Do I Need a Nominee Director For My Business in Singapore? And Who Can Be One. 

At Counto, we understand that establishing a robust foundation for your business in Singapore is paramount. A crucial part of this foundation involves appointing a nominee director, especially for foreign entities aiming to comply with local regulations while managing their operations remotely.

This detailed guide explains the role of a nominee director, their responsibilities, eligibility criteria, and the process of appointment to ensure your business thrives in Singapore’s dynamic market.

Understanding the Role of a Nominee Director

A nominee director (also known as a local or resident director) is appointed to fulfil statutory requirements rather than manage daily operations. In Singapore, having at least one resident director on the board is mandatory as per the Companies Act.

The nominee director primarily ensures regulatory compliance, representing the foreign entity locally without necessarily involving themselves in everyday business decisions.

Responsibilities of a Nominee Director

1. Compliance and Governance:

The nominee director ensures that your company adheres to Singapore’s legal standards and business practices. This includes:

• Filing annual returns and conducting annual general meetings.
• Maintaining up-to-date financial records.
• Ensuring that the company’s operations are in line with local laws and regulations.

2. Local Presence and Representation:

The nominee director provides a local presence which is essential for:

• Facilitating communications with local authorities and stakeholders.
• Establishing trust and a physical presence in the local market.

3. Fiduciary Duties:

Acting in the best interest of the company, the nominee director must:

• Safeguard the company’s integrity and compliance.
• Avoid conflicts of interest and ensure transparency in their dealings.

Eligibility Criteria for a Nominee Director

To ensure compliance and integrity, a nominee director must meet the following criteria:

• Residency: Must be a Singapore citizen or permanent resident to ensure accountability.
• Age: At least 18 years old to legally enter into contracts.
• Legal Standing: A clean criminal record and no history of bankruptcy or previous disqualifications from corporate roles.

How to Appoint a Nominee Director for My Company in Singapore? 

1. Choose a reliable individual or outsource to a professional nominee director service like Counto to find someone who aligns with your business ethics and can fulfil the statutory requirements effectively.
2. Draft and Execute a Service Agreement: Detail the terms of engagement in a Nominee Director Service Agreement, which outlines the scope of responsibilities, limits of authority, and the procedures for dispute resolution.
3. Document Collection and Verification: Compile necessary documentation such as proof of identity and residence. These documents need to be submitted to the Accounting and Corporate Regulatory Authority (ACRA) for verification.
4. Ongoing Compliance and Reporting: The nominee director will assist in fulfilling regulatory obligations, keeping the business compliant with local laws, and maintaining its good standing in Singapore.

Mitigating Risks

While a nominee director plays a critical role, the appointment comes with potential risks:

• Regulatory Risks: Non-compliance can lead to fines or penalties.
• Reputational Risks: Misconduct by the nominee director can damage the company’s reputation.
• Operational Risks: Inadequate oversight could impact business operations.

✅ Selecting a nominee director through a reputable provider like Counto ensures due diligence is performed, reducing these risks and ensuring that the director acts in the best interest of your business.

Replacing or Removing a Nominee Director in Singapore

A nominee director can be essential during the initial stages of your company’s development in Singapore—particularly during company incorporation and while awaiting the processing of Employment Passes for non-local directors. However, there may come a time when changing this appointment is necessary.

Replacing Nominee Directors:

Once a non-local director receives their Employment Pass, which usually takes about 6 months, they may replace the nominee director. This transition ensures that the company continues to comply with the requirement of having at least one locally resident director at all times.

To replace or remove a nominee director, refer to your company’s constitution, shareholders’ agreement, and other relevant legal documents. These documents typically outline the process, which may include:

• Submitting a letter of resignation.
• Filing a notification of cessation with the appropriate authorities.

Resignation of a Singapore Company Director:

In Singapore, the resignation of a company director must adhere to specific legal stipulations:

• A director can resign provided there remains at least one other director who is an ordinary resident of Singapore.
• The resignation procedure should follow the guidelines set out in the company’s memorandum and articles of association.
• The director must provide a written notice of their resignation, typically sent by registered mail to the company’s registered office. Following the resignation notice, it is mandatory for the company to:

☞ File a cessation of director with the Accounting and Corporate Regulatory Authority (ACRA) within 14 days.

☞ Ensure all filings are completed accurately through ACRA’s BizFile system.

Ensuring a Smooth Transition

Replacing or removing a nominee director involves more than just administrative changes; it reflects a strategic shift in your company’s governance structure. As such, it is essential to manage this process carefully to maintain compliance and uphold the integrity of your business operations in Singapore.

Common questions answered: 

1) Can my company have more than one director?

Your company may appoint multiple directors, but company registration with the Accounting and Corporate Regulatory Authority (ACRA) requires that at least one of them be a Singapore citizen or Permanent Resident.

2) Does the nominee director need to hold qualifying shares in my company?

No. You can own 100% of your company shares. Your nominee director does not need to hold any shares in your company to be recognised as a local director.

3) How do I appoint a nominee director for my company?

To appoint a nominee director, adhere to the protocols specified in your company’s constitution, shareholders’ agreement, and any applicable legal documents. This process typically requires submitting a letter of appointment or filing a notification of appointment.

4) What are the risks associated with hiring a nominee director?

Hiring a nominee director can pose risks such as potential conflicts of interest, diminished control over company affairs, and the director’s failure to meet their responsibilities. To minimise these risks, it is crucial to thoroughly vet and choose a reputable nominee director.

Using an incorporation service as an extension of your team

Setting up a company in Singapore can be challenging, but with professional support, it can be simple, Counto’s mission is to support your new business, take away the complexities of compliance, and save you time and money throughout the year. Speak to us directly on our chatbot, email us at [email protected], or contact us using this form.

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