In this article, we shall talk about the responsibilities of a company director. Also, we will let you know those who are eligible for the position, how can they be appointed, and resign from the post.
What Does a Director Do?
A director manages the company’s affairs and handles major issues in the company. In some cases, the director is the employee of the company, though it isn’t mandatory to be. If you are a director in the company where you work, you probably would have noticed that your actions determine the company’s progress.
How Many Directors Do I Need?
Every company in Singapore must have at least one locally resident director. The appointed locally resident director can either be a permanent resident or a Singaporean citizen. The individual may even be sponsored to serve as the local director on an Employment Pass work visa after the company has been incorporated.
Who Can be a Director in Singapore?
Anyone who wants to be a director in Singapore must be:
- Older than 18 years
- A natural person ( meaning a business or business entity don’t qualify for the position)
- A person with a sound mind
Suppose the constitution requires the director to hold a specified share qualification and the appointed person isn’t qualified already. In that case, he must obtain the qualification within two months after his appointment or within a shorter period as specified by the constitution.
The following individuals don’t qualify to be a director:
- An undischarged bankrupt.
- An unfit director from a different company.
- A director of a company that was closed down due to national security.
- An individual involved in offences like fraud, dishonesty, or any other violation due to which they were punished by the authority with imprisonment of 3 months or more in Singapore or any other country.
- An individual convicted of an offence under Part XII of the Securities and Futures Act, where they were convicted on or after 1st of July 2015
- An individual who has been imposed with civil penalty under section 232 of the Securities and Futures Act upon on or after 1st of July 2015
- An individual that has been disqualified by an order in addition to other sentences imposed.
Foreigners / Non-locals as Directors
Foreigners/non-locals can become directors of a company that already has at least one locally resident director. Presently Dependant Pass holders can be listed as a Director of a company right from the point of incorporation. However, they cannot start working until MOM approves the Letter Of Consent (LOC).
If a foreign company doesn’t have a local director, they can appoint a nominee director to meet ACRA’s requirements of having at least one locally resident director.
Duties and Responsibilities of Singapore Company Directors
The following are the responsibilities of a company director:
To avoid conflicts of interests
A director is not expected to merge his personal interests with the company’s interests. Consequently, they must declare whether they are interested in any proposed transactions of the company. The declaration includes situations where a subcontractor is a relative of the director or when the company partners with another business in which he holds minor shares.
To act in the interests of the company
A director has to serve honestly in every action they take. Any third party and personal interest shouldn’t influence the director’s decision for the company.
To behave with care, skill, and diligence
Directors must be caring, skilful, and diligent in the course of their duty. In most cases, the actual experience and skills serve as a standard of what is expected of him.
To use his powers for the right purpose
Directors must not misuse their power or information available to them in the company. They are expected to direct their power to the company’s interest. For instance, a director that issue shares with the intentions of raising capital is simply misusing the power he has. The example we mentioned just now is quite common. Another example that is considered as misuse of power involves issuing of shares to dilute the shareholdings of a member or preserve his control of the board. Any director who misuses their power is unfit for the position and may be forced to resign.
Meeting the requirements of the Companies Act
A director also serves as a guardian of a company. Hence, it’s part of his responsibility to meet statutory requirements under the Companies Act. Those requirements are as follows:
- Have an AGM and file annual returns at the appropriate time
- Maintain a local registered business address
- Keep statutory registers such as a register of members, directors’ register, and a register of charges and also report changes to ACRA.
In most cases, the company’s director works in concert with the secretary of their company in order to fully understand and meet every filling requirement. If a director fails to fulfil these requirements, they can face penalties.
Becoming a Director
You can become a director as soon as your company becomes incorporated or after the company is formed. First, the secretary of your company will prepare the director’s consent form and give it to you to sign. Then, other directors in the company will also sign in order to approve your appointment. After that, the form will be filed with ACRA, and the company secretary will enter your details into the company’s registers.
Resigning as a Director
If you want to resign as a director, the first thing you need to do is to ensure the company has another locally resident director to meet your obligations under the Companies Act. Next, inform your company secretary about your wish to resign. The company secretary will prepare your resignation letter and a resolution for other directors to sign. Also, changes will be filed with ACRA, and the company secretary will update every necessary register.
Don’t hesitate to contact HeySara today if you need assistance to meet all the statutory requirements of a resident director. We will be glad to help you.