Why Directorship Services are Imperative for Businesses in Singapore

With a stable political and economic climate and comprehensive fiscal policies, Singapore makes an attractive destination for aspiring entrepreneurs seeking company incorporation. But before you can get down to running a business, it is mandated that every locally incorporated company appoint at least one resident director on its board of directors at all times.

This can pose a challenge for foreign business owners who may not necessarily have immediate access to one. In such situations, nominee director services offers a simple solution to this hurdle. But what is a nominee director?

What is a Nominee Director?

A nominee director is an individual who assumes the role of a non-executive director on your behalf. These individuals are appointed to meet the requirements of having a resident director on the board of directors for company incorporation in Singapore. For this reason, a nominee director typically does not:

• Act as a bank signatory.
• Interfere with or participate in operational decision-making, voting or board meetings that impact the company.
• Act as a shareholder of the company.

This passive involvement of a nominee director is what distinguishes it from the active role of a “regular” or executive director, who assumes operational responsibilities and oversees the business’ day-to-day operations.

That said, like a company secretary, a nominee director still has a fundamental obligation to ensure the company maintains compliant with regulations by shouldering regulatory responsibilities, including:

• Upholding the accuracy and integrity of the company’s statutory records.
• Ensure timely completion of regulatory filings in accordance with legal requirements.
• Ensuring accurate accounting records and annual financial statements.
• Conduct meetings with shareholders and directors, such as the annual general meeting, in compliance with relevant laws and regulations.
• Perform their fiduciary duty to act in the best interests of the company in all official actions.

How to Appoint or Change a Nominee Director?

Selection and Appointment of Nominee Director

When engaging the services of a nominee director in Singapore, the chosen candidate must meet the following criteria:

• Be a natural person: This means that a company or business entity cannot be appointed as a nominee director.
• Be of a minimum age of 18
• A Singapore Citizen, Singapore Permanent Resident, or an EntrePass/Employment Pass holder.
• Possesses full legal capacity for directorship: This means that an individual should not lack the ability to make decisions due to impairment of their mental faculties or cognitive abilities.

Additionally, a nominee director should not:

• Be an unfit director in another business.
• Be an undischarged bankrupt.
• Be found guilty of any crime involving fraud or dishonesty that carries a punishment of imprisonment for a minimum of three months.
• Consistently fail to adhere to the requirements of the Companies Act regarding filing returns, accounts or other financial documentation with the Accounting and Corporate Regulatory Authority (ACRA).

After selecting a qualified candidate, your company will be required to enter into a director service agreement with the individual and disclose the nominee directorship to the company within 30 days from the company’s date of incorporation in Singapore. Precise information regarding the nominator should also be furnished for recording in the Register of Nominee Directors. These include:

• Full name;
• Alternative names, if any;
• Residential address;
• Nationality;
• NRIC number or passport number;
• Date of birth; and
• Date of assuming nominee directorship.

If the nominee director is nominated by a legal entity, additional information, such as the unique entity number (UEN) issued by ACRA and the legal structure of the legal entity, may be required.

Safeguarding the Company’s Interests

With a nominee director arrangement established, it is equally crucial to ensure that the interests of your company are safeguarded under this structure. This can be achieved by having a properly drafted service agreement signed by the nominee director to confirm their commitment to act as a proxy. Through these measures, you can protect your company and the nominee director and simplify the process of any future removal of the nominee director (who can be removed by the shareholders)

Replacement of Nominee Director

To replace and appoint a new nominee director, you must pass a directors or shareholder resolution and comply with the stipulations of keeping your Register updated by submitting a Notice of Change (NOC) detailing the change.

Find Nominee Directors that Deliver with Segovia

While having a general understanding of nominee directorship is helpful, navigating the intricacies of legal requirements of appointing a nominee director and company incorporation can be overwhelming. This is where turning to a professional corporate services firm like Segovia Financial Services can give you the peace of mind you need to move forward with your business.

With decades of experience in helping clients tackle the legal complexities of starting a company incorporation in Singapore, we’re well-positioned to make your dream a reality. From nominee director appointment to accounting and banking, we’re here to guide you every step of the way so you can focus on the more fulfilling aspects of growing your business.

So why not take the first step towards kickstarting a successful business by seeking the advice of a team committed to your success? Speak to us today to find out how our services can bring synergy to your operations.