What is a Nominee Director? How do you appoint one in Singapore?
Last updated: March 2024
If you are a foreigner looking to start a business in Singapore, then this article is for you. Understanding how to start and manage a business in Singapore can be tough, especially if you’re from another country. As per Singapore regulations, you’ll need to appoint a nominee director to meet the country’s legal requirements. This guide will explain what a nominee director is, what they do, who can be one, how to appoint them, and the risks involved.
- What is a nominee director and does your company need one?
- What are the roles and responsibilities of a nominee director?
- What is the eligibility criteria for a nominee director?
- What is the process to appoint a nominee director?
- What are the risks of hiring a nominee director?
- Difference between nominee director and a company director
- How to replace or remove a nominee director?
- How can Sleek help you appoint a nominee director for your business
- Frequently Asked Questions
What is a nominee director and does your company need one?
Singapore’s Companies Act stipulates that all Singapore incorporated companies during the company registration process must have at least one local resident director on their company’s board at all times, including at the date of incorporation, for compliance purposes.
A local resident director is classified as a person who is physically residing in Singapore (validated by proof of a local residential address) and who has not been disqualified from holding a directorship role.
If the company’s beneficial owner or appointed directors are not Singapore residents, they may use a nominee director to fulfill this requirement.
The name ‘Nominee’ is used to indicate that the director role is strictly a non-executive role in companies. Their role is to provide a local presence for foreign-owned Singapore companies, aiding in compliance with local laws. It does not involve the Nominee Director taking any other forms of direct involvement and risks in the operation aspects of the business (i.e. single handedly authorising the incorporation, opening of a company bank account, voting or attending board meetings, etc). While nominee directors may offer advice, their main function is to represent the appointing party without holding shares or directorial responsibilities.
Hence, if you intend to set up a company in Singapore but cannot locate a resident director, you’ll require a nominee director to complete the incorporation process successfully.
How to register a company in Singapore
What are the roles and responsibilities of a nominee director?
The roles and responsibilities of a nominee director in Singapore typically include:
- Meeting legal requirements: The primary responsibility of a nominee director is to fulfill legal requirements stipulated by the Companies Act of Singapore, which mandates at least one resident director for all companies registered in Singapore.
- Compliance: Ensuring compliance with all relevant laws, regulations, and corporate governance standards applicable in Singapore, including filing of annual returns, maintaining statutory registers, and adherence to tax obligations.
- Fiduciary responsibility: The nominee director represents another person or entity on the company’s board, ensuring that the appointing party’s interests are upheld within the legal framework of Singapore.The person is also required to maintain confidentiality regarding company matters and sensitive information, ensuring that the appointing party’s interests are protected at all times.
Overall, the nominee director acts as a local representative to facilitate the smooth operation of the company within the regulatory framework of Singapore, ensuring that legal requirements are met and the interests of the appointing party are safeguarded.
What is the eligibility criteria for a nominee director?
In Singapore, at the time of the company incorporation the local ordinarily resident director role can only be held by someone who is a Singapore Citizen, Permanent Resident or a person who holds the Entrepass work visa.
An Employment Pass (EP) visa holder with local residential address can only be appointed as a director of a Singaporean company only after the new entity has been successfully incorporated and the corporate bank account has been opened.
The reason being that the company first has to come into existence before it can sponsor the EP visa individual. The directorship eligibility for an EP individual is also contingent upon the appropriate documents and approvals from the Ministry of Manpower, which typically involve the granting of a valid Letter of Consent (LOC) and if the EP individual is already a director of another Singapore company the approval for taking up a secondary directorship.
More Director Guidelines here from the Ministry of Manpower.
They must be at least 18 years of age and mentally competent to fulfill the duties and responsibilities of a director. Further, the nominee director should not have a history of bankruptcy, disqualification, or any criminal convictions that may disqualify them from holding a directorship position. She or he must be willing to act in the capacity of a nominee director and agree to represent the interests of the appointing party in accordance with the law, and should not have any conflicts of interest that may impair their ability to act in the best interests of the company or the appointing party.
How to set up a company as a foreigner in Singapore
What is the process to appoint a nominee director?
The process to appoint a nominee director in Singapore typically involves the following steps:
- Identify a Suitable Nominee: Choose an individual who meets the eligibility criteria to act as a nominee director. This person should be a resident of Singapore with a clean record and a clear understanding of the role.
- Agreement: Reach an agreement with the chosen nominee director regarding their appointment. This agreement should outline their responsibilities, remuneration (if any), and other relevant terms.
- Documentation: Prepare the necessary documentation to formalize the appointment. This may include a director’s consent form, an indemnity agreement, and any other required legal documents.
- Submission to ACRA: Submit the relevant forms and documents to the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. This typically involves filing the necessary forms online through ACRA’s BizFile+ portal.
- Payment of Fees: Pay any applicable fees for the appointment of the nominee director. These fees may vary depending on the service provider and the complexity of the appointment process.
Once the appointment is processed and approved by ACRA, the nominee director will be officially appointed to the company’s board. They can then begin fulfilling their duties and responsibilities as required by law.
Ensure ongoing compliance with all legal and regulatory requirements related to the appointment of the nominee director. This may include maintaining proper records, updating information with ACRA as necessary, and fulfilling any reporting obligations.
Need assistance with your company incorporation? Speak to our experts
What are the risks of hiring a nominee director?
Hiring a nominee director for your company in Singapore can have certain risks and considerations, including:
- Confidentiality Concerns: The nominee director may have access to sensitive company information, raising concerns about confidentiality and potential misuse of information. It’s important to establish clear confidentiality agreements and safeguards to protect your company’s interests.
