SINGAPORE Law and Practice Contributed by: Sim Bock Eng, Josephine Choo, Aw Wen Ni and Vincent Ho, WongPartnership LLP
2. Succession 2.1 Cultural Considerations in Succession Planning Despite the extensive commercialisation and globali - sation of its businesses, Singapore is culturally still very Asian. This encompasses various values, such as filial piety, respect (or subservience to seniors) and civility. There is also a tendency to avoid direct con - flict. Therefore, it is not unusual for the patriarch to take the lead or be the decision-maker in various aspects of succession planning, even when it requires the co- operation or involvement of other family members. On those occasions when subsequent generations are consulted, younger individuals tend to be respectful of and align themselves with the direction of the ear - lier generations, particularly in their presence. Whilst there is much concern and planning to protect family wealth, particularly in the event of the failure of busi - nesses or marriages, the reasons for such concerns would rarely be discussed. Culturally, Asians tend to favour keeping families together and keeping assets within the family. On occasion, this presents a divide between the first generational wealth creators and the subsequent gen - erations, who may have less interest in pursuing the family business. 2.2 International Planning With the increasingly international nature of busi - nesses and the globalisation of Asian families, wealth and succession planning will inevitably involve plan - ning across jurisdictions and different tax and legal considerations. This has become more challenging in recent years with the implementation of aggressive tax and disclosure regimes by an increasing number of countries. The simplification and rationalisation of the family’s asset holding across various jurisdictions have thus become a sensible (and sometimes essen - tial) first step to effective and efficient succession planning. However, tax laws in Singapore are stable, transparent and easy to apply. The authorities are also proactive and responsive to the needs of companies and indi -
viduals keen to relocate to Singapore, and have put various schemes in place over the years to attract such relocation. These include the Global Investor Programme (the GIP, or the “Programme”), which enables the applicant to invest in Singapore and earn residency status in Singapore for themselves and their family upon satisfaction of the Programme’s criteria. Applicants to this Programme may include next-gen - eration business owners and founders of fast-growing companies, as well as established business owners and family office principals. Applicants are given the options to invest in a business in Singapore or to invest in a GIP-selected fund or establish a Singapore-based Single Family Office with assets under management of at least SGD200 million. Attracting Funds Singapore has also been proactively attracting funds to its shores. The various tax incentive schemes together with the introduction of the Variable Capital Company (VCC) further this attraction. The VCC is a corporate structure that is able to issue and redeem shares without shareholders’ approval, and to pay dividends using capital and not just profits. It can be a standalone structure or an umbrella structure with multiple sub-funds (suitably ring-fenced) with different investment objectives, investors, assets and liabilities. These factors and tools available for wealth and suc - cession planning make Singapore a favoured jurisdic - tion for the location of wealth and succession struc - tures. 2.3 Forced Heirship Laws Singapore does not have forced heirship laws, except for Muslims domiciled in Singapore. Therefore, there are no restrictions on the manner by which non-Mus - lims in Singapore may choose to provide for their suc - cession. This general rule as to testamentary freedom for non- Muslims is subject to the provisions of the Inherit - ance (Family Provision) Act 1966, which allows the court to provide reasonable maintenance to the deceased’s dependants out of the deceased’s net estate. “Dependant” is defined as a spouse, a child (of any gender or age) who is by reason of physical
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