What is a nominee director and what do they do?

Based on the regulations from Accounting & Corporate Regulatory Authority (ACRA), all companies in Singapore must have a local resident director. Thus, for all foreigners incorporating businesses in Singapore, having a nominee director is crucial. Here’s what they do, and how to appoint one. 

To incorporate in Singapore, the company must have:

  • A paid-up share capital of at least $1
  • A local registered office address
  • At least one shareholder (either a private individual or a corporate entity)
  • One company secretary
  • At least one local resident director

Your company can have as many directors as you like. However, if none of them are locals, ACRA won’t permit you to register your company. This is where nominee directors come in. They must be Singapore citizens or Singapore Permanent Residents (PR), and you can meet Singapore’s incorporation requirements by appointing a nominee director to act as your local director.

Their role in your business

The nominee director has a wide array of responsibilities, which is why it’s important to identify a reliable nominee. It can go far beyond the basic purpose of fulfilling statutory requirements and ensuring compliance with the Singapore Companies Act.

Rest assured that the nominee director does not need to hold qualifying shares to be recognised as a director. In the same vein, the nominee will not have any operational or functional role. Other executive directors can be appointed to manage day-to-day operations, and you can limit a nominee’s ability to influence your company through a written agreement with them, which clearly spells out their responsibilities and curtails their authority.

Appointing a Nominee Director

The ND Agreement is a formal agreement between the Singapore company and the nominee. It protects both parties by ensuring that (a) the nominee cannot be held accountable for decisions made by the company’s board and (b) the nominee cannot make any decisions that can impact the company.

However, even with the ND Agreement, the nominee is still bound by Singapore’s laws, and they are expected to act in the best interests of the company they represent.

If they fail to adequately fulfil their responsibilities, the nominee director may end up being financially liable for certain charges, such as liquidation (in circumstances where other directors are non-contactable).

Registration

Once you have appointed a nominee director and completed the registration for your company, your must include your nominee’s details in the Register of Nominee Directors. The nominee’s details required are: Proof of residential address, Passport / NRIC, and the appointment date.

These details have to be kept accurate and up to date. Any misrepresentation, if deemed as a breach of local regulations, can result in a hefty fine. Working with a competent and experienced corporate secretary will help you avoid that.

Replacing or removing your Nominee Director

Assuming everything goes well, you may not have to indefinitely retain a nominee director. Eventually, they can be replaced by non-local directors. Upon receiving an Employment Pass from the company (which usually takes 6 months to process), these non-local directors can replace the existing nominees. Do note that a nominee director is still required (a) when a company incorporates in Singapore and (b) while an Employment Pass is being processed.

Next Steps

In summary, the Singapore Companies Act requires a local resident director for your company, and typically, a nominee director is the best solution. Drop us a note to learn more and receive our assistance in appointing a reliable nominee director. 

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