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

Singapore’s strong economy, pro-business environment, and strategic location have made it one of the most attractive places in the world for entrepreneurs. Many foreign professionals who come to work in Singapore eventually think about starting their own business here. But if you already hold an Employment Pass (EP), the question arises — can you start and operate a company in Singapore while holding an EP?

The short answer is yes, you can — but with important restrictions.

This article explains what an Employment Pass holder can and cannot do, the legal options available, and the correct procedures to follow if you want to build your own business in Singapore.

Understanding the Employment Pass (EP)

The Employment Pass is a work visa issued by Singapore’s Ministry of Manpower (MOM) to foreign professionals, executives, and managers who work for a Singapore-registered employer. It gives you permission to work for that specific company only.

Your EP is therefore tied to your employer, which means:

• You cannot work for any other company.

• You cannot earn additional income or take on side projects.

• You cannot freelance, consult, or manage another business — unless MOM approves it.

However, the EP rules do not prevent you from owning shares in another business. Being a shareholder is different from being an employee. This is where most EP holders begin their journey toward entrepreneurship.

The Difference Between Owning and Running a Business

To understand what’s allowed, it’s important to differentiate between owning a business and running one.

✅ You can own a business

As an EP holder, you can:

• Register a company with the Accounting and Corporate Regulatory Authority (ACRA).

• Hold shares in that company.

• Earn dividends from profits.

❌ You cannot run or manage it without approval

You cannot:

• Handle the daily operations.

• Represent the company in dealings.

• Be listed as a director without MOM’s consent.

• Draw a salary or perform work for the company.

In simple terms, you can invest, but you cannot work for your own company unless you obtain the proper work authorization from MOM.

Key Roles in a Singapore Company

To better understand your limits as an EP holder, let’s look at the three main roles within a Singapore company — shareholder, director, and employee.

1. Shareholder — The Owner

A shareholder is someone who owns part (or all) of a company through shares.As an EP holder, you can:

• Incorporate a new company.

• Hold shares and enjoy dividend payouts.

• Vote on company matters during shareholder meetings.

However, you cannot sign contracts, represent the company, or be actively involved in its day-to-day running unless you are also a director or employee with proper authorization.

2. Director — The Decision Maker

Every Singapore company must have at least one local resident director. This can be a Singapore Citizen, Permanent Resident, or a valid work pass holder who is legally allowed to be a director.

If you want to act as a director while holding an EP, you must:

• Obtain MOM’s Letter of Consent (LOC).

• Have the approval of your existing employer if the new business is related to your current company (such as a subsidiary or affiliate).

Without this LOC, you cannot legally act as a director.

3. Employee — The Worker

To be involved in the company’s operations and receive a salary, you need a valid work pass tied to that company. You cannot use your existing EP for this purpose.

If you wish to run your startup full-time, you will need:

• A new EP sponsored by your company, or

• An EntrePass (for innovative startups), or

• A ONE Pass (for top-tier professionals who qualify).

Legal Pathways for EP Holders Who Want to Start a Business

Depending on your goals and situation, there are several legal routes for EP holders who want to build their own company in Singapore.

1. Become a Passive Investor

If you only want to own shares and receive dividends, you can simply register a company and act as a shareholder.

Steps:

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

• Appoint at least one local resident director.

• You remain a shareholder without any operational role.

This option is best if you are still working full-time for your employer and want to invest or co-own another company without getting directly involved.

2. Apply for a New Employment Pass Sponsored by Your Own Company

If you want to actively run your business, you can start by incorporating your company, then apply for a new Employment Pass (EP) under your own firm.

Your new company must:

• Have a clear business plan and operational readiness.

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

• Demonstrate commercial viability.

Once approved, you can legally work for and manage your own company under the new EP.

3. Apply for the EntrePass

The EntrePass is designed for foreign entrepreneurs who plan to start innovative and high-growth businesses in Singapore.

To qualify, you should meet one or more of these conditions:

• Your company is venture-backed or has funding from an accredited investor.

• You own intellectual property (IP).

• You have a proven track record in entrepreneurship, innovation, or technology.

EntrePass holders can incorporate and operate their business immediately and are not required to hire a local director. This pass is ideal for tech startups, innovation-driven companies, or those in cutting-edge industries.

4. Obtain the ONE Pass

The Overseas Networks & Expertise (ONE) Pass is a newer type of work visa for global talent who meet certain criteria.

