Company Director

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Being a company director is demanding, but it’s equally rewarding. Several factors come into effect to become a successful director of a company. Apart from the capabilities, there are many other factors one needs to consider while appointing a company director.

As per the Companies Act, every company incorporated in Singapore needs to have at least one Singapore resident director who handles the company’s affairs and sets the direction for it at all times.

The one who plays the role of a company director has to shoulder many responsibilities and duties. As a result, they become a more significant part of the company. The director must be honest, diligent, and proactive to oversee the company’s operations and growth. They should also have a genuine interest in its affairs and possess the skills and powers to serve every situation.

While every director must meet these requirements, you must offer extra attention if you are not a Singapore resident. As you’ll be leaving the company in the hands of another director (a resident), you must ensure that the appointed director will be able to take charge of the company. In addition, they must comply with the laws and requirements related to the position of director. Therefore, it’s essential to know how and who can be appointed as a company director in Singapore. Continue reading to find out all the necessary information you need about company directors.

Eligibility to Become a Company Director

While Singapore allows both locals and foreigners to become the company’s directors, there are specific rules and regulations to follow. Along with that, there are eligibility factors to become a company director.

A resident is a Singaporean citizen, Permanent Resident, Entre Pass, or Employment Pass holder. That said, here are some of the other requirements for an individual to act as a director:

  • The individual should be someone natural, not a corporation or company.
  • The individual should have reached at least the age of 18.
  • The individual should be someone with legal capacity.
  • Suppose the Constitution requires a person to hold a specific qualification, and the person isn’t qualified beforehand. In that case, they are required to obtain the same in two months after receiving the appointment or in a shorter period mentioned by the Constitution.

Even if the potential individual meets all the above requirements, they must check the following factors to ensure that they are not subjected to disqualification.

  • The person shouldn’t be an unsuitable individual from a different company.
  • Shouldn’t be involved in undischarged bankruptcy.
  • Shouldn’t be an individual involved in any offence dealing with dishonesty and fraud requires imprisonment for three months or more, either in Singapore or anywhere else.
  • Shouldn’t be an individual who repeatedly fails to adhere to the requirements of the Companies Act related to the filing of returns, documents, and other accounts with the Accounting and Corporate Regulatory Authority (ACRA).
  • They shouldn’t be an individual who has been a director of at least three non-functioning companies that got their names deregistered from the register within five years.
  • Shouldn’t be a person who has acted as the director of a company that seized operations because of national security or interest.
  • Shouldn’t be an individual convicted of an offence under Securities and Futures Act (Cap. 289) Part XII, on or after July 1st of 2015.
  • Shouldn’t be an individual against whom charges are pressed for a civil penalty under the Securities and Futures Act (Section 232) on or after July 1st of 2015.
  • Shouldn’t be an individual who has received a disqualification order apart from other sentences imposed.

Types of Directors

Executive Director

Executive Director is an existing employee of the company who works full-time managing daily operations of the company. Managing directors too fall under this category, who handle other functions from a company’s CEO.

Non-Executive Director

A non-executive director isn’t an employee of the company and doesn’t handle the company’s daily operations. This person contributes by offering their outside experience, reputation, and prestige. So the non-executive directors usually join the panel and give their independent thoughts on the company’s management.

Independent Director

This person has no affiliations with the company in any form. An independent director will have no relationship with substantial shareholders or related corporations so that there’ll not be prejudice to the independent judgments provided by the independent director.

However, an executive director isn’t eligible to become an independent director because they are a company employee. It means the person shares a bond with the company, so the independent judgment cannot be considered.

Nominee Director

A major stakeholder can nominate a person to be a director, known as a nominee director. The appointed individual must abide by the Companies Act and act according to the company’s best interest. In addition, a nominee director must meet the obligations mentioned in the company act, which are as same as for the regulated director.

De Facto Director

This person openly acts as a company director regardless of a formal appointment. Just like the directors who get appointed formally, De Facto Director also should adhere to and follow the regulations mentioned in the Companies Act. They are liable to meet all the duties of a director.

Shadow Director

This person plays a similar role to De Facto Director, except they don’t openly act as a director. They will adhere to the rules and regulations mentioned in the Companies Act. They will meet all the duties as well.

However, a typical duty of a shadow director is to direct or guide formally appointed directors on matters discussed by the Board of Directors.

