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Nominee Director in Singapore: How to Appoint, Roles & Responsibilities Explained

A Nominee Director in Singapore is a foreign director who can be hired if the resident director is not available in Singapore. Let's understand the roles and responsibilities which are executed by the nominee director in Singapore company.

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    Nominee Director in Singapore: Complete Guide

    Are you in search of appointing a nominee director in Singapore?
    Well, a foreigner cannot operate an enterprise in Singapore when his firm is not registered with no directors who are native citizens of Singapore.

     

    need for nominee director in singapore

    A nominee director can be an effective way for foreign companies to register your company in Singapore, but they must be Singapore residents in accordance with Singapore’s Companies Act.

    Eventually, the director nominee in Singapore will not have any involvement in running your company which means that he/she is appointed to only ensure compliance and meet Singapore’s regulations.

    In this article, we will explore the role and responsibilities of a nominee director in Singapore, the risks involved in appointing one, and how foreign companies can protect themselves.

    What is a Nominee Director?

    A nominee director is a person from a third party who represents your company without an executive director in the local area to carry out the corporate obligations in Singapore.

    The word “Nominee” means that the director’s designation is not a position of executive power and is only to fulfill Singapore’s regulations and legal requirements. This means that the director’s role does not mean that they have direct charge of the company’s operations.

    The main purpose of a nominee director is to provide a local presence for a company that is incorporated in a foreign jurisdiction. 

    For example, if a foreign company wants to set up a business in Singapore, it may be required to appoint a Singaporean nominee director who will act as the local representative of the company.

    It is important to note that while the nominee director may be responsible for fulfilling certain statutory obligations, they do not have any real control over the company’s management or decision-making processes.

    Need for a Nominee Director in Singapore

    Singapore requires a local nominee director as part of its company incorporation process for foreign individuals or entities looking to set up a business in Singapore

    Here are some reasons why your company needs a nominee director in Singapore:

    Comply with local laws

    As mentioned, every Singapore firm should possess at minimum 1 regional director. Regulatory and legal impacts can occur if you fail to meet the compliance.

    Establish a local presence

    Having a nominee director who is familiar with the local business landscape can help your company establish a local presence and build relationships with local stakeholders.

    Access to local expertise 

    A nominee director can provide valuable insight into the local market, culture, and regulations, helping your company navigate these unfamiliar territories.

    Protect your privacy

    By appointing a nominee director, your company can maintain confidentiality and privacy, as the nominee director’s name will appear on public records rather than your own.

    Flexibility in managing your company

    The nominee director can hold shares in the company on behalf of the foreign owner, giving the owner flexibility in managing the company without being physically present in Singapore.

    Overall, appointing a nominee director can help your company navigate the legal and regulatory landscape in Singapore, establish a local presence, and access valuable local expertise.

    Procedure to Appoint a nominee director in Singapore

    procedure to appoint a nominee director in singapore

    Here is a step-by-step guide on how to appoint a nominee director in Singapore:

    Step 1:- Identify a suitable nominee director 

    You can either appoint a trusted individual as your nominee director or engage a professional service provider who specializes in providing nominee director services.

    Step 2:- Execute a Nominee Director Service Agreement

    Once you have identified a nominee director, you will need to execute a Nominee Director Service Agreement, which outlines the terms and conditions of the appointment, including the nominee director’s duties, responsibilities, and liabilities.

    Step 3:- Obtain the necessary documents

    You will need to provide the nominee director with the necessary documents to facilitate the appointment, including a copy of your company’s Memorandum and Articles of Association, and any relevant corporate documents such as board resolutions and incorporation certificates.

    Step 4:- Apply for the appointment of nominee director

    You can apply for the appointment of a nominee director by submitting the necessary documents to the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. 

    Step 5:- Verify the identity of the nominee director

    As part of the appointment process, the nominee director will need to provide proof of their identity and residential address, which will be verified by ACRA.

    Step 6:- Notify the nominee director

    Once the appointment has been approved by ACRA, you will need to notify the nominee director and provide them with the necessary information to facilitate their role as a director of the company.

    Step 7:- Fulfill statutory obligations

    The nominee director will be responsible for fulfilling certain statutory obligations, such as filing annual returns, holding annual general meetings, and maintaining proper accounting records.

