Singapore is a lucrative investment hub for foreign investors. While you can surely enjoy all the perks of a favourable business environment in the region, there are a few restrictions in terms of access for foreign investors. For this reason, having a minimum of one local director who is a citizen or permanent resident of Singapore is mandatory.
Who is Referred as a Nominee Director?
As a non-resident stakeholder, shareholder, or creditor of a Singapore organisation who is often unreachable, you can select a representative to present your interests on the company’s board. This person is called a nominee director and a nominee director may also act as the head of your Singapore company.
Your selection of a nominee director will influence your stakes in the company. In addition to being a Singapore resident, the nominee director must be competent, trustworthy, and have a good reputation. A good choice will yield positive results for not only you but also the overall company.
The appointment of a nominee director is a mandatory requirement according to the Singapore Companies Act. Companies that are owned and managed by foreign parties must have at least one director who is a resident of Singapore. Nominee director services can range from SGD 1,500 to 2,400 per year and an additional SGD 2,000 security deposit.
Eligibility Requirements of a Nominee Director
According to the Companies Act, a nominee director must meet one of the below conditions to qualify:
- The candidate must be a citizen of Singapore
- The candidate must be a Singapore Permanent Resident
- The candidate must have EntrePass, Employment Pass or proof of a local residential address
Why a Competent Nominee Director is Important
A capable nominee director will always stay well-informed regarding the compliance requirements of the Companies Act. What’s more, he will prioritise deadlines and file returns proactively. The director will collect signatures for important documents and obtain the signatures in a timely manner. The best thing about appointing a competent individual as your nominee director is that he will notify you about all the ongoings within the company.
What to Do if You Do Not Have a Suitable Candidate for Nominee Director
Sometimes foreign investors struggle to find a proficient individual who can act as their Singapore-based nominee director. This is not a limitation. There are third-party companies that provide nominee director services. These companies will act in your best interests and you get all the advantages of having a capable nominee director.
Looking to appoint a Nominee Director? Check out our Nominee director services.
FAQs – Frequently Asked Questions
Will my nominee director have management or signatory authority?
No, a nominee director is only a representative and not a part of business operations. Your nominee director will not have any signatory authority in business decisions, legal decisions, bank transactions, etc.
Who will be held liable in case of non-compliance with statutory requirements?
Your company must comply with the Singapore Companies Act. If the company fails to do so, the company directors will bear legal liabilities such as facing prosecution or getting fined.
Why do I need a nominee director?
The Singapore Companies Act obligates that every Singapore company must have a local director. The nominee director is important for serving this statutory requirement. However, Singapore nominee directors do not have any control over your management, business operations, or business transactions.
What is the difference between the security deposit and the service fee?
Security deposit and service fees are different. The security deposit is a refundable amount you pay at the beginning of the business relationship. This amount will be returned after your relationship with the nominee director ends. On the other hand, the service fee is the annual payment you will make for the nominee director services.
Security deposits are collected as an assurance for the nominee director, who carries out arduous duties on behalf of you. This one-time deposit ensures a productive and long-term business relationship. Even though there will be no additional security deposits, the deposit amount will be higher for companies that are registered for GST. For, nominee directors of GST-registered firms have higher risks.
In Singapore, GST-registered companies are expected to make GST payments one month after the period indicated in the tax returns. The Singapore authorities penalize companies for failure to pay GST or making late payments.
What is the ideal duration for nominee director appointments?
There is no predetermined duration for how long a nominee director should serve you in Singapore. According to the law, you can hire and dismiss a nominated director whenever you want. After you terminate the services of a company’s nominee director, the relevant authorities will be notified and the security deposit will be reimbursed.
How can the nominee director help me get the power of attorney?
If you want to transfer the legal responsibilities of your firm to someone else, you will need the power of attorney. The power of attorney is a legal document that contains the conditions under which the selected individual will get the responsibility of your firm. This document will allow the attorney to act without discussing it with the directors. Some companies even preserve a few responsibilities for the company directors.
If you have enlisted the services of a nominee director, you will have to provide a reason for issuing power of attorney. Plus, it is important to cross-check before issuing the power of attorney. Your nominee director can cross-check. You will require the following documents about the potential attorney:
- A copy of the passport
- Proof of a Singapore residential address
- A copy of the attorney’s national identity card
- The attorney’s telephone number and email
- A reference letter or bank statement from the potential attorney’s personal bank
- A reference letter from the potential attorney’s present employer
- A written document stating why you wish to issue the power of attorney
- A written document explaining why the power of attorney is required from the nominee director instead of an executive director
If an attorney does not meet the qualifications, the nominee director can reject him. The nominee director can issue a special power of attorney but only if it is requested by the law.
Can my nominee director help with the licence application?
No. The job responsibilities of a nominee director do not include company operations. As licence application is a business operation task, it is beyond your nominee director’s jurisdiction. An executive director appointed under the provisions of ACRA can help complete these applications and also sign them.
Can my nominee director help open bank accounts?
Yes, your nominee director can assist with opening corporate bank accounts for your company. However, the nominee director does not have the authority to sign any bank documents.
Can my nominee director be involved in the registration of local facilities?
No. The nominee director cannot sign any declarations on behalf of the company. This includes gateway payments and mobile phone packages, all of which will be registered under the company owner’s name.
