The duties of officers in Singapore-incorporated corporations are prescribed by the country’s Accounting and Corporate Regulatory Authority (ACRA). The following description lays out who they are and what their roles include, even though they each bear numerous responsibilities to ensure that all businesses abide by the Singapore Company Law.
According to the Companies Act, Who are the Company Officers In Singapore?
The Companies Act, notably Division 2 of Pt (V), contains a detailed definition of the legal framework guiding directors and officials. As per Section 4(1), the term “officer” should have the following meanings:
- A director of a company.
- A secretary for a company.
- A company’s manager and receiver.
- A company executive.
- A liquidator appointed by a company that is voluntarily winding down.
However, in line with the Companies Act, the following individuals are not classified as company officers and are therefore not included in that definition: They consist of:
- A company receiver without a managerial position.
- Any receiver and manager appointed by the court.
- A judicial manager appointed by a court.
- Any liquidator appointed by the company’s creditors or one appointed by the court.
As a result, it is clear from the foregoing explanation that your firm can have several officers.
The Categories of Officers in a Singapore Company
To ascertain the level at which your company executives should be performing their duties, it is critical to identify the offices that they hold or oversee.
Although the Companies Act lists obligations that only apply to directors, it also lists obligations that cover company secretaries and any other “officer” belonging to the business.
These obligations are outlined in Section 157(2) of the Companies Act, which has been laid down to prevent a company’s officers from abusing their positions by leveraging their access to information for personal gain at the expense of the business.
An individual whose job description requires him to manage, oversee, and/or supervise day-to-day business operations in the organization is referred to as a director. Every company in Singapore must have at least one local resident director.
The “board of directors” (“Board”) is the collective term used to describe them because the majority of Singapore firms often have more than one director.
According to Section 4(1) of the Companies Act, a person who assumes the responsibilities of a director, regardless of the title bestowed upon them by the business, is a “director” of the company.
The Registrar of Companies in Singapore considers someone you appoint to fill tasks, directions, or instructions that correspond to those of a company director to be a substitute director.
Thus, you can categorize each of your company’s directors as follows: :
- The executive director, such as the managing director.
- The non-executive director, such as an independent director.
- The board’s chairman.
- The nominee director.
- The alternative director.
- The de facto director.
- The shadow director.
But, your business may also use the term “director” to refer to a specific position and not only the nomination of an officer of the company to the position of director.
For instance, if your business employs a person whose title is “sales director,” that person may simply be an employee with the duty of managing your sales activities. Such an employee might not have been chosen by your company to serve as a director per the rules outlined below, and it could be you didn’t intend for them to do so.
But how can a corporate director be distinguished from “other” directors of operations?
Check the registration of your company’s directors, CEO, secretaries, and auditors to see if a person holds the title of “director” in addition to their regular employment, or use BizFile+ to access the Accounting and Corporate Regulatory Authority’s (ACRA’s) database.
The categories of directors listed above are not specifically defined or distinguished in the Companies Act, and all directors are subject to the same obligations, such as fiduciary duties, the duty of care and skill, and other legal obligations.
It’s crucial to realize that even if a person is not specifically listed as a director but has taken on the responsibilities and status of one, they are still considered to be one by the law. Although not technically appointed, such a person is regarded as a de facto director.
2. Company Secretaries
In Singapore, each business must designate at least one company secretary. The Board of Directors of your organization should be taking up the responsibility for doing so.
The following principles should generally be reflected in the eligibility requirements for hiring a corporate secretary in a Singapore company:
- A natural individual.
- A Singaporean citizen or resident.
- Not the company’s sole director.
- The necessary expertise, credentials in academia, and professional experience.
- On the day of the appointment, the Registrar issued no ineligibility directives.
ACRA emphasizes that your company secretary must be accessible at the registered office throughout working days and hours. If not, a qualified agent or clerk must perform the necessary tasks in his or her place since a company secretary is authorized to speak with the board directly.
If there are multiple company directors, you may designate one of them to act as the secretary of the company.
In addition, one person serving in a dual role must complete any tasks that both a director and secretary are obliged to complete. A person functioning in two capacities, such as a director and a secretary, is only permitted to sign once when witnessing the affixation of the common seal to a document.
The following are just a few of the additional important tasks and responsibilities of a company secretary:
- Preparation, maintenance, and updating of legal records and registers.
- Preparation of resolutions made by the board.
- Compiling the agenda for planned meetings and giving directors advice on it.
- Compiling of documents that contain thorough information on planned meetings.
- Participating in meetings and taking down the minutes.
- Certifying copies of minutes.
- Overseeing the democratic and proper conduct of the voting process.
- Compiling and disseminating financial reports.
