Singapore Nominee Director
A foreign individual who is looking to start a new business in Singapore, but do not have the required visa for it, need to initiate the registration of their Singapore company with a nominee director.
All incorporations/ companies in Singapore must be registered with the Accounting & Corporate Regulatory Authority (ACRA) and abide by the statutory compliance and statutory requirements for registration of a company in Singapore include:
- at least one shareholder (individual or corporate entity)
- at least one resident director
- one company secretary
- initial paid-up share capital of at least S$1
- a physical Singapore office address
However, before we proceed, we would like to tell you something that other service provider won’t. If you are not a Singapore permanent resident or a valid pass holder, then to start your company, you will need a resident director.
And if you don’t have one, Paul Hype Page & Co will assist in providing you with a reliable individual, while applying an Employment Pass for you, in order for you to become your company’s director.
Some service provider will continue to charge you the nominee director fees without telling you that you can be your own director. However, with Paul Hype Page & Co, we will tell you straight, that you don’t need us anymore.
Trust, that is the most important thing in a business. Therefore, trust us to provide you with more info on the term of nominee director.
The risks of using nominee directors
In our experience as an ACRA license corporate service provider, we have not seen any issue thus far. That is also we have all our customers covered.
However, our professional advice is that all nominee directors must be appointed with a legal written arrangement. This is to safeguard you as a business owner and your company as a legal entity.
The risks of not using proper documents to set up the arrangement is that you incur damaged which can’t be controlled.
Things that might turn sour in the business includes:
- Damaging relationship with the nominee and they treat the shares as a gift by you. Therefore, claiming the entitlement as the real owner of the shares in the company,
- Demanding more payment,
- The nominee passes away or loses mental capacity, and their next of kin refuses to recognize the arrangement and seek to treat the shares as their right,
- The nominee becomes uncontactable,
- Using the shares as security for a personal loan, or selling them, or paying himself a director’s service fee,
- Disclosing the arrangement to a third party.
Hence, the importance of using well-written documents to record a nominee director arrangement cannot be overstated, given the risks highlighted above.
Why appoint a nominee director?
This is the most important part where you need to pay attention to. There are various reasons for using a nominee director. Singapore Company Law requires foreign investors setting up companies in the Republic to appoint an ordinarily resident director and a resident company secretary.
The director must be a Singapore citizen or may have a residence or permanent employment pass. However, there are situations in which a foreign business cannot find a local partner.
Nominee directors are often family members or trusted friends of a business owner. However, let’s say you do not have a nominee director; Paul Hype Page & Co has the expertise and resources to handle this situation in the professional, easy and fast manner. Like we have mentioned, we are No. 1 when it comes to Singapore company incorporation.
You must understand, a foreigner or a foreign company must go through an ACRA licensed corporate service provider for their company incorporation. By appointing the No. 1 in Singapore, we are then allowed to provide you with the best nominee director services.
One of the greatest advantages of this appointment is the privacy of the shareholder or the ‘actual’ director. Moreover, your nominee director can set up the company’s bank account, complete the taxation registration and obtain the required licenses to operate your business. This will not only save you time to concentrate on growing your business, but also save you much money.
The role of a nominee director is not illegal under Singapore law, if it is used for legitimate reasons. The existence and identity of the company owner is recorded for the benefit of public agencies such as the Inland Revenue Authority of Singapore and ACRA.
ACