All the companies that register themselves in Singapore for doing business are required to have a minimum of one resident director. Singapore Companies Act specifies this mandate.
A nominee director Singapore is a local director for a company that does not otherwise have a resident director. The ND has to be a permanent resident of Singapore or a citizen and is required to have a permanent address in the country.
In reality, the nominee director does not have any role in the business operations of the company. The appointment of the person is to only fulfil the regulatory requirements of Singapore.
Nominee directors are especially used by foreign nationals planning to set up a company in Singapore, but there is no local individual who can take the role of the resident director, then you can hire someone for the director’s role of your company for a fee. This type of director is referred to as a nominee director.
A foreigner can appoint themselves as a nominee director while setting up a company in Singapore. To do that, the person has to become a Singapore resident first and then self-appoint themselves to be a nominee director to meet this regulation.
To initiate the process of self-appointing yourself as a nominee director, you need to apply for an “Employment Pass” or an “Entrepreneur Pass.” After getting the work pass, you can appoint yourself a director of your newly formed company. In this case, you do not need an ND anymore.
You need to remember one thing that when the Singapore government approves your work pass, it expects you to relocate to the country and set up a permanent residence. So, you should only apply for a work pass if you are willing to relocate to Singapore. If you do not have a plan to relocate and live in Singapore, then you would need permanent nominee director services
What Is a Nominee Director’s Role?
Now, the question is what is a nominee director’s role in Singapore or what role does the person play?
The main role of the nominee director is to fulfill the condition of having a resident director. According to the Companies Act, they are still a director and has to work in the interests of the appointing company.
Here is the role of a qualified and reliable nominee director:
- They are required to have knowledge and skills at an acceptable level to manage the affairs of the company.
- They should act as a representative of the board of directors to undertake various tasks. Some of the duties are handling financial paperwork, engaging with the local authorities relating to license registrations, and others.
- The nominee director holds the responsibility to perform their duties with integrity. Also, the person needs to avoid any conflict of interest with the company.
- The nominee director has to be aware of company accounting and tax, along with statutory obligations. Their duties also comprise of working alongside the company secretary to make sure all the mandatory documents are submitted to ACRA on time.
What Is the Deed of Indemnity?
The deed of indemnity is a contract between the company and the nominee director.
This contract protects the nominee director by making sure the person cannot make any decisions that are disadvantageous to the company or sign any legal documents without standing instructions from authorised individuals.
The deed of indemnity also protects the nominee director by mentioning that the person will not be held accountable for the decisions made by the actual board.
Nominee Director Duties
Here are the nominee director Singapore duties:
- The Companies Act imposes a number of responsibilities on the nominee director. The primary role of a nominee director is to oversee the operations of the company as a “watchdog” and make sure sound policy decisions are taken.
- Also, the nominee director acts as a liaison between the company and the nominator.
- A nominee director acts as a non-executive director. However, they are expected to be actively involved in the decision-making process relating to the financial performance of the company, investments, and fund-raising strategies.
- An appointed nominee director should be careful and cautious when dealing with unpublished and unauthorised price-sensitive information to maintain the integrity of the company.
The nominee director always needs to comply with the code of conduct when it comes to regulating, monitoring and reporting trading by insiders prepared by the listed entity.
Do I Need a Nominee Director?
Why does your company need a local director in Singapore?
The reason why the Singapore government rolled out the regulation of having a local director is for accountability.
The government wants someone in the company in Singapore to be held responsible if they violate laws. For example, if a company tries to evade its taxes, breaks any law, or dupes customers, the nominee director can be held accountable for representing the company
If Singapore does not include the nominee director requirement, then foreign business owners could easily break laws and abscond. To prevent such situations, the government passed the law of having a local director assuming that the nominee director for a company will follow all the due diligence and comply with the law.
Companies in Singapore often appoint a nominee director, who acts as a nominee shareholder as well.
So, what is nominee shareholder?
A nominee shareholder Singapore is the person who “lends his/her name” to you to function as the registered shareholder in a company. However, the truth is that the person holds the shares for your benefit only.
Can I replace the Nominee Director?
Sure. For that, you need to get an Employment Pass from your own company. That takes about 6 months to receive, so you’ll still need a Nominee Director while you’re waiting. Getting the Employment Pass will cost you about S$800 - S$1,200, plus you need to have a monthly salary of at least S$6,000.
What Is the Procedure for Hiring a Nominee Director?
The procedure of hiring an nominee director, along with the company incorporation can be found below:
- Submit your nominee director hiring request, along with incorporation details
Once you submit the request with your company details, the authorities will:
- Review the availability of your proposed company name.
- Keep in touch with you and advise you on the next step.
- You need to sign the documents of incorporation either in Singapore or before the Notary Public if you are abroad.
- Set up your company and open a bank account
After signing the incorporation documents, you will go ahead to register your company with the Accounting and Corporate Regulatory Authority of Singapore (ACRA).
If you do not have a local director, you can hire a qualified Singapore resident as the nominee director. Look for companies which provide nominee director services. Osome provides this service conveniently.
After hiring a nominee director, you need to record it in the Register of Nominee Directors, which will contain details of the nominator (you). It contains the responsibility of the nominee director to make sure that this data is maintained correctly.
How Much Does a Nominee Director Service Cost?
The annual price for providing nominee director services by local agencies ranges from S$1,800 to S$5,000. There are many agencies that even ask to pay a refundable security deposit of S$2,000 on top of it.
What Is a Security Deposit?
In Singapore, taking security deposits is an industry-standard. At Osome, we do not take security deposits anymore, but most agencies still do. The deposit works like insurance for the nominee director. After the Nominee’s contract ends, the person gets back the deposit.
If you’re looking for a nominee director service, don’t hesitate to reach out to us.