Singapore Company Director- All You Need To Know
Last updated: March 2024
In Singapore, serving as a company director comes with a range of responsibilities and duties that must be fulfilled diligently to ensure legal compliance and effective corporate governance. Understanding these responsibilities is essential for anyone considering or currently holding a directorial position, or starting a company in Singapore.
In this comprehensive guide, we delve into the various responsibilities and obligations that Singapore company directors must adhere to, and provide insights into the legal framework, key duties, and best practices to perform the role successfully.
What does a company director do in Singapore?
A director is responsible for managing the affairs of a company and steering the direction of the company on major issues. A director can be an employee of the company but doesn’t have to be. A director has several key obligations to the company – we’ll cover these below. If you are a director, you act for the company, and the company is bound by your actions.
How many company directors do I need?
Singapore requires a minimum of one “locally resident” director. This can be a Singaporean citizen, permanent resident, or once a company is incorporated, then an individual can be sponsored to act as a local director on an Employment Pass work visa. Many overseas companies who want to set up a base in Singapore but do not have anyone locally resident opt for a nominee director, who stands in as the locally resident director but will not act or interfere with any of the company’s operations.
Who can be a company director in Singapore?
In order to be a director in Singapore, you need to be:
- Over 18 years old
- A natural person (that is, a business entity or a business can’t be a director)
- Of sound mind
- If required by the constitution to hold a specified share qualification and who is not already qualified, shall obtain his qualification within 2 months after his appointment or such shorter period as is fixed by the constitution
You cannot be a director if you are:
- An unfit director from another company
- An undischarged bankrupt
- A person involved in offenses such as dishonesty or fraud that is punishable with imprisonment of 3 months or more either in Singapore or elsewhere.
- A director of a company that was wound up due to interest or national security.
- A person convicted of any offense under Part XII of the Securities and Futures Act (Cap. 289), where the conviction was on or after 1 July 2015
- A person subject to the imposition of a civil penalty under section 232 of the Securities and Futures Act on or after 1 July 2015
- A person where a disqualification order was made against the person in addition to any other sentence imposed
Can foreigners / non-locals be company directors?
As long as you have at least one locally resident director, you can have foreigners/non-locals as other directors of the company. At present, Dependent Pass holders are allowed to be listed as a Director of a company from the point of incorporation. Work however should not be carried out until the Letter Of Consent (LOC) has been approved by MOM.
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Duties and responsibilities of Singapore company directors
In Singapore, company directors have statutory duties outlined in the Companies Act. These duties include:
To avoid conflict of interest
A director needs to separate his personal interests from that of the company. This means that he or she must declare if they have an interest in any proposed transactions of the company. This includes things like declaring where a subcontractor is a family member of the director, or if a company has a partnership with another business in which the director has a minor shareholding.
To act in good faith in the interests of the company
A director is expected to serve honestly in his or her actions, and third party and personal interests should not play a part in the director’s decision-making process about that company.
You should also ensure you are keeping in line with the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) and their Tripartite Guidelines on Fair Employment Practices, which will soon be made into law. The guidelines encourage employers to recruit and select employees on the basis of merit, without regard to race, age, gender, religion, marital status and family responsibilities, or disability, among others.
To behave with due care, skill and diligence
Directors should manage their companies with reasonable care, skill and diligence while undertaking their responsibilities. Most of the time the actual skills and experience that the director has are used as a yardstick in determining the standards that are expected of him.
To work in the interest of the company
The director should not misuse his power or information he has on the company. The powers directors have should be directed to the interest of the company. An example of a common misuse of power is that of issuing shares that is commonly done with the intention of raising capital. A director would be misusing his powers if he or she did something like issuing shares to dilute a member’s shareholdings or to preserve control of the board.
Comply with the requirements of the Companies Act
As a caretaker or guardian of the company, all directors also have a responsibility to meet the statutory requirements under the Companies Act.