- Sending out proxy reports.
- Effectively communicating with the shareholders.
Consequently, a corporate secretary has a wide range of obligations. Companies, therefore, frequently choose to use specialized businesses to handle compliance tasks and provide secretarial services, such as accounting firms and corporate secretarial firms.
In such a scenario, the professional firm would sign an agreement to offer secretarial services and allow one of their employees to be designated as the client’s secretary in exchange for a retainer fee. Thus, the company secretary is an “outsourced person.”
3. Chief Executive Officers (CEOs)
You should be aware that although the majority of businesses choose to have a CEO, doing so is not legally required.
According to Section 4(1) of the Companies Act, a CEO is defined as an individual:
- acting directly on behalf of or in the service of a company, and
- is primarily responsible for the management of the business and its day-to-day operations.
It should be emphasized that a person’s title does not necessarily indicate their exact position inside the organization; under the aforementioned scenarios, an employee may be regarded as the CEO.
Even though their functions, including those prescribed by statutory requirements, typically overlap, you could not assign a CEO the same duties as a managing director before January 3 2016.
To remedy this overlap, the Companies Act was modified to place some statutory obligations on CEOs beginning January 3, 2016. In general, the Companies Act does not consider a CEO to be a director. A CEO is viewed as an employee of a corporation who is bound by a contract. Your business has the authority to select a CEO and determine the conditions that come with the position.
The CEO’s service agreement will outline, among other things, the CEO’s responsibilities, authority, and duration of the appointment. Also, it is typical for the contract to limit the CEO’s involvement in any rival companies.
4. Chief Operations Officers (COOs)
The COO is responsible for managing the company’s business operations and reports directly to the CEO. The COO will probably report to the executive vice president if there is one in the company. A COO will often carry out the duties of a vice president in the absence of a specific vice president post, managing both strategy and day-to-day operations.
5. Company Vice Presidents
The second executive in charge of a corporation is the vice president. His tasks could resemble those of a COO for a business. Yet, in general, a chief operating officer’s duties are more tactical and day-to-day, whereas a vice president’s function is more strategic.
6. Chief Financial Officers (CFOs)
The executive holding the highest financial role for the company is the CFO (or treasurer). The company’s financial strategy is developed by this senior manager, who also monitors cash flow and profitability. The CFO, who normally answers to the CEO, is also in charge of the corporation’s budget, operations related to maintaining financial records, and company audits.
Registration of Directors, CEOs, Secretaries, and Auditors’
At one time, a corporation would have been required by the Companies Act to keep a record of its directors, managers, and secretaries at its registered office. Both shareholders and non-shareholders were required to be able to view this registry.
The second phase of the Companies (Amendment) Act 2014 went into effect on January 3, 2016, and as of that day, a company is no longer required to keep a record of its directors, managers, and secretaries.
ACRA currently maintains an electronic registration of the directors, CEO, secretaries, and auditors of your firm (if any). As a result, a corporation is only obliged to inform ACRA within fourteen (14) days of the appointment or change in appointment of its director, CEO, secretary, or auditor.
The name and contact information for your directors, secretaries, and auditors would remain on ACRA’s electronic register if your company was registered before January 3 2016, unless you notify them of any changes.
Regarding CEOs, Section 173D(2) states that if a company was incorporated before January 3 2016, the name and information of the manager(s) submitted with ACRA should be preserved in the register of CEOs unless you notify them of any changes.
Credentials Required of Company Officers
The qualifying standards for corporate officers, the selection procedure for choosing them, and the reasons for their removal should all be outlined in the by-laws of a corporation. In addition, the titles of the officers and a description of their duties should also be listed in the by-laws.
Corporate officers are also required to fulfil the following fiduciary obligations:
1. The Obligation to Exercise Care
Officers have a duty of care to make decisions that are in the company’s and its shareholders’ best interests.
2. The Obligation for Loyalty
Duty of loyalty requires them to prioritize the company’s and its owner’s interests.
3. The Obligation for Good Faith
Officers have a duty of good faith to conduct themselves in a morally upright and honest manner while performing their corporate duties.
We hope this article can help you with the selection of your company officers in Singapore if you are a business owner in Singapore and need advice on issues relating to the appointment of Directors, Secretaries, Chief Executive Officers (CEOs), Chief Operations Officers (COOs), Vice Presidents, and Chief Financial Officers (CFOs). This will help you ensure that your company remains in compliance with Singapore law as it develops and grows.
Suppose you are a newly incorporated company in Singapore and looking for a local director or a company secretary. In that case, you can also leverage the service of a corporate service provider to meet the statutory requirements. Outsourcing these critical positions to the experts would not only ensure the work is done well and on time but also save you cost in the long run.