Responsibilities of a Singapore company director

5 minute read

This article outlines what it means to be a director of a company in Singapore. Who is eligible, what are your responsibilities and duties, how are you appointed, and how can you exit the company? All these and more are answered below.

Overview:

What does a director do?

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 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 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 offence 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

Foreigners / non-locals as 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, Dependant 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.

Duties and responsibilities of Singapore company directors

To avoid conflicts of interests

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 use his powers for the right purpose

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.

Meeting 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:

  • having an AGM and filing annual returns
  • keeping statutory registers such as a directors’ register, a register of members, and a register of charges, and reporting any changes to ACRA, and
  • maintaining a local registered business address

Usually, the directors of a company work in concert with their company secretary to ensure that the directors understand and meet all the filing requirements. This also means that where a director does not fulfil these requirements, they are liable to face penalties.

Becoming a 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 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.

Next steps

If you need help to meet your statutory requirements of a resident director, we provide a Singapore nominee director service. Contact us to find out more.

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