A Nominee Director Singapore is one of the common practices in a corporate environment in Singapore, commonly imposed by a foreign business in establishing a company in Singapore. This will enable non-residents to comply with local statutory requirements as they operate their business remotely overseas. While there are huge benefits that the nominee director concept offers, there are also some risks and requirements to be well considered.
What is a Nominee Director in Singapore?
The Companies Act stipulates that every company in Singapore shall have at least one resident director. A Nominee director Singapore is one that enables foreign-owned companies to meet this requirement when the non-Singaporean owners wish to establish and operate their businesses remotely from their home country or region. The appointed nominee director may be a local citizen, Permanent Resident, or an employment/dependent pass holder with a valid local address.
It is critical to note, however, that even as a nominee director satisfies the requirement of resident directorship in law, such directors have no actual charge and management of the company. Their purpose, largely, is acting as a representative of the company in Singapore, in essence, lending their name for meeting residency requirements.
What is a Nominee Director in Singapore?
Assessing the Risks Associated with Nominee Directors in Singapore
The process of appointing a nominee director isn’t exactly free of risks, despite its simplicity. The Nominee director Singapore risks therefore flows from the statutory obligations imposed on a director by the Companies Act of Singapore. Although a nominee director may be regarded as having no active involvement in the day-to-day operation of a company, it does not mean that the individual will be completely discharged from the identical legal duties and responsibilities as any other director in that company. This means that they can also be held liable in cases of legal non-compliance by the company, fraud, or violation of corporate laws.
- Legal Liabilities: In the case of a company operating in Singapore, a nominee director is legally responsible for the compliance of the company with the law and other rules and regulations. The compliance usually relates to the filing of annual returns, tax compliance, and maintenance of standards for corporate governance. In case any fraud or illegal dealing is found to be committed by any company, the nominee director may be held liable.
- Abuse of Proxy: When the nominee director has no active control in the running of the affairs of the company, there is a risk that the real owners might conduct questionable activities. A nominee director may also be held liable for actions in which he had little or no actual involvement, bringing on financial or legal consequences.
- Reputational Risks: Being a nominee director to any company involved in illegal or other unethical business practices could affect your own reputation. This might be problematic for serving as a nominee director in the future or even in other existing ventures.
Understanding the Risks of Having a Nominee Director in Singapore
Exploring Considerations for Nominee Director Singapore Fee
Their nominees’ directorship services, usually offered in Singapore, have varying prices, either by different service providers, the nature of the company, and the quantum of responsibility that the nominee director assumes. Normally, the Nominee Director Singapore Fee are charged between SGD 1,500 to SGD 5,000 per annum. Some of the firms would even charge more, particularly when the nature of their operations falls within a high-risk industry or requires additional services like compliance monitoring and increased legal support.
Other charges may be applicable when it is anticipated that the nominee director will have to do more than just satisfy the statutory residency requirement, for instance, signing off on major documents or participating in more active supervision of the company’s affairs.
Nominee Director Singapore Requirements
The most important requirement as set by law for one to serve as a Nominee Director in Singapore is that concerning residency. In this connection, to meet the residency requirement, the nominee director should either:
- Be a Citizen of Singapore;
- Be a Permanent Resident of Singapore;
- A person who holds an Employment Pass, EntrePass, or a Dependent Pass indicating a local residential address;
Nominee director, like any other director, must at least be 18 years of age and must not have been disqualified to act as a director by the nature of his past criminal records and insolvency issues.
Any company which intends to appoint a nominee director, therefore, will have to make sure that the person they are appointing can meet all these legal requirements and truly understand the responsibilities attached to the position. It is often customary for the company and this nominee director to have a legal memorandum of agreement on paper, specifying their duties, the scope of their engagement, and remuneration.
Essential Requirements for Nominee Directors in Singapore
How to Become a Nominee Director in Singapore
A few steps to be a nominee director in Singapore are as follows:
- Meet the Eligibility Criteria: You must be resident in Singapore-that is, a citizen of Singapore, a permanent resident, or a holder of a pass-and you need to be qualified to meet minimum requirements under the law to act as a director in Singapore-that is, above 18 years and not disqualified from directorship.
- Understand your legal and fiduciary responsibilities. The nominee director has all the legal and fiduciary responsibilities that come with the position. This falls into the lion’s den of the Companies Act and failure to comply may result in penalties or personal liability.
- Appoint a Corporate Service Provider: The majority of nominee directors sell their services through corporate service providers offering nominee directorship as part of a broader package of incorporation and compliance services. By using a reputable service provider, you will have assurance that companies you represent will be in compliance with all regulations, and you will be well-protected from legal risk.
- Draft a Nominee Director Agreement: There needs to be a formal agreement between you and the company, which is putting your services as a nominee director to work. Such an agreement will have to include the scope of duties, fees, and indemnities that would insulate you from liabilities caused by the actions of the company.
- Ensure Ongoing Compliance: As nominee director, you must ensure that the company which you are a representative of has always complied with all Singaporean requirements for annual returns and keeping up to date with its various tax obligations. You might not actually be managing such tasks yourself, as this can be and often is left to other directors or even the owners themselves, but you should remain quite aware of the current compliance condition of the company.
How to Become a Nominee Director in Singapore
Conclusion
A nominee directorship in Singapore by One IBC is of utter importance to any foreign company that would want to have a presence in the country. While the position provides a way to fulfill the statutory requirement for a local director, it also creates legal and reputational risks. All such risks and responsibilities should be fully understood by companies and individuals prior to undertaking a nominee directorship. The nominee director system will offer a convenient solution for foreign business owners while ensuring that the companies remain legally sound, by mitigating these risks and ensuring compliance with all local laws in Singapore.
