For foreign entrepreneurs aiming to set up a business in Singapore, understanding the role and function of a nominee director is vital. This guide covers what a nominee director is, their responsibilities, and how Singbac can assist you throughout the process.
What Is a Nominee Director and Why Does Your Singapore Company Need One?
A nominee director is a non-executive director appointed to meet the legal requirement of having at least one resident director in Singapore. This role ensures regulatory compliance without involving day-to-day business operations.
Key Points:
- Legal Requirement: Singaporean law mandates that companies must have at least one resident director, who can be a Singapore citizen, Permanent Resident, or Employment Pass (EP) holder.
- Role: Nominee directors primarily fulfill statutory obligations and do not engage in business management.
Roles and Responsibilities of a Nominee Director
Responsibilities:
- Act in Good Faith: Ensure that actions are in the company’s best interests.
- Avoid Conflicts of Interest: Maintain impartiality and disclose any potential conflicts.
- Basic Administrative Duties: Includes signing routine notices and approving annual accounts.
- Annual General Meetings: May need to convene or execute annual returns if requested.
Exclusions:
- Office Presence: Not required to attend the office or participate in negotiations.
- Internal Meetings: Does not engage in internal company meetings or make business decisions.
Difference Between Regular and Nominee Directors
Aspect | Regular Director | Nominee Director |
Role | Actively manages and makes business decisions. | Non-executive, fulfills statutory requirements only. |
Authority | Has decision-making authority and managerial roles. | No authority in business operations or decision-making. |
Involvement | Directly involved in company management. | Primarily for compliance, not involved in management. |
Requirements to Become a Nominee Director in Singapore
To be eligible as a nominee director, one must:
- Be a Singapore Citizen, Permanent Resident
- Be at least 18 years old
Disqualifications Include:
- Undischarged Bankruptcy: Must not be legally bankrupt.
- Criminal Convictions: No serious criminal convictions or repeated ACRA filing offenses.
Singbac ensures that all nominee directors meet these criteria, providing dependable compliance support.
Steps to Appoint a Nominee Director
- Find a Suitable Candidate:
- Can be a personal contact, a trusted business associate, or a candidate provided by a corporate service provider. SINGBAC can assist you with this process.
- Conduct thorough background checks to ensure reliability.
- Draft a Service Agreement:
- Outline the nominee director’s duties, conditions, responsibilities, and limitations.
- The agreement should clarify that the role is non-executive and specify the director’s lack of authority in business operations. SINGBAC can assist you with this process.
- Complete Verification with Your Appointed Corporate Secretarial Provider
- Submit required paperwork and personal identification details to ACRA for verification.
Risks of Appointing a Nominee Director and How to Reduce Them
Risk | Description | How to Reduce Risk |
Legal and Regulatory Risks | Breach of laws or regulations can result in penalties or legal action. | Ensure compliance with all legal requirements and conduct regular audits. |
Financial Risks | Potential financial losses if the nominee director fails to perform duties. | Draft a detailed service agreement and regularly monitor the nominee’s activities. |
Reputational Risks | Damage to the company’s reputation due to the nominee director’s actions. | Choose a reputable nominee director and ensure proper due diligence. |
Maximize Your Business Success in Singapore with Singbac
Appointing a nominee director is crucial for ensuring legal compliance and focusing on business expansion. Singbac offers expert services to guide you through the appointment process, minimizing risks and ensuring efficiency. Contact Singbac to streamline your company setup in Singapore!
