The Singapore Companies Act defines a nominee director as a director ‘whose instructions or obligations are a representation of the formal or informal act of the individual and/or entity within a corporation’.
A nominee director in Singapore acts on behalf and in accordance to the intentions and directions of an individual and/or entity which make him/her the face of the company.
For foreign investors to legally establish a new business in Singapore, this is an essential criterion that they have to meet in the event that they cannot find a qualified resident director for their company.
Fiduciary Duties of a Nominee Director
As an agent or a representative of the company appointing him or her, a nominee director is a person who can permit or order the management of the company just about anything.
This also means that the company is bound by these acts and is accountable for its outcome. Therefore, the nominee director position is a crucial role governed by four key fiduciary duties:
- To act in good faith and with all honesty in behalf of the company’s best interest
When it comes to any decision-making, a nominee director must prove undivided loyalty and unquestionable integrity with complete disregard for personal and third-party interests.
- To avoid conflict of interest
A nominee director strives to steer clear of situations which compromise the interest of the company. Below is a list of potential areas of conflict:
- Direct/indirect purchase from or sale to the company of assets/properties
- Divulging company information to external parties or competitor
- Diverting company opportunities to a third-party or to the nominee director
- Setting up a rival firm to compete for potential investments or contracts
- To exercise professionalism as well as utmost care and diligence
Managing the company requires more than just mere presence of the nominee director. He or she must have the right set of character skills and experience – executed professionally – in order to meet the exacting standards expected from a nominee director.
- To not exploit power and position
A nominee director must only use the rights, privileges, and position granted to him or her for the purpose of achieving the company’s end goals and not for its prejudice or harm.
Nominee Director and Company Information
A nominee director can only be legally allowed to share company information with his or her nominator/s after compliance with the following terms:
- Declaration of the name, office, and position of the person who will receive full disclosure of company information
- Declaration of the particulars of company information that will be disclosed
- Approval from the board of directors that full disclosure of company information is allowed
- Confirmation of the nominee director that full disclosure of company information will not compromise the company in any way possible
Statutory Requirements of a Nominee Director
In the absence of a local resident director, a nominee director is required to fulfill the following statutory requirements:
- To convene the mandatory Annual General Meeting (AGM) and to file the Annual Returns (AR)
- The AGM is where shareholders and members gather to view and discuss about the company’s financial statements.
- Shareholders and members must receive the financial report 14 days prior to the date of the AGM.
- Filing of the Annual Returns with ACRA must be done within one month after holding the AGM.
- To maintain an accurate and updated record of the Statutory Registers
This includes the Register of Members, Register of Directors, Register of Directors Shareholdings, Register of Charges, including the company’s accounting records and sensitive documents.
- To register a local business address
This refers to a locally registered place of business that is not merely a PO Box. In the event of change of business address, the nominee director must notify ACRA within 14 days.
- To report changes or amendments within and about the company
Proper documentation and filing of report to ACRA is mandatory upon any change or amendments happening within and about the company.
- To provide regular update about the Register for Directors Shareholdings
A nominee director must ensure that ACRA receives full disclosure regarding any update about the Register for Directors Shareholdings which include rights, shares, contracts, or options.
Liabilities of a Nominee Director
Failure to properly exercise a nominee director’s roles and responsibilities can result to both civil and criminal consequences, such as:
- Declaration that any decision or acts of the nominee director as invalid
- Obligation to return any profits earned
- Payment for any damages incurred by the company
- Payment of up to SGD5,000
- Possible imprisonment of up to one year
How does Corporate Services Singapore assist you in the Nominee Director Service?
Engaging a nominee resident director in Singapore is a good decision for foreign companies who want to meet the statutory requirements of a local resident director.
Engage Corporate Services Singapore to provide you with the Nominee Director Service your business deserves. Contact us today for no-obligation customised consultation.