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what is a Singapore nominee director

What is A Singapore Nominee Director? 

To establish a company in Singapore, it is mandatory to appoint a local Singapore resident director. A local resident director refers to an individual residing in Singapore, who can be…

To establish a company in Singapore, it is mandatory to appoint a local Singapore resident director. A local resident director refers to an individual residing in Singapore, who can be either a Singapore citizen, Permanent Resident, or Employment Pass holder. Additionally, he or she must have a local residential address. 

Why does a Singapore Company require a Nominee Director? 

Foreign entrepreneurs embarking on company incorporation in Singapore may initially lack Singapore citizens, permanent residents, or EP holders in their management team. Fortunately, they have the option to engage nominee director service. It is provided by corporate service providers like Aura Partners Singapore.  

This service is legally regulated under Section IXA of Singapore’s Companies Act. The term “nominee” indicates that the director’s role is non-executive and primarily serves the purpose of meeting legal and regulatory requirements in Singapore. 

Despite their non-executive status, nominee directors are still obligated to fulfill their general duties. This ensures compliance of the companies they are associated with under Singapore laws. 

Nominee directors bear both responsibility and legal liability for potential risks. Corporate service providers mitigate this liability by acquiring appropriate insurances such as Directors & Officers Insurance Obligations or implementing a Deed of Indemnity. 

What are the responsibilities of a Nominee Director? 

The primary role and duties of a nominee director are as follows: 

  • Acting in good faith and in the best interest of the company they represent. 
  • Avoiding any conflicts of interest between their personal interests and the interests of the company. 
  • Providing their signature on routine notices as required. 
  • Approving the annual audited accounts of the company. 
  • Convening an annual general meeting in accordance with legal requirements. 
  • Executing the annual return if requested to do so. 

Meanwhile, a Singapore Nominee Director are NOT authorized to

  • Interfere with or make any business decisions on behalf of the company. 
  • Be required to physically attend the company’s office or be present during negotiations. 
  • Have any decision-making authority or influence over internal company meetings. 

The Principal Company (hiring company) and Nominee Director mutually acknowledge that the services provided by the Nominee Director are carried out in a nominee capacity. The Nominee Director does not possess any executive authority or commercial responsibilities. 

Occasionally, a Nominee Director may request read-only access to the client’s corporate bank account. This access is solely sought to fulfill their fiduciary obligations and regular accounting and tax filing duties. However, the Principal Company retains the discretion to approve or deny this request. This does not include concerns about penalties from ACRA or any government agency. 

Regular Director vs Nominee Director 

For a detailed comparison between a Nominee Director and a regular Director, please see the table provided below:

Singapore-incorporated companies are required to have at least one resident director who is a Singapore citizen, Permanent Resident, or Employment Pass holder. However, foreign companies that do not have access to a resident director can engage the services of a nominee director provided by corporate service providers. 

The appointment of a nominee director by foreign and new companies is done in order to comply with regulatory requirements. Both a nominee director and a regular director (who can be a member of the board or someone fulfilling the role of a company director) share the same obligations and responsibilities as per the Common Law and Companies Act. 

The Board of Directors holds the authority and powers to manage company affairs and is accountable to the company shareholders. In contrast, a nominee director does not possess executive power or authority to operate the company or make decisions on its behalf. Professional services for nominee directors also include a separate “Nominee Director Arrangement”. It outlines the rights and responsibilities of both the nominee director and the client. Moreover, it ensures the protection of their respective interests. 

Qualifications of a Nominee Director in Singapore 

Nominee directors are engaged to fulfill the statutory compliance requirements for company incorporation in Singapore. One of these requirements is to have at least one director who is a resident of Singapore. 

Therefore, a nominee director must meet the following criteria: 

  • A Singapore citizen, Permanent Resident, or Employment Pass holder with a permanent address in Singapore 
  • At least 18 years old 

According to the provisions of the Singapore Companies Act, a nominee director must NOT be: 

  • Currently an undischarged bankrupt, indicating they are legally declared bankrupt and obligated to repay specific debts, with restrictions on borrowing from financial institutions 
  • Convicted of an offense involving fraud or dishonesty carrying a prison term exceeding three months 
  • Convicted by a court of law for three or more ACRA filing offenses 
  • Associated with three or more companies that have been struck off by ACRA within a span of five years 
  • Disqualified from involvement in the winding up of companies due to national security or interest concerns 
  • Disqualified as unfit directors of insolvent companies 
  • Disqualified for failing to comply with the obligation to submit required returns 

Conclusion :- 

A foreign company intends to register company in Singapore, they need to appoint minimum one local resident director in Singwapore. In such case, when foreign company does not have any local staff to act as a Singapore resident director, they have the option to engage a Nominee Director to fulfill this requirement. 

Why Should You Hire a Nominee Director Service in Singapore?  

Engaging a nominee director independently, without the assistance of a corporate service provider, entails significant risks. One potential risk is that the nominee director may misuse the powers entrusted to them, potentially attempting to gain control over shares or even the entire business. Therefore, it is crucial to clearly outline the limitations of their authority and influence as a nominee director in a written contract. 

To ensure convenience and mitigate risks, it is advisable to collaborate with a nominee director service in Singapore. Many corporate service providers, like Aura Partners Singapore  offers nominee director services as part of its company registration package. This eliminates the need to engage another provider. It is important to note that the primary role of a nominee director is to ensure that your company complies with statutory requirements throughout the incorporation and year-end filing processes. 

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