What is a Nominee Director in Singapore?
In Singapore, the Companies Act mandates that every business have at least one resident company director who must be a Singapore citizen or Permanent Resident. When a foreign organisation cannot provide a resident director, an ND can be appointed to fulfil legal requirements without actually being actively involved in company management.
Essentially, appointing an ND allows foreign entrepreneurs to meet Singapore incorporation requirements without waiting to become citizens themselves. Once appointed, the ND’s primary responsibility is to make sure the company complies with Singapore’s legal and regulatory requirements. Their activities may include:
- Attending and recording annual general meetings (AGMs)
- Submitting annual returns with the Accounting & Corporate Regulatory Authority (ACRA)
- Signing company documents
- Serving as a conduit between the company and ACRA
Advantageously, the ND does not need to hold qualifying shares to be recognised as a director. They need not have any operational or functional role, and other executive directors can manage day-to-day operations. Companies are also free to limit a nominee’s influence through a written agreement that specifies their responsibilities and restricts their authority.
Key Benefits of Engaging a Nominee Director in Singapore
Appointing an ND through a nominee director services provider like InCorp offers several advantages for foreign businesses in Singapore:
- Meet Legal Requirements: An ND allows companies to satisfy Singapore’s locally resident director requirements quickly.
- Simplified Incorporation: Foreign entrepreneurs can start their business without delays caused by residency issues.
- Cost-Effective Solution: Using an ND is nearly always more economical than relocating a foreign director or hiring a full-time local executive.
- Maintained Privacy: The ND’s details appear in public records instead of the foreign directors’, offering a level of privacy to the actual business owners.
- Local Expertise: NDs typically have knowledge of Singapore’s business environment and regulatory requirements, which can be valuable for foreign companies.
- Flexibility: Companies can replace the ND with non-local directors once they obtain Employment Passes, usually after about 6 months.
- Compliance Assurance: Experienced NDs help make sure the company adheres to local laws and regulations.
- Time-Saving: NDs handle administrative tasks, allowing foreign directors to focus on core business operations.
- Credibility: Having a local director is important for the company to make connections with local partners and customers.
These benefits make NDs a practical choice for foreign businesses entering the Singapore market. Of course, it is crucial to choose a reliable ND service provider to fully realise these advantages and avoid potential complications.
How to Source a Reliable Nominee Director in Singapore
When seeking an ND in Singapore, it is the norm to partner with a reputable corporate service provider (CSP), but one must also be sure that they adhere to the latest regulations. Notably, the Corporate Service Providers Act 2024 and the Companies and Limited Liability Partnerships Bill have introduced new laws that strengthen the regulatory framework for CSPs.
InCorp, a proven local CSP, strictly follows these new regulations, ensuring compliance, enhancing transparency in company ownership, and helping prevent financial crimes, including money laundering.
Beyond legislative adherence, the quality of service will vary from CSP to CSP. InCorp spans multiple countries, with over 1,500 dedicated professionals offering a comprehensive suite of services, including corporate secretarial, accounting and tax, payroll and HR, and compliance solutions. In essence, we have a proven reputation with on-the-ground experience when finding the best partnerships in Singapore.
Most importantly, by partnering with a trusted provider like InCorp, you can focus on your core business activities while confidently meeting Singapore’s regulatory requirements.
Appointing a Nominee Director in Singapore
After selecting an ND and completing your company registration, you must include the nominee’s details in the Register of Nominee Directors. This process requires:
- Proof of residential address
- Passport or NRIC
- Appointment date
It is crucial to keep these details accurate and up-to-date. Any misrepresentation could be seen as a breach of local regulations, potentially resulting in significant fines.
When working with InCorp, we can organise this registration process on your behalf. We can also provide you with an experienced corporate secretary who can help you work through this process smoothly and avoid compliance issues. They can also assist in maintaining proper documentation and making sure all necessary information is correctly recorded and submitted to the relevant authorities.
The Nominee Director Agreement in Singapore
The ND Agreement is a formal contract between the Singapore company and the nominee. This agreement serves two crucial purposes:
- It protects the nominee from being held accountable for decisions made by the company’s board.
- It prevents the nominee from making decisions that could impact the company.
Despite these protections, the ND remains obligated to comply with Singapore’s laws and must always act in the company’s best interests. Failure to fulfil their duties properly could result in financial responsibility for specific charges, including liquidation costs, especially if other directors are unavailable.
From the organisation’s perspective, the ND Agreement is an essential document that balances the company’s need for a local director with the protection of both the company’s interests and the nominee’s legal standing. It is a key component in establishing a clear and mutually beneficial relationship.
Again, a reputable CSP like InCorp will be able to facilitate an ND agreement tailored to your organisation’s needs.
Replacing or Removing Your Nominee Director
ND’s don’t have to be a permanent fixture. As your company grows, you may choose to replace them with non-local directors. This typically occurs when these directors receive an Employment Pass (EP), which usually takes about six months to process.
It is important to note that an ND is still required during two key periods:
- When a company first incorporates in Singapore
- While an Employment Pass is being processed
This flexibility allows your company to evolve its leadership structure as it establishes a stronger presence in Singapore, while always maintaining compliance with local director residency requirements.
Where to Next With Incorp
NDs provide a practical option for foreign business owners, allowing them to follow Singaporean regulations while keeping control of operations. InCorp’s knowledge in this field, along with our strict adherence to new legislation, makes us a compelling choice for your Singapore business plans.
For expert help with appointing an ND and following Singapore’s company rules, reach out to InCorp. Our team is ready to support you in setting up and growing your business in Singapore’s active market.
FAQs about Nominee Director in Singapore
- You need a Nominee Director if you are starting a company in Singapore as a foreign business owner and don’t have a local resident director.
- A Nominee Director’s tasks include going to AGMs, submitting yearly reports, signing company papers, and talking with ACRA.
- To get a Nominee Director, use a trusted Corporate Service Provider like InCorp. They offer professional Nominee Director services, handle the paperwork, and ensure you meet all legal requirements.
About the Author
Alton Neo
Alton has deep technical expertise in the Singapore Financial Reporting Standards as well as hands-on experience in accounting for publicly-listed entities and growing enterprises in Singapore. Beyond that, Alton also provides expertise to fund managers and family offices on structuring.
