What is a Nominee Director?

What is a Nominee Director?

Download Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist

If you are a foreign business owner looking to register a corporation in Singapore, there are several requirements you have to fulfil. These include having:

  • A minimum of one shareholder (and a maximum of 50)
  • One company secretary
  • Minimum initial paid-up capital of S$1
  • A local registered address
  • At least one Singapore local director

As part of Singapore’s Companies Act, all Singaporean companies are required to onboard at least one local director on their company’s board. Companies which do not have local directors may choose to appoint a Nominee Director to meet the requirements.

Who can be a Nominee Director? 

Only Singapore Citizens and Permanent Residents are to be appointed as Nominee Local Directors and there are other requirements they have to meet to ensure they are not legally disqualified from being a director of the company.

The following scenarios will deem a person unfit to be the company's director: 

  • He/she is an undischarged bankrupt 
  • He/she has committed criminal offenses of fraud and dishonesty 
  • He/she has 3 (or more) High Court orders regarding compliance under the Companies Act within 5 years 
  • He/she as committed 3 or more offenses under the Companies Act within 5 years 
  • He/she as a disqualification order made against them in court 

Additionally, a person with a local residential address who holds the Employee Pass (EP) can also become a Nominee Director. Yet, this is only possible after the business has been incorporated and the company’s bank account has been open.

Another route in which the company can take to appoint a non-local director as a Nominee Director is by applying for an Employment Pass for the foreign candidate. However, this process can only be done after the incorporation of the company and successful opening of the company’s bank account. 

Why is a Nominee Director needed? 

The requirement for a Nominee Local Director arises as the Singapore government requires liability in case of fraudulent corporate activity. Examples of such behaviours involve not paying taxes, violating laws, and theft.

Without such accountability placed on a Nominee Director, foreign company owners could simply abandon the company and leave the country with minimal repercussions.

Although the Nominee Director title suggests similar responsibilities as a regular company director, this does not have to be the case. The term ‘Nominee’ implies that this role is a non-executive one, and mainly serves to abide by Singaporean law and regulations. Yet, as part of laws stipulated in Singapore’s Companies Act, there is an overlap with the responsibilities of a regular company director. As such, a Nominee Director’s role includes:

  • Making sure the company abides by Singaporean law
  • Ensuring corporate governance
  • Employing best practices for corporate social responsibility
  • Undertaking similar levels of responsibilities as the foreign director

Where can you find Nominee Directors? 

More often than not, the corporate service providers in Singapore will offer Nominee Director services. Engaging a reputable corporate service provider will in turn help to ensure the following: 

  1. Having a credible Nominee Director assigned to your company who is fit and able to fulfil his fiduciary duties toward the company 
  1. That the Nominee Director is bound by an agreement to limit their authority in making executive decisions in the management of the company 
  1. Providing the Nominee Director with comfort that their interests are protected through the corporate service providers 

Engaging a Nominee Director at Sprout 

A corporate service provider such as Sprout works with a panel of Nominee Directors who have proven track records and will help to protect the arrangements between the Nominee Director and yourself.

At Sprout, clients who have signed up for our Nominee Director packages will be provided with an agreement that will capture the nature of the relationship and authority of the Nominee Directors.