This includes, among other things:
- Maintaining Proper Accounting Records: Directors must ensure that the company maintains accurate and up-to-date accounting records that fairly reflect its financial position.
- Preparing Financial Statements: Directors must ensure that the company’s financial statements comply with accounting standards and give a true and fair view of the company’s financial position and performance.
- Holding Annual General Meetings: Directors must convene and hold annual general meetings within the prescribed time frames and ensure that shareholders receive necessary information and reports.
- Filing Annual Returns and Other Documents: Directors must ensure that the company files annual returns and other required documents with the Accounting and Corporate Regulatory Authority (ACRA) within the stipulated deadlines.
What decision making powers does the company director have?
It’s important for directors to understand their authority and obligations regarding decision-making and to seek shareholder approval when necessary, especially for significant matters that affect the company’s direction and financial position.
Here is a breakdown of decisions that directors can make themselves and those that require a shareholder vote:
Decisions Directors Can Make Themselves:
- Setting strategic objectives and long-term goals for the company.
- Making day-to-day operational decisions necessary for the company’s operations.
- Managing the company’s finances, including budgeting and financial planning.
- Appointing and removing officers of the company, such as executives and managers.
- Representing the company in legal matters and signing legal documents on its behalf.
- Entering into contracts and agreements on behalf of the company, subject to any limits set by the company’s constitution or shareholders’ agreements.
- Making decisions regarding corporate governance and compliance with relevant laws and regulations.
- Making decisions on matters not specifically reserved for shareholder approval.
Decisions Requiring Shareholder Vote:
- Amending the company’s constitution or articles of association.
- Approving significant transactions, such as mergers, acquisitions, or disposals of assets, that exceed certain thresholds set by law or the company’s constitution.
- Electing or removing directors, unless it’s done as part of a regular rotation or board refreshment process.
- Declaring dividends to shareholders.
- Approving changes to the company’s capital structure, such as issuing new shares or buying back existing shares.
- Approving significant changes to the company’s business, such as a change in its core activities or business model.
- Making decisions on matters specifically reserved for shareholder approval under the law or the company’s constitution.
How to register a company in Singapore
How to appoint a company director?
You typically become a director either at the point of incorporation or after the company has been formed. Your company secretary will prepare the director’s consent form for you to sign (and the other directors in the company to sign the board resolution approving your appointment), which is then filed with ACRA. Your company secretary will then update the company’s registers with your details.
Resigning as a company director
In order to resign as a director, you first need to ensure that there is another locally resident director, so that you meet your obligations under the Companies Act. If that’s all ok, then your next step is to alert your company secretary, who will prepare your resignation letter and a resolution for all the other directors to sign and file the changes with ACRA. After that change is filed, your company secretary will update all the necessary registers.
How to appoint a company director?
To remove a company director, first review the company’s Articles of Association to understand the removal procedure. If permitted, convene a board meeting to discuss and vote on the removal, passing a resolution with a majority vote. Notify the director in writing of the decision and reasons for their removal. Update company records and file necessary forms with authorities like ACRA in Singapore to ensure compliance. Finally, update legal documents like the register of directors to reflect the director’s removal.
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Frequently asked questions
How many directors does a Singapore company need?
A private limited company in Singapore must have at least one director who is ordinarily a resident of Singapore.
Can a foreigner be a director of a Singapore company?
Yes, a foreigner can be a director of a Singapore company. However, at least one director must be a resident of Singapore.
What are the responsibilities of a director in a Singapore company?
Directors have various responsibilities including ensuring compliance with the law, maintaining accurate financial records, convening annual general meetings, and acting in the best interest of the company.
Can a director be held personally liable for the company's debts?
Directors of a private limited company enjoy limited liability, meaning their personal assets are generally protected from the company’s debts.
How can a director resign from a Singapore company?
A director can resign by submitting a resignation letter to the company and updating the relevant authorities. The resignation takes effect upon acceptance by the company or at a specified future date mentioned in the resignation letter.
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