Inside the Content
- What is a nominee director?
- Why do I need a nominee director for my new company?
- How do I get a nominee director in Singapore?
- Why should I engage a nominee director service in Singapore?
- Can you replace your company’s nominee director in Singapore?
- What are the consequences of not having a nominee director?
- What are the risks of having a nominee director?
- A nominee director can help your company in many ways
When do you need a nominee director?
If you’re considering incorporating a new company, you may need a nominee director to fulfil certain laws.
If you’ve heard of nominee directors but are unsure of what they do, this is a great guide to find out more!
What is a nominee director?
A nominee director is a person appointed by a company to act as a director in the company’s name. The appointment of a nominee director is often used to protect the company from potential legal action by third parties.
Sometimes, the nominee director may be appointed by the company’s board of directors. In other cases, the nominee director may be appointed by the shareholders.
Related Read: What is a nominee director? »
What is the difference between a nominee director and a nominee shareholder?
A nominee director is appointed by a company to act as a director in the company’s name. On the other hand, a nominee shareholder is appointed by a company to hold shares on behalf of the company.
However, they share similar responsibilities:
- Responsible for maintaining the company’s statutory books
- Ensure that regulatory filings are completed on time
- Maintain accounting records and yearly accounts precisely
- Conduct shareholder and director meetings according to the law
- Honour their fiduciary duty toward the company in their official actions at all times
What is the difference between a nominee director and an executive director?
Nominee directors are different from executive directors in that they are appointed to safeguard the company’s interests and have no direct involvement in the business’s operations.
On the other hand, executive directors are responsible for the company’s day-to-day operations.
Although a nominee director does not need to show up to work at the company like an executive director, they still play a massive role in ensuring the wellbeing of the business.
Why do I need a nominee director for my new company?
There are several reasons why you should have a nominee director in your company, and here are some of them:
It’s a legal requirement for incorporation
For foreigners who want to start a company in Singapore, the law states that you must have a local Singaporean on your board of directors.
If you can’t find a local person, you can appoint a nominee director instead.
Per the Singapore Companies Act of 1967, a nominee director has to be either a citizen or permanent resident of Singapore or a company director who has a Singaporean employment pass with a permanent address in Singapore.
Ensures accountability in the company
A nominee director’s primary role is to ensure transparency in the company.
While they will not get involved in the company’s day-to-day operations, it is their job to ensure the company complies with the law and act in good faith on behalf of the company.
They carry this liability with them and will be answerable if any wrongdoings in the company come to light. In short, they ensure that there is check and balance in the company.
They’re in charge of keeping everything up to date
A nominee director also has to ensure that crucial tasks such as the company accounts, tax filing, and invoice payments are all settled right on time.
Nominee directors can also be in charge of calling for annual general meetings (AGMs).
To take care of things when you’re away
As your nominee director is expected to be trustworthy, honest, and transparent, this person should be able to look after things for you if you aren’t around.
The Accounting and Corporate Regulatory Authority (ACRA) of Singapore defines a nominee resident director as someone who acts on another person’s directions, instructions, or wishes.
Therefore, whoever you appoint as a local director will have to act based on what you’ve told them to do and not as per their wish.
Related Read: The Important Role of Singapore Resident Directors »
How do I get a nominee director in Singapore?
So, how do you get a nominee resident director for your Singapore company?
If you want to appoint a nominee resident director in Singapore, there are a few ways to do so. You can either:
- Ask a friend or family member to be your local director
- Appoint a professional corporate service provider for this service
- Nominate an existing company director
Why should I engage a nominee director service in Singapore?
There are a few reasons why you may want to engage a nominee director service in Singapore:
Adheres to the right requirements
Firstly, a reputable nominal director service makes sure that the proper documentation is implemented according to compliance requirements. This prevents undesirable situations, like incurring expensive damages due to incompliance.
Hiring a professional firm for nominee director services can ensure that all the required aspects are dealt with accurately, with the agreement signed appropriately.
Gets rid of unnecessary stress and trouble
A corporate nominee director services provider manages the process in a professional and knowledgeable manner.
Its specialists are trained to eliminate any stress and hassle. It can be beneficial if you’re unfamiliar with the available candidates.
Provides access to insight and advisory
Most of these nominee director services providers also offer helpful insights and advisory services that you can gain from.
These tips can be helpful if you are unsure of how it works and if it is new to you.
Related Read: Singapore Branch Office Setup with Nominee Agent »
Can you replace your company’s nominee director in Singapore?
Yes, it is possible to replace your company’s nominee director in Singapore. You can either appoint a new nominee director or find a local Singaporean to take on the role.
If you decide to appoint a new nominee director, they must be a citizen or permanent resident of Singapore, or a company director who has a Singaporean employment pass with a permanent address in Singapore.
You will also need to update the Registrar of Companies (ROC) with the new nominee director’s details. To do this, you will need to file a Notice of Change (NOC) form with the ROC.
The process of appointing a new nominee director is relatively simple and can be done quickly. However, it is important to note that the decision to replace your company’s nominee director should not be taken lightly.
This is because the nominee director plays an important role in ensuring the company’s compliance with the law and acting in good faith on behalf of the company.
Related Resource: Singapore Company Incorporation for Foreign Individuals with ND »
What are the consequences of not having a nominee director?
The Singapore Companies Act states that at least 1 director who is a Singapore resident to represent your company.
If you are required to have a nominee director but do not have one, the company may be found to be non-compliant with the law.
This could result in hefty fines or even the dissolution of the company. Therefore, it is crucial to ensure that your company has a nominee director if it is required to do so by law.
Not having a nominee director could also put the company at risk if any illicit or illegal activities occurred. This is because the nominee director would be held liable.
If you are running a company in Singapore but are not based in the country, it is especially important to have a trustworthy and reliable nominee director in place to look after things for you.
This is because you will not be able to keep a close eye on the company’s activities and may not be aware of any problems that may arise. Having a nominee director in place can help mitigate some of these risks.
What are the risks of having a nominee director?
Wondering whether taking on a nominee director can pose dangers to your business?
It is generally safe to have a nominee director, but you should remember that there is no difference between a regular and a nominee director under the Singapore Companies Act.
It states that all directors share the same right to make decisions on behalf of the company.
This means that nominee directors have the same level of authority as other directors. One potential setback is the possibility of malpractice.
However, a professional nominee director service provider can reduce the risk involved through the contractual agreement.
It can limit their powers through the contract for your peace of mind.
A nominee director can help your company in many ways
If you’re someone who isn’t based in Singapore, but you run a company in the country, a good nominee director can put your mind at ease by handling things for you when you’re away.
In short, having a nominee director in your company who acts as a gatekeeper can ensure the company’s interests are well-protected and that there isn’t any misconduct.
As mentioned above, in some cases, it may also be mandatory to appoint one.
Appoint Rikvin as your trusted corporate service provider for your nominee director to take the load off you!
- A nominee director is a person who is appointed to act on behalf of a company, typically in order to maintain compliance with the law.
- The fees or costs can vary according to the provider you choose. Let our team at Rikvin walk you through what you need to know!
- The nominee director’s responsibilities may include ensuring good corporate governance, acting in good faith on behalf of the company, and reporting any wrongdoings that may come to light.
Need a nominee director for your Singapore company?
Let our company incorporation experts guide you on how to get your own nominee director in Singapore today!