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It is required for every company in Singapore to appoint a local director. Under the Companies Act, businesses must register their directors with Accounting & Corporate Regulatory Authority (ACRA) along with the following information:

  • Full name
  • Residential address
  • Identification
  • Nationality
  • Appointment date and
  • Cessation of appointment date.
  • Director’s signed copy of the declaration of consent.
  • A verified statement that the director is qualified for the position.

It is also mandatory for the company to maintain a Register of Directors and keep it at its registered address. They should notify ACRA if they choose another address within 14 days of registration.

Eligibility of a Director

A company director needs to meet the following criteria:

  • A director needs to be an actual person, not a corporate entity or enterprise.
  • A director must be at least 18 years of age
  • A director must be in an excellent physical and mental state to perform his duties.

ACRA can disqualify a company director if they meet the following conditions:

  • Declared bankrupt by a local or foreign panel.
  • Issued with a disqualification court order.
  • Convicted for fraud or dishonesty in the past.
  • Convicted during the last three years of offences like failing to file returns, accounts, or other documents within five years.
  • Associated with a company closed down due to national interest or security reasons.

Appointment Process

Generally, companies appoint directors through an ordinary resolution passed during a general meeting. However, the memorandum and articles of association dictate the appointment’s specific manner.

On the other hand, specific shareholders may have the power to appoint directors without passing the 50% votes, according to the company’s resolution. More often than not, before they pass an ordinary resolution, the board of directors can appoint a replacement director to hold office until the next general meeting.

In the meantime, the company can designate a nominee director to conduct the duties of a regular director. His duties are unequal to the regular director, but he has the same responsibilities to execute authority under Singapore laws. He is authorised for legal oversight and transparency and ensures that the company operates within the law.

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The appointed director must provide his written consent for the role and non-disqualification statement to perform as a local director. After the appointment, the company must notify ACRA within 14 days with the following information:

  • Individual’s Name
  • Nationality
  • Identification Number
  • Residential Address
  • Appointment Date
  • Appointment Role
  • Email Address
  • Contact Number

Powers of Director

The director can make all judgments on behalf of the company except the affairs needing a particular resolve mandated by a shareholder vote.

Examples of company decisions made by the directors:

  • Borrowing or lending funds,
  • Opening a bank account,
  • Selling company assets or
  • Investing company funds.

Examples of company judgments mandating shareholder vote:

  • Appointing and removing auditors
  • Declaring Dividends
  • Alteration to clauses in the Constitution
  • Electing directors in place of retiring directors
  • Changing the company name
  • Reducing the share capital of the company

Duties of Director

Directors must fulfil the fiduciary and statutory duties mandated by the Singapore common law and the Companies Act.

Fiduciary Duties of a Director

With the director’s supreme decision-making power, he has a lawful and virtuous commitment to promoting the company’s financial well-being.

1. Directors should give their undivided loyalty, and all decisions should be in the company’s best interest.
2. Directors should eradicate circumstances where their private welfares conflict with the company. Like:

  • Joining a deal that benefits them at the company’s expense.
  • Shifting interaction to a competitor’s business.
  • Functioning as a director for a competing business.

3. Directors should run the company to the best of their ability, exercising care, diligence, ad skill.
4. Directors should not misuse the knowledge and authority granted to them by the company.

Statutory duties

As a director, he must ensure that the accounting records demonstrate the company’s financial health.

  • Documents must be available for inspection by other company directors.
  • They must submit financial statements to the shareholders at the Annual General Meetings.
  • He must appoint a company secretary within six months of starting the business and an auditor within the first three months of incorporation.

Liabilities of Director

A director who fails to meet his duties is liable to criminal and civil penalties. For violating fiduciary responsibilities, a company can demand payment or any damages incurred. The director should return any profit earned while in violation. And the company can declare the director’s decision invalid.

Likewise, a director violating fiduciary duties can face a S$5,000 fine and up to one-year imprisonment.

Resignation of Director

A director may resign if at least one director is a Singapore resident. He must comply with the resignation procedure outlined in the company’s memorandum and articles of association.

Typically, a director must give a resignation notice in writing and send it by registered mail to the registered office address of the company.
Once the company receives the director’s resignation letter, they should file with ACRA a cessation of director within 14 days.

Removal of Director

Shareholders can terminate the company director’s period of office before it expires through an ordinary shareholders resolution as long as it complies with its memorandum and articles of association.

Once the company removes the director, they should file a director removal notice with ACRA within 14 days.

Although it is helpful to comprehend the director’s appointment process, striving for expert advice is better to ensure all applicable laws are laid out in your company’s Constitution.

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