history. In a share purchase, the company keeps its tax history, including any unutilised trade losses and capital allowances. Under the shareholding test, those items generally can be carried forward only if shareholders holding at least 50% are the same on the relevant dates, so a full takeover usually fails the test unless IRAS grants a waiver for genuine commercial reasons. Do not pay for tax losses without advice. In an asset purchase, how the price is allocated between equipment, stock, goodwill and intangibles affects your company’s future tax claims, so agree the allocation in the APA.
What happens to the employees?
In a share purchase, the employer stays the same company, and MOM lists a transfer of shares as not being a transfer of employment. In an asset purchase where the business is transferred as a going concern, section 18A of the Employment Act generally applies: employees in the undertaking move to your company on their existing terms, with continuous service, unless they agree to changes. MOM’s guidance on transfer of employment requires the seller to notify affected employees within a reasonable time and the buyer to give the seller the information it needs to do so.
For foreign employees, a share purchase leaves their work passes with the same employer. In an asset purchase, your company becomes the employer, so plan the work pass arrangements with MOM early, because staff cannot simply carry on working under the seller’s passes.
What does the buyer need to do at and after completion?
Share purchase:
- Receive the signed instrument of transfer and arrange stamping within the deadline
- Have the share transfer lodged with ACRA so the electronic register of members is updated; our guide to filing a share transfer with ACRA covers the process
- Collect resignations of outgoing directors and appoint your own, keeping at least one locally resident director
- Update the register of registrable controllers and the central register filing within the prescribed time
- Change bank mandates, Corppass administrators, the registered office if needed and the company secretary
- Collect the company’s statutory books, seals, contracts and passwords
Asset purchase:
- Sign novations and assignments, and obtain the landlord’s consent to the lease
- Apply for licences in your company’s name and confirm GST registration where needed
- Issue employment confirmations to transferring staff
- Transfer domain names, trade marks and other registrations
Example: a café group buys an established bakery
Example: This is a hypothetical scenario. A Singapore café group agrees in principle to buy a two-outlet bakery owned by one shareholder through a private company. Due diligence finds that the bakery company has an unresolved claim from a former supplier, that both shop leases need landlord consent for assignment, and that its food shop licences are held in the company’s name.
The buyer weighs the options. An asset purchase would leave the supplier claim behind but would need two landlord consents and new licences, putting the opening dates at risk. A share purchase keeps the leases and licences in place. The buyer chooses a share purchase, with a specific indemnity for the supplier claim, a retention from the price for 12 months, a locked box price based on recent management accounts, and a two-year non-compete from the seller covering bakery businesses in Singapore. Completion is conditional on the landlords confirming that the change of ownership is not a breach of the leases. After completion, the buyer stamps the transfer, lodges it with ACRA, appoints its directors and changes the bank mandates within the first week.
Buyer’s checklist before signing
- Due diligence report with each issue mapped to a price adjustment, indemnity, condition or structure change
- Price mechanism agreed, with definitions of cash, debt and working capital
- Disclosure letter reviewed line by line
- Retention or escrow amount and release terms
- List of consents, approvals and their owners
- Stamp duty and GST treatment confirmed, with funds set aside
- Employee and work pass plan
- Completion deliverables list and post-completion filing timetable
Frequently asked questions
Is an asset purchase always safer for the buyer?
Not always. It leaves most historic liabilities behind, but can cost time and value if key contracts, leases or licences cannot be moved. A share purchase with strong protections is often the better commercial answer.
Can a foreign company or foreign individual buy a Singapore company?
Generally yes, through a share purchase, although some regulated sectors require approval for changes in control. The company still needs at least one locally resident director, and any foreign owner who will work in the business needs a suitable work pass.
Do we need a lawyer for the SPA or APA?
For anything beyond a very small deal, yes. The agreement allocates risk for years after completion, and the drafting of warranties, indemnities and limitations decides whether you can recover if something goes wrong.
Can we buy only part of a company’s business?
Yes, through an asset purchase of that part. For the GST going concern treatment, the part transferred must be capable of operating on its own, among the other IRAS conditions.
For a share purchase, also read how warranties, indemnities and the disclosure letter allocate risk.
Need help with buying a business?
If your company, or you as a director or shareholder, is buying a business or a Singapore company, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines. Where your matter needs a lawyer, we will refer you to a firm on our panel of Singapore law firms that regularly handles mergers, acquisitions and business sales. Raffles Corporate Services is a corporate services provider, not a law firm, and this article is general information, not legal advice.
The Raffles Corporate Services Editorial Team, Raffles Corporate Services