Why we need to hire a nominee director in Singapore Private Limited Company?
The Singapore Companies Act requires foreigners who intend to set up a company in Singapore to appoint at least one local resident director. The director appointed must be a Singapore citizen or permanent resident, also known as PR.
However, if the foreigner is not a Singaporean or PR, the law requires him to appoint a nominee director who is a resident director so as to stay in compliant with the laws and authorities of Singapore. The nominee director will act in the capacity of the company’s director, which may or may not represent the interests of the people that appointed him. More importantly, it is to meet the statutory requirement of having at least one local resident director in the Singapore Company.
A local resident director can be anyone, even a business partner of the company. However if the foreigner is not able to find a reliable local Singapore partner, he/she can engage the services of a professional filing agent firm to provide with a local resident director. Most accounting and company secretarial firms such as J Accounting Pte Ltd can provide the foreigner with services of a nominee director. A nominee director cannot be a firm or a legal entity. It must be a natural human. A Singaporean local resident nominee director has the same fiduciary duties and responsibilities as those of a regular director as stipulated in the Singapore Companies’ Act.
Nominee director roles and responsibilities in a Company
The Singapore Companies Act outlines the guidelines for the registration of company by foreign owners or foreigners. The Act stipulates that at least one director of the company has to be a Singaporean or Singapore PR. If not, statutory requirement is not met and a Singapore private limited company cannot be formed. There are no two ways about this. The company must appoint a minimum of one local Singapore citizen to be the local director. This appointed director must be an ordinary resident of Singapore.
By appointing a nominee resident, the foreigner is able to meet the residency statutory requirements laid out in the Singapore Company Act. Since the nominee director is a Singapore citizen or resident, he has full jurisdiction to meet residency requirement on behalf of the company that he is representing.
In terms of liabilities and responsibilities, the nominee director has the same roles and responsibilities as though he is a real director of the company. That means for example if the company is not in compliant in any way, the nominee director still has a duty of care and is responsible for its non-compliance too. If the company is fined or gets into any trouble, the nominee director will be implicated as well. These are some of the risk being a nominee director.
What nominee director do and not do?
A nominee director has great logistical benefits to the company. For example, he or she can represent the company during the bank account opening process for incorporation purposes since a director must be physically present during this process. This can save the investors money and time since not all the directors need to travel from their home countries to be there physically.
The nominee director can complete all the other legal requirements. This includes things such as tax filing, acquiring the proper licenses etc. A nominee director also has powers to register the company with various governmental organizations, represent the interests of the company and so on. This can end up saving the investors considerable amounts of money. However more often than not, most nominee director will not be involve in the operations of the company. They exist only because it’s required statutorily by law to comply with the authorities.
A nominee director of company is risky to a certain extent due to various potential issues that may arise. As such, nominee director services does not come cheap. It has to be compensated with the risks involved. Depending whether a company is low or high risk, simple or complicated, history of compliance or not in compliance, all these will result in different service fees involved. If you require nominee director services in your company for some reason, send J Accounting an email at Sales@J-AccountingServices.com for help and support.