- Legal Liability: Despite their role as a nominee director, they may still bear legal liability for the actions of the company. If the company engages in unlawful or improper activities, the nominee director could be held accountable, leading to potential legal consequences.
- Reputation Risk: If the nominee director’s reputation is tarnished or if they are involved in any controversies, it could reflect negatively on your company. This could impact your business relationships, credibility, and reputation in the market.
Choosing a capable and trustworthy nominee director who knows Singapore’s Companies Act, as well as local laws and regulations, is crucial to reduce these risks. Working with reputable and trustworthy nominees, establishing clear agreements and safeguards, and maintaining open communication can help mitigate these risks and ensure compliance with applicable laws and regulations.
Difference between nominee director and a company director
The primary difference between a nominee director and a company director lies in their roles, responsibilities, and the nature of their appointment:
Role and Responsibilities:
- Nominee Director: A nominee director is typically appointed to a company’s board to represent another person or entity, fulfilling legal and regulatory requirements. Their primary role is to provide a local presence and facilitate compliance with local laws and regulations. Nominee directors may not actively participate in the management or decision-making processes of the company.
- Company Director: A company director is appointed to the board to actively manage and oversee the affairs of the company. They have fiduciary duties to act in the best interests of the company, make strategic decisions, and ensure compliance with legal and regulatory obligations. Company directors play a direct role in the management, governance, and strategic direction of the company.
Appointment and Authority:
- Nominee Director: A nominee director is often appointed by an external party, such as a corporate services provider or a shareholder, to fulfill a specific purpose, such as meeting residency requirements or providing local representation. They may lack executive authority and decision-making powers over the company’s operations.
- Company Director: Company directors are typically appointed by shareholders or through the company’s constitution. They have legal authority and decision-making powers to manage the company’s affairs, enter into contracts, hire employees, and make strategic decisions. Company directors are responsible for the overall management and performance of the company.
In summary, while both nominee directors and company directors serve on the board of a company, their roles, appointment processes, authority, and responsibilities differ significantly.
Nominee directors are appointed to fulfill specific legal or regulatory requirements, while company directors actively manage and oversee the company's operations and strategic direction.
Looking for nominee director services. Speak to our experts.
How to replace or remove a nominee director?
When considering the replacement or removal of a nominee director, it’s important to note that a Singaporean company must always have at least one local or nominee director. If you’re in the process of replacing or removing a nominee director, you can adhere to the procedure outlined in the company’s constitution, shareholders agreement, and other legal documents. This process may entail submitting a resignation letter or filing a cessation notification.
To replace or remove a nominee director in Singapore, you typically follow these steps:
- Check Company Constitution: Review your company’s constitution (also known as the Articles of Association) to understand the process and requirements for appointing or removing directors.
- Hold Board Meeting: Convene a board meeting with the current directors to discuss the replacement or removal of the nominee director. Ensure that this meeting complies with any notice period and quorum requirements specified in the company’s constitution.
- Pass Resolution: During the board meeting, pass a resolution to appoint a new director or remove the existing nominee director. This resolution must be approved by a majority vote of the directors present at the meeting.
- Update ACRA Records: File the necessary changes with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. This may involve submitting relevant forms, such as the Notification of Change in Directors, within the stipulated timeframe.
When considering the replacement or removal of a nominee director in Singapore, it is essential to secure a suitable replacement before the current nominee director steps down or is removed. Failure to do so may lead to non-compliance with local laws and potential legal repercussions. Engaging professional nominee director services during this process can guarantee accurate execution in line with local laws and regulations.
Pre-incoporation checklist for Singapore company incorporation here
How can Sleek help you appoint a nominee director for your business?
To help our clients’ fulfill ACRA’s local director statutory compliance requirement and in accordance with Singapore law, Sleek offers Nominee Director Services for companies incorporating their business using our services.
Many foreigners, foreign entrepreneurs in Singapore, and business owners who do not have a Singapore Citizen, Permanent Residences or Entrepass Holders in the management or shareholders, will typically use our local Nominee Director services.
You have the flexibility to select the service duration that best fits your requirements, with options available for 3 months, 6 months, or 12 months. Alternatively, you can opt for a Sleek Accounting plan or provide a deposit of S$2,000, which is refundable upon replacing the Nominee Director.
Due to the associated liability and non-executive nature of the Nominee Local Director role, the terms of use for every company must include:
- Joint take up of our all-inclusive Corporate Secretary package
- Appointment of at least one other director (can be 100% foreign) who can make decisions and take responsibility for the entity
- Take up one of our accounting or tax packages or provision of a refundable S$2,000 security deposit.
Read our guide on how to start an offshore company in Singapore.
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Frequently asked questions
What is a nominee director, and why do I need one?
A nominee director is an individual appointed to represent a company, ensuring compliance with local laws. They are required for Singaporean companies to meet the legal mandate of having at least one local director.
What are the eligibility criteria for a nominee director?
Eligibility criteria for a nominee director typically include being a citizen or permanent resident of Singapore and having a local residential address.
How do I appoint a nominee director for my company?
To appoint a nominee director, you need to follow the procedures outlined in your company’s constitution, shareholders agreement, and other relevant legal documents. This may involve submitting a letter of appointment or filing a notification of appointment.
Can a nominee director be removed or replaced?
Yes, it’s possible to remove or replace a nominee director. The process typically involves following the procedures outlined in the company’s constitution and legal documents, such as submitting a letter of resignation or filing a notification of cessation.
What are the risks associated with hiring a nominee director?
Risks associated with hiring a nominee director may include potential conflicts of interest, lack of control over company affairs, and the nominee’s failure to fulfill their duties. It’s essential to carefully vet and select a reputable nominee director to mitigate these risks.
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