What is a Nominee Director?
The Singapore Companies Act mandates every registered company to have at least one director who is a local or citizen of the country. Such a director is known as “Nominee Director (ND)” or “local director”. The role of the Nominee Director comes in when a foreigner incorporates a company in Singapore and requires a local citizen who can act as a resident director of the newly incorporated company.
The Singapore government defines a local resident director as a person who is physically residing in Singapore and has not been disqualified from holding a directorship role. The nominee director does not engage in any operational roles in the company but is only hired for a fee to meet up and satisfy Singapore’s company regulatory requirement.
If you are a foreigner, you are probably thinking, “can I become a resident of Singapore and then appoint myself as a director to fulfill the regulatory requirement”. Yes, you can do that. All you need to do is apply for a work pass (an Entrepreneur Pass or an Employment Pass). After you acquire the work pass, you can become the director of your company. You are expected to relocate and establish a residence in Singapore. Therefore, it is highly advised that you apply for a work pass only if you plan to relocate to Singapore.
If you have no plans of living in Singapore, simply engage the services of a nominee director.
Does Your Company Need A Nominee Director?
You may wonder,” why do I need a nominee director for my company in Singapore”. Well, that’s a good question. The Singapore government wants to have someone to hold responsible in case the company violates any law, steals money from customers, or does not pay its tax. If there was no nominee director, a foreigner could simply abscond and abandon a company after breaking the rules and evading taxes. Hence, to prevent that from happening, the Singapore government has made the local director requirement compulsory. They assume that the person who acts as the nominee director will ensure that the company continually complies with the law.
According to Singapore’s Companies Act and its common laws, the nominee director and the regular director are required to perform the same duties and responsibilities. Directors are responsible for ensuring that the company’s statutory books are maintained correctly. Its regulatory filings are done promptly, accurate accounting records, and annual accounts are maintained. They are also responsible for ensuring that shareholders and directors’ meetings are conducted in accordance with the law, and their fiduciary obligation towards the company is carried out at all times.
How can you get a Nominee Director for your company?
Corporate services providers are hired to incorporate the company. They normally also offer nominee director services in Singapore. Secretarial firms such as HeySara provide these services to new and existing incorporated companies.
Is There Any Risk Associated with Hiring A Nominee Director for Your Company?
By law, there is no significant difference between the nominee director and the regular director. According to the Companies Act, the directors have the power to make decisions on behalf of the company, except the matter necessitates an ordinary or special resolution decided upon by a shareholder vote. In light of this, it is important to appoint a corporate company of repute to handle the affairs of the company. The corporate service provider will appoint a professional resident director and limit the powers of the director through a service agreement contract.
You will also be required to appoint at least one executive director who doesn’t necessarily have to be a resident of Singapore to manage the affairs of your company. Hence the nominee director is simply a figurehead director to comply with the local director requirement.
What Risks Does A Nominee Director Take?
A Nominee Director takes on significant risk. If the company or its other directors violates the law, the nominee director is held responsible by the Singapore authorities. Although the nominee director’s power is limited, his or her liability is not as any serious breaches of the law can result in the prosecution of the nominee director.
Using Our Nominee Director Service
If you are a foreigner, foreign entrepreneur, or business owner and don’t know anyone in Singapore who can be the director of your company, we will provide you with a professional, reliable and competent Singapore local director to be your nominee director. The following terms apply for our nominee director services;
- As required by Singapore law, we will perform due diligence check on the client in need of our services
- Your company will be required to use our annual company secretary, registered address, and tax filing services so that we can make sure the company performs all compliance activities correctly.
- You must implement our Nominee Director indemnity agreement. This protects you by ensuring the ND does not take any harmful actions to your company and protects the nominee director by confirming that the ND can’t be held responsible for the executive directors’ decisions.
- You must appoint at least one executive director who will be responsible for managing your company’s affairs. Our nominee director will not carry out any operational roles in your company.
- You must keep us adequately appraised of the activities of your business.
- You must ensure your company follows all relevant laws.
Most corporate service providers require you put down a security deposit. However, we do not require a security deposit, except if the client’s company has a heightened risk profile.
Our “Know Your Client” Process
We assume our clients are well-meaning, honest individuals, and we are keen to have them as our customers. However, just like every corporate service provider is required by the Singapore government in compliance with the international AML regulations, we carry out the know your client checks on our clients. We need at least the following information from major shareholders, ultimate beneficiaries, and directors;
- Verification of identification and address proof documents
- Professional background information
- Plans for the Singapore entity
If the company has a corporate shareholder, we will require verification of the shareholding company’s corporate profile. Use our nominee director services for your Singapore company today to fulfill your statutory compliance requirements.