Can an Employment Pass (EP) Holder Start a Business in Singapore?

Singapore is known as one of the most business-friendly countries in the world. With its low corporate taxes, strong legal framework, and global connectivity, it’s no surprise that many foreign professionals working here dream of starting their own business someday. But if you’re currently working in Singapore under an Employment Pass (EP), you might be wondering:

Can an EP holder start a business in Singapore?

The answer is yes — but with important conditions.

This article will walk you through what’s allowed, what’s restricted, and how you can legally and successfully start your own company while holding an Employment Pass.

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Understanding What an Employment Pass Allows

The Employment Pass (EP) is a work visa issued by Singapore’s Ministry of Manpower (MOM) to foreign professionals, managers, and executives who are employed by a Singapore-registered company. It ties you specifically to your employer.

This means:

• You can work only for the employer that sponsored your EP.

• You cannot take on additional jobs, side businesses, or freelance work without MOM’s approval.

However, owning a business as a shareholder is not considered “working” — it’s considered an investment. This distinction is crucial for EP holders who want to become entrepreneurs in Singapore.

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You Can Be a Shareholder, But Not a Worker Without Approval

As an EP holder, you are allowed to:

✅ Incorporate a company in Singapore.
✅ Own shares in that company.
✅ Receive dividends from the company’s profits.

But you are not allowed to:

❌ Manage day-to-day operations.
❌ Work for the company (even unpaid) without MOM’s consent.
❌ Draw a salary from the new business unless it’s approved under a valid work pass.

In short — you can be a business owner, but not yet a business operator unless you get proper authorization.

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The Three Roles to Understand: Shareholder, Director, and Employee

To understand what you can or cannot do, it helps to break down the three main roles in a Singapore-registered company.

1. Shareholder (Owner / Investor)

• You can legally own shares in a Singapore company while on an EP.

• You can earn profits through dividends.

• You cannot sign contracts, manage operations, or represent the company in business dealings.

This is the simplest, lowest-risk route for EP holders who just want to invest or co-own a business without being involved in daily management.

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2. Director (Management Role)

Every Singapore company must have at least one locally resident director (a Singapore Citizen, PR, or an eligible pass holder).

If you’re an EP holder and want to become a director, you’ll need to get MOM’s Letter of Consent (LOC). The LOC gives you permission to hold a directorship position.

However, MOM generally only grants this for related companies (such as a subsidiary, branch, or joint venture of your existing employer). If your new business is unrelated to your current employer, MOM will likely require you to switch your EP to your own company instead.

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3. Employee (Working for the Business)

To be actively involved and draw a salary from your new company, you must have a valid work pass sponsored by that company. You cannot use your existing EP (tied to your current employer) for this.

This means you’ll need to apply for:

• A new Employment Pass under your own startup, or

• An EntrePass, or

• A ONE Pass (for high-achieving professionals who qualify).

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The Legal Pathways Available for EP Holders

Depending on your goals, there are several legitimate ways you can start and operate your business in Singapore as an EP holder.

Option 1: Be a Passive Shareholder

If you just want to invest and earn from profits, this is the simplest route.

• Incorporate a company through a local Corporate Service Provider (CSP).

• Appoint at least one local resident director.

• You can hold shares and receive dividends.

• You cannot manage or work for the business.

This is ideal if you are still employed full-time but want to own part of another business passively.

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Option 2: Apply for a New Employment Pass Under Your Own Company

If you want to actively run your startup, you can incorporate it first and then apply for a new EP sponsored by your own company.

Your company will need to:

• Be registered with ACRA.

• Have a business plan and operational readiness (office, contracts, etc.).

• Offer you a genuine role and salary that meet MOM’s EP criteria.

Once approved, you can legally work for and manage your own company.

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Option 3: Apply for the EntrePass

If your business idea is innovative, tech-driven, or venture-funded, MOM’s EntrePass is designed for you.

Eligibility includes:

• Owning at least 30% of the company.

• Having funding from a recognized venture capitalist or government agency, or

• Owning innovative intellectual property (IP).

The EntrePass lets you set up and operate your startup in Singapore from day one, even before it generates revenue.

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Option 4: Apply for the ONE Pass

The Overseas Networks & Expertise (ONE) Pass is a newer, more flexible work visa for top-tier professionals.

It allows you to:

• Work for multiple companies at once.

• Start and run your own business.

• Not be tied to a single employer.

You’ll need to meet MOM’s criteria — such as earning at least S$30,000 per month or demonstrating outstanding achievements in your field.

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Option 5: Obtain a Letter of Consent (LOC) for a Related Company

In rare cases, if your new business is related to your existing employer (e.g., a subsidiary or parent company), your current employer can apply for an LOC for you to serve as a director in that related company.

However, if your startup is completely independent, MOM will not usually approve this. It’s mainly for group-related entities.

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Step-by-Step: How to Get Started

Here’s how most EP holders legally start their business in Singapore.

Step 1: Decide Your Role

Will you be a passive investor or an active founder?
This determines whether you need a new pass or can remain a shareholder only.

Step 2: Incorporate the Company

Use a registered Corporate Service Provider (CSP) to set up your company with ACRA.
Appoint a local resident director (can be a nominee if needed).

Step 3: Open a Corporate Bank Account

Prepare your company documents, including:

• Certificate of Incorporation

• Business profile

• Directors’ resolution

• Proof of registered address

Step 4: Apply for the Right Pass

Depending on your plan, apply for:

• A new Employment Pass under your company,

• The EntrePass, or

• The ONE Pass.

Step 5: Secure MOM’s Approval

If you intend to take up a director role while holding your current EP, apply for the Letter of Consent (LOC) through your employer (if applicable).

Step 6: Stay Compliant

• Maintain accounting and tax records.

• File your Annual Return with ACRA.

• Register for GST if required.

• Do not perform any work for your company unless MOM approval is in place.

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Common Mistakes to Avoid

1. Working for your own company without approval.
   Even unpaid work counts as “employment” under MOM rules.

2. Assuming you can automatically be a director.
   EP holders must get a Letter of Consent before accepting a directorship.

3. Not appointing a local resident director.
   Every Singapore company must have at least one.

4. Choosing the wrong visa type.
   Traditional businesses may not qualify for EntrePass; in that case, apply for a new EP sponsored by your company instead.

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Frequently Asked Questions

Q: Can I register a company while still working under my EP?
Yes, you can. Just ensure you are a passive shareholder and not managing or working for the company.

Q: Can I be the director of my company while employed elsewhere?
Not without MOM approval. You’ll need a Letter of Consent (LOC), which is usually approved only for related companies.

Q: What if I only invest and let someone else run the company?
That’s completely fine. You can remain a shareholder and appoint a Singapore resident director to manage operations.

Q: Is EntrePass only for tech startups?
EntrePass focuses on innovative, scalable, and venture-backed businesses — not traditional retail or trading firms.

Q: Can I own multiple businesses as an EP holder?
Yes, as long as you’re only an investor. If you want to be active in any of them, you’ll need appropriate passes or approvals.

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Summary: What You Can and Cannot Do

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Conclusion

Yes, an Employment Pass holder can start a business in Singapore — but not all forms of involvement are allowed without the right permissions.

In simple terms:

• You can own a business,

• But you can only run it if you have the right work pass.

The most common compliant pathways are:

1. Stay as a passive shareholder.

2. Apply for a new EP sponsored by your startup.

3. Get an EntrePass for innovative ventures.

4. Qualify for a ONE Pass for multiple ventures.

By understanding and following MOM’s guidelines, you can legally build your entrepreneurial dreams in Singapore — a global hub for innovation, investment, and business growth.

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Need professional help incorporating your company and ensuring compliance with MOM’s rules?
Reach out to a trusted corporate services provider in Singapore who can guide you through incorporation, work pass applications, and compliance setup.