    Under Singapore laws, Odint consultancy will perform a KYC due diligence test of the prospective client before the start of our services.

    Eligibility Criteria for Appointing a Nominee Director

    eligibility criteria for appointing a nominee director

    In Singapore, there are certain eligibility criteria that should be met in order to appoint a nominee director. Here are the main requirements:

    Should be a Singapore citizen or permanent resident

    The nominee director should possess a local residence in Singapore and hold either citizenship or permanent residency.

    Should not possess a criminal record

    The nominee director should possess a clean criminal record and not be disqualified from holding any directorship positions.

    Should possess a regional residential address

    The nominee director should possess a regional residential address in Singapore, as this is mandated for official correspondence.

    Should be of 18+ years old

    The nominee director should be of 18 years old to be qualified for the position.

    Should possess relevant experience and knowledge

    The nominee director should have relevant business experience and knowledge of local regulations, as they will be responsible for ensuring that the company complies with all relevant laws.

    Odint Consulting will take care of all the due diligence to make sure all the criteria are met for the ideal nominee director in Singapore.

    Roles & Responsibility of Singapore’s nominee director

    The roles and responsibilities of a nominee director in Singapore include:

    Compliance with local laws and regulations

    The nominee director is responsible for ensuring that the firm operates in compliance with local laws and regulations. This includes filing annual returns, holding annual general meetings, and maintaining proper accounting records.

    Providing a local address

    The nominee director provides a local address for the company, which is required by law.

    Representing the company

    The nominee director represents the company in Singapore and may be required to sign documents on behalf of the company.

    Maintaining proper records

    The nominee director is responsible for maintaining proper records of the company’s transactions and ensuring that these records are kept up to date.

    Acting in the best interests of the company

    The nominee director has a fiduciary responsibility to operate in the finest goods of the firm and its shareholders.

    Disclosing conflicts of interest

    If the nominee director has a conflict of interest, they must disclose it to the board of directors and abstain from any decision-making relating to that conflict.

    Reporting to the board of directors

    The nominee director is required to report to the board of directors on the company’s operations and financial performance.

    Liability for breach of duties: The nominee director can be held liable for breach of their duties as a director, including breaches of fiduciary duty, negligence, or fraud.

    Risks of appointing a nominee director in Singapore

    risks of appointing a nominee director in singapore

    While appointing a nominee director in Singapore can be an effective way for foreign companies to establish a local presence and comply with local laws and regulations, there are some risks involved. 

    Some of the potential risks of appointing a nominee director in Singapore include:

    Legal and regulatory risks

    The nominee director is responsible for ensuring that the company operates in compliance with local laws and regulations. If the company violates any laws or regulations, the nominee director may face legal and regulatory risks, including fines, penalties, or even imprisonment.

    Reputational risks 

    If the company is involved in any unethical or illegal activities, the nominee director’s reputation may be affected, and they may face damage to their professional standing.

    Financial risks

    The nominee director may be held personally liable for any financial losses suffered by the company as a result of their negligence or breach of duty.

    Conflict of interest risks

    If the nominee director has a conflict of interest, such as having a personal or financial interest in a decision made by the company, they may face legal and reputational risks if they fail to disclose it.

    Difficulty in managing relationships

    In some cases, the relationship between the nominee director and the foreign company may become strained, particularly if there are disagreements over management decisions or issues relating to corporate governance.

    It is important for foreign companies to carefully vet potential nominee directors and ensure that they have the necessary expertise and experience to fulfill their roles and responsibilities effectively.

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      Difference between Nominee Director & Regular Director

      For a comparison of a Nominee Director to a director, see the table below:

      Comparison Table between Regular Director and Nominee director Nominee Director Regular Director
      Responsible for managing the company's affairs? No Yes
      Comply with the legal obligations imposed by the Companies Act on Directors Yes Yes
      Do you want to sign as a bank signatory? No Yes
      Access to bank statements and financial records? No Yes
      Does the company have a fiduciary responsibility? Yes Yes
      Are you a shareholder or owner of shares? No Yes

      Singapore residents must have at minimum one resident director for companies that are registered here. This can be a Singapore citizen, Permanent Resident, or Employment pass holder. 

      A Nominee Director & a formal director (who can both be part of the board or play a role as a company director) share the same obligations and responsibilities as the former under the Companies Act and Common Law.

      The Board of Directors have the power to control the company and is answerable to its shareholders. The nominee director does not have any executive authority or say in the management of the company. 

      Professionally managed Nominee Director’s services include a separate “Nominee Director Arrangement”, which outlines the rights and responsibilities of the Nominee and Client to protect their interests.

      What Makes a Nominee Director Different from a Nominee Shareholder? ​

      A nominee director acts on behalf of the company owner as a director. A nominee shareholder is a person that “lends their names” to you to allow you to become the registered owner of shares in a company. A nominee shareholder holds shares only for your benefit.

      Nominated shareholders are appointed by companies to act as the shareowner. The arrangement remains secret. You retain all rights associated with holding shares. These include the right to vote at general meetings and to receive dividends.

      It is possible for the nominee director to be the same person as the nominee shareholder. Let’s say that a nominee shareholder must be another person. These people are often close friends or relatives of the business owner, as well as other professionals such as accountants or lawyers.

      Singapore does not have any laws against shareholder agreements with nominees as long as the following:

      • Legal reasons prompted the arrangement.
      • Public agencies such as the Accounting and Corporate Regulatory Authority of Singapore and the Inland Revenue Authority of Singapore (IRAS), record the identity and existence of beneficial owners (you and/or the business owner).

      Are You able to replace the Nominee Director of your Company in Singapore?

      Yes, you can. You can’t operate your business in Singapore without one. It is essential that you have at least one local director and one nominee director.

      If you are unhappy with the current nominee director, you have the option to:

      • Odint Consulting offers to hire a second nominee director
      • You will need to find a Singapore citizen, PR, EP, or EP holder who can act as your resident Director.

      Although you can act as sole director, an EP must be obtained for your company. You might also be able to get assistance from CSPs regarding immigration. The employment pass allows you to hire yourself as a director for the company you have incorporated in Singapore. 

      Once you are approved, your move and relocation to Singapore will be permitted. You will be considered a local-resident Director, which means that your company won’t require the services of a nominee director.

      However, the process of obtaining an Employment Pass may take several months. Your company will still need to meet with a nominee director to fulfill incorporation requirements in Singapore until the EP is available to you.

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        Conclusion

        As Singapore continues to attract entrepreneurs and corporations from around the world, the role of nominee directors will remain essential in facilitating international business transactions and promoting economic growth. 

        By understanding the responsibilities and obligations of a nominee director, foreign entities can successfully navigate the complexities of setting up a business in Singapore and thrive in one of the most dynamic and prosperous business environments in the world.

        However, the role of a nominee director should not be taken lightly, that’s why it is advisable to seek the assistance of professional experts from Odint Consultancy to help you appoint a nominee director in Singapore.

        FAQ’s

        Foreign companies appoint nominee directors in Singapore to comply with the local law that requires every Singapore company to possess a minimum of 1 regional director.

        Companies are often forced to replace their Nominee Director because they are no longer cooperative with clients or not accessible. We as corporate service providers must communicate clearly with our clients and explain to them the responsibilities and scopes of nominee directors.

        The nominee director won’t visit your office, can’t take part in any policy meetings and will not engage with the company in negotiations. This nominee director is a figurehead appointed to meet Singapore’s requirements.

        Nominee directors will be hired to comply with Singapore law. They must be 18+ citizens or permanent residents of Singapore with a permanent Singapore address.

        A nominee director to a JV Company Board will need to exercise independent judgment and not only take into consideration the views and interests of his shareholder.

        Yes, a nominee director can be held liable for the actions of the foreign company if they are found to have acted negligently, breached their fiduciary duties, or engaged in fraudulent activities.

        Foreign companies can protect themselves when appointing a nominee director in Singapore by conducting thorough due diligence, ensuring that the nominee director has the necessary experience and expertise, having appropriate insurance coverage, and regularly reviewing the nominee director’s performance.

        Yes, a nominee director can be removed from their position by the foreign company that appointed them. 

        The cost for Nominee Director varies from $1,800-$3,300 per year, based on the risk amount.

        To ensure that the financial institution’s interests are properly protected, a nominee director is appointed. A nominee director is also designated to serve the obligation towards the borrower and its stakeholders.

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