Duties and Responsibilities of a Director

“The business of a company shall be managed by, or under the direction or supervision of, the directors” and that, “The directors may exercise all the powers of a company except any power that [the Companies Act] or the constitution of the company requires the company to exercise in general meeting.”

This pretty much sums up the duties and responsibilities of a director/s. Their authority allows them to decide on the company’s behalf, but shareholders’ votes may come into effect if the matter needs special attention or intervention.

Decisions that only the directors can make alone:

  • Planning strategic objectives.
  • Accepting the annual budgets.
  • Handling financial statements.
  • Finalizing and appointing officers for executive positions.
  • Providing balance sheet, profit and loss account, and directors’ report at the AGM.
  • Creating a bank account for the company.
  • Lending or borrowing funds.
  • Investing the company funds.

As mentioned under the Companies Act, the directors have the autonomous power to make decisions on the company’s behalf, but certain decisions require shareholders’ approvals.

Decisions that require the involvement of the stakeholders are:

  • Issuing shares.
  • Payments made to directors in case of removal of opposition.
  • Increasing or offering “emoluments” such as allowances and fees for expenses for company directors.
  • Disposing business assets that belong to the company.
  • Declaring dividends.
  • Replacing retired directors with elected directors.
  • Electing or removing company auditors.
  • Decreasing the company share capital.
  • Altering the name of the company.
  • Changing the clauses mentioned in the Constitution.
  • Director’s Statutory and Fiduciary Duties

A company’s progress solely depends on the directors’ judgments. Therefore, to ensure that the directors make the right decision for the company’s interest, the Companies Act and common law of Singapore have mandated the statutory and fiduciary duties of the directors.

Statutory Duties

Sections 197, 165, 157, 156, and 145 in the Companies Act of Singapore outline the statutory duties that directors must adhere to. However, these duties differ from the ones mentioned in the common law.

  • Companies Act, section 201 requires directors to submit the financial statements to the company’s stakeholders at the AGM. Therefore, they should do it at least once a year.
  • Directors must conduct the below-mentioned meetings. However, these meetings may differ as per the business structure and company size.
    • Annual General Meetings (AGMs) – Every company must hold an AGM annually.
    • Statutory Meeting – Public companies must hold statutory meetings within three months from when they started the business.
    • Extraordinary Meeting – The shareholders (own a combination of a minimum of 10% shares) can request an extraordinary meeting, and the directors must hold one.
  • Directors must appoint a secretary for the company within six months from the date they started the company.
  • The director must appoint an auditing committee or an auditor within three months from their incorporation date.
  • The director must pay dividends from the company’s profits alone.
  • The director must ensure that the company shares are issues after they get approved by the stakeholders. If the shares are issued without stakeholders’ approval, it’s considered void.
  • The director has to disclose. If a director faces a conflict of interest, as mentioned in the fiduciary duties, they must reveal it to the company. A few examples are as below:
    • If a director has a personal gain from a transaction that benefits the company, they must disclose it at a meeting conducted with the directors and note it in the minutes.
    • If a director owns a company property, which they can benefit from but is a valuable asset to the company, they should disclose it. It should be said in a director’s meeting and included in the minutes.

Fiduciary Duties

A director is obliged to act legally and ethically to uplift the company’s financial aspect. So to uphold the fiduciary duties, it’s vital to meet the following:

  • The directors should be proactive not to let personal interests cloud their business interests. Some examples include adding a personal transaction in the company’s account, playing director to a competing business, or diverting business opportunities to support a competitor.
  • The directors must provide their complete loyalty to the company. In simple terms, act in the best interest of their company. They should decide what’s best for the company and set aside third-party and personal interests.
  • The directors are appointed based on their experience and are expected to grow the company using their skills. Therefore, they exercise diligence, talent, and aptitude to handle company matters.
  • Information and power are vested in directors, so they must use them for the right cause. They must ensure that they use their power to support the company at all times.

Can a Foreigner Become a Company Director in Singapore?

As mentioned earlier, you can appoint a foreigner as a company director provided they are a local resident of Singapore or your company meets the condition of appointing at least one director who is locally resident in Singapore. A foreigner needs to hold either an EntrePass or employment pass (EP) to be appointed as a local resident director in Singapore.

A Dependant’s Pass (DP) holder is also eligible to be listed as a company director. But the said dependent cannot work without obtaining the Letter Of Consent (LOC) approved by the Ministry of Manpower (MOM). To be eligible to apply for a LOC, the DP holder should have at least 30% shareholding in an ACRA-registered business.



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