It allows the holder to:

• Work for multiple companies at the same time.

• Start and operate their own business.

• Be free from being tied to a single employer.

To qualify, you generally need to earn at least S$30,000 per month or demonstrate exceptional professional achievements. The ONE Pass offers unmatched flexibility for entrepreneurs who want to manage several ventures concurrently.

5. Get a Letter of Consent (LOC) for a Related Company

In limited cases, an EP holder may take up a secondary directorship in a company that is related to their current employer (for example, a parent, subsidiary, or sister company with shared ownership).

Your current employer must apply to MOM for an LOC on your behalf. However, this option is not available for unrelated businesses or independent startups.

Step-by-Step: How to Start a Business as an EP Holder

Here’s a practical guide to help you get started.

Step 1: Define Your Role

Decide if you want to be:

• A passive investor, or

• An active founder involved in operations.

This decision determines whether you can keep your existing EP or need to apply for a new pass.

Step 2: Incorporate the Company

Engage a Corporate Service Provider (CSP) to incorporate your company with ACRA.Make sure you appoint at least one local resident director as required by law.

Step 3: Open a Business Bank Account

Prepare the necessary documentation:

• Company profile from ACRA.

• Constitution and board resolution.

• Proof of address and identification of directors and shareholders.

Step 4: Apply for the Appropriate Pass

If you intend to manage the business, apply for the pass that fits your profile:

• New EP (for standard business roles).

• EntrePass (for innovation-based businesses).

• ONE Pass (for high-level professionals).

Step 5: Obtain MOM’s Approval

If you plan to act as a director while still under your current employer, apply for MOM’s Letter of Consent (LOC) — provided the company is related.

Step 6: Stay Compliant

After incorporation:

• Maintain proper accounting and tax records.

• File your Annual Returns with ACRA.

• File your corporate income tax with IRAS.

• Register for GST if your revenue exceeds S$1 million per year.

Compliance Rules to Remember

• No moonlighting: You cannot work for any company other than the one stated on your EP without MOM’s approval.

• Get the right authorizations: If you intend to be a director or take on a second role, always obtain the necessary Letter of Consent first.

• Appoint a local director: Every company must have at least one Singapore resident director at all times.

• Separate your employment and investment roles: If you hold shares in a company, you must not perform any operational duties unless approved.

Common Mistakes EP Holders Make

1. Running their company without approval — Even if unpaid, any work done for your own business counts as employment.

2. Failing to get a Letter of Consent — You must have MOM’s approval to take on a director role.

3. Choosing the wrong pass — The EntrePass is only suitable for innovative startups, not general trading or service businesses.

4. Ignoring compliance — Every company must maintain records, hold AGMs if required, and file returns on time.

Frequently Asked Questions

Q: Can I register a company while still working on my EP?Yes. You can register and own a company as a shareholder. However, you cannot manage or work for it without the appropriate work pass or MOM approval.

Q: Can I be a director of my own company while employed elsewhere?Not unless you get a Letter of Consent (LOC), which is typically only granted for related companies.

Q: Can I be both a shareholder and a director?Yes, but only after obtaining MOM’s approval or a new work pass sponsored by your own company.

Q: What if I just invest and let someone else run the company?That’s allowed. You can own shares and appoint a local director to handle operations.

Q: Can I own multiple businesses while on an EP?Yes, as long as you are only a shareholder. If you intend to actively manage any of them, you’ll need appropriate work passes.

Summary of What’s Allowed

Role/Activity	Permitted?	Conditions
Own shares in a Singapore company	✅ Yes	Allowed under MOM rules
Be a company director	⚠️ With approval	Requires a Letter of Consent
Work for or manage your own company	❌ No	Not allowed under existing EP
Apply for a new EP under your startup	✅ Yes	Must meet EP criteria
Start and run a tech startup	✅ With EntrePass	For innovative businesses
Operate multiple ventures	✅ With ONE Pass	For eligible professionals

Conclusion

Yes, Employment Pass holders can start a business in Singapore — but it must be done within the limits set by the Ministry of Manpower.

You can own shares and incorporate a company, but you cannot manage or work for that company unless you have the appropriate work authorization.

To actively run your own business, you can:

1. Apply for a new EP under your company,

2. Apply for an EntrePass (for innovative startups), or

3. Qualify for the ONE Pass (for top professionals).

By following the correct procedures, you can build your entrepreneurial future in Singapore while staying compliant with MOM and ACRA regulations.