Can Employment Pass Holder Set Up A Company In Singapore?

Did you know that over 1.3 million foreign professionals live and work in Singapore, many of them as Employment Pass (EP) holders? With Singapore’s reputation as a global business hub, it’s common for these professionals to ask: Can an employment pass holder start a business in Singapore?

The short answer is yes—but with conditions. This guide explains exactly what an employment pass holder can and cannot do when it comes to starting a business in Singapore, the challenges you may face, and the solutions that make entrepreneurship possible in 2025.

TL;DR: Quick Takeaways for Busy Readers

• ✅ Yes, an employment pass holder can set up a company in Singapore.
• 🚫 Restrictions apply—you cannot be a director unless the company sponsors your EP.
• 👥 Nominee directors help EP holders meet the Companies Act requirement.
• 🔄 If you want to run your business full-time, you must switch your EP to your own company.
• 📊 COMPASS framework and higher paid-up capital requirements make EP approval more competitive in 2025.
• 💡 With proper planning and professional support from Grof, EP holders can successfully launch businesses in Singapore.

Can An Employment Pass Holder Start A Business in Singapore?

The Ministry of Manpower (MOM) allows an EP holder to own shares in a Singapore-registered company. This means you can legally become a shareholder or investor.

However, there are restrictions:

• You cannot be a company director unless the company sponsors your EP.
• Every company must have at least one resident director under the Companies Act.
• You must follow MOM guidelines to avoid conflicts with your current employer.

In short:

• ✅ Yes, you can be a shareholder.
• ❌ No, you cannot be a director unless your EP is tied to that company.

Key Restrictions EP Holders Must Know

Before jumping into business, it’s important to understand the limits:

• Resident Director Requirement: Companies must appoint at least one Singapore Citizen, PR, or EP holder (with their EP under that company).
• Employer Conflict: EP holders employed elsewhere need MOM approval before joining another company’s management.
• COMPASS Framework: Since 2023, EP applications are assessed using a points-based system evaluating salary, education, diversity, and industry contribution.

These restrictions mean EP holders often need creative solutions, such as using nominee directors or applying for a new EP under their own company.

Common Scenarios and Practical Solutions

1. Passive Investor

If you simply want to invest in a friend’s or partner’s business, you can safely become a shareholder without restrictions.
Tip: Limit your stake if you want low risk, since you won’t be managing the company directly.

2. Start a Company While Keeping Your Current EP

Many EP holders want to start a side business but keep their main job. In this case:

• You can be a shareholder.
• You’ll need a nominee director to satisfy the Companies Act.

👉 Need help with appointing a nominee director? Check out our full Nominee Director Guide to understand the process before you get started.

3. Becoming a Full-Time Entrepreneur

If you’re ready to leave your current role and run your own company, you’ll need to:

1. Incorporate the company (initially with a nominee director).
2. Apply for a new EP under your company.
3. Wait 3–6 months for approval.
4. Take over as resident director once your new EP is approved.

Note: MOM now expects a higher paid-up capital commitment to show your company can pay salaries. This is especially important under the stricter COMPASS framework.

What Is the COMPASS Framework?

Introduced in 2023 and still relevant in 2025, COMPASS is a points-based system that ensures foreign professionals contribute meaningfully to Singapore’s workforce.

It evaluates:

• Salary (minimum SGD 5,000 per month, higher for certain industries).
• Qualifications (recognised degrees or equivalent).
• Diversity (whether your profile enhances workforce balance).
• Industry Role (supporting priority sectors).

An applicant needs at least 40 points to qualify. This means EP holders planning to start a business should prepare stronger evidence of their contribution.

Steps for EP Holders to Start a Business in 2025

If you’re serious about entrepreneurship, here’s a practical checklist:

1. Define your role – Investor or active director.
2. Comply with MOM rules – Avoid conflicts with your employer.
3. Appoint a resident director – Use nominee services if needed.
4. Incorporate with ACRA – Register shareholders, address, and constitution.
5. Set paid-up capital – Prepare sufficient funds for EP applications.
6. Apply for a new EP – If you plan to actively run the business.
7. Stay compliant – Appoint a company secretary, file annual returns, and keep proper records.

Why Singapore Is Still the Best Place to Start a Business

Despite stricter rules, Singapore remains one of the top choices for entrepreneurs because of:

• Pro-business regulations and transparent policies.
• Gateway to ASEAN markets with strong international ties.
• Stable legal and financial systems that protect investors.
• Government startup schemes and grants supporting innovation.

With the right preparation and guidance, an employment pass holder can successfully transition from employee to entrepreneur in Singapore.

Conclusion

So, can an employment pass holder set up a company in Singapore? Absolutely—but only if you understand the rules. You can be an investor at any time, but to become a director, you’ll need to either switch your EP or appoint a nominee director.

By planning carefully, understanding the COMPASS framework, and seeking professional support, you can build a compliant and successful business in Singapore.

👉 Ready to explore your options? Arrange a free consultation with Grof Singapore to make your entrepreneurial journey smooth and compliant.

Frequently Asked Questions

1. Can a S pass set up a company in Singapore?

   No. As an S Pass holder, you are not permitted to be a company director or a sole proprietor in Singapore. If your goal is to start a business, you must first resign from your current job and then apply for the EntrePass.

2. What is the difference between EP and PEP?

   The EP is for professionals with a specific job offer and is employer-bound. The PEP is for high-earning professionals, offering greater freedom to switch jobs and search for employment in Singapore.

3. Can a foreigner set up a business in Singapore?

   Yes, foreigners can establish a business in Singapore by either relocating (using an Employment Pass or EntrePass) or by hiring a local nominee director to act on the company's behalf without relocating.