The Roles and Responsibilities of Company DirectorsDownload Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
The Singapore Companies Act requires that all companies incorporated in Singapore have at least one director who is responsible for managing the affairs and overall direction of the company.
In this guide, we’ll explain the roles and responsibilities of company directors, who can or who cannot fulfil this position, and more.
Who Can or Cannot Be a Company Director?
Both local residents and foreigners (holding an Employment Pass (EP) or Dependent’s Pass Letter of Consent (DP LOC) are allowed to be directors, provided that they meet the following requirements. The individual must:
- Be a natural person (which means that corporations cannot be directors);
- Be at least 18 years old;
- Be of sound mind;
- Have at least 30% shareholding for foreigners (holding a DP LOC).If the individual has experienced any of the following circumstances, (s)he is automatically disqualified from being a director of a local or foreign company and has to seek permission from the High Court to overturn this verdict.
Specifically, the individual cannot:
- Be convicted of criminal offences involving fraud or dishonesty;
- Be convicted of three or more filing-related offences under the Companies Act within five years;.
- Have received an order by the Court that disqualifies him/her from being a director;
- Be bankrupt. The individual must receive permission from the court official who presided over the bankruptcy (i.e. the Official Assignee) to be allowed to be a director;
- Have had a company wound up for reasons of national security;
- Have had three or more High Court Orders made against him/her requiring compliance with the relevant requirements of the Act within the past 5 years.
What are the Responsibilities of Company Directors?
Even though companies have Chief Executive Officers, the ultimate decision-making power for the company lies in the hands of the company directors. Specifically, directors have statutory and fiduciary duties to the company. Under their statutory duties, they are required to:
- Keep accounting records in a location where they can be easily accessed and inspected by other company directors;
- Maintain annual accounts and submit financial statements to shareholders at least once a year at the company's annual general meeting (AGM);
- Appoint a company secretary within six months and an auditor or committee of auditors within three months of the incorporation of the business;
- Organise and hold required meetings such as the AGM, statutory meetings, and extraordinary meetings;
- Pay dividends and issue shares;
- Disclose conflicts of interest.
Regarding their fiduciary duties, directors are bound by law to act in the best interest of the company, set aside personal and third-party interests, run the company to the best of their abilities and not abuse their power or the information that they possess.
Directors that fail to fulfil their duties and responsibilities are liable to both civil and criminal penalties. Depending on the exact offence, these penalties include fines ranging from S$1,000 to S$10,000, compensating the company and/or its shareholders, repaying creditors, and prison sentences ranging from a few months to two years.
What Is the Difference between a Nominee Director and a Company Director?
While foreigners are allowed to incorporate businesses in Singapore and act as company directors, every company is required to have at least one director who is a citizen, permanent resident of Singapore, or local resident. However, a foreign national is allowed to “nominate” a resident to act as a director on his/her behalf in order to satisfy the requirement stated by the Companies Act. Such directors are known as nominee directors.
How do You Appoint and Remove a Company Director?
The exact process varies from company to company, but, in general, directors are appointed through an ordinary resolution passed during a general meeting. Such a resolution must receive at least 50% of the votes cast at the meeting.
Once the director has been appointed, the company must notify the Accounting and Corporate Regulatory Authority (ACRA) within 14 days of the date of appointment through the BizFile+ website. The company must provide ACRA with the following information about the director:
- Identification number
- Appointment date
- Contact details
- Have a record of a signed board resolution that approves the appointment
- Have a record of a declaration of consent to act as a director (Form 45)
- Have a record of the director’s disclosure of any other directorships or shareholdings (s)he has
A company can remove a director through an ordinary resolution of its shareholders. The company must then file a Removal of Director Notice with ACRA within 14 days.
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Whether you require incorporation services, corporate secretarial services, or accounting services, Sprout Asia’ has got you covered! We have worked with an array of credible Nominee Directors with proven track records. With our Nominee Director Packages, we will also help to protect the arrangements between the Nominee Director and yourself. To get started, set up a free consultation with a Sprout representative to discuss the specifics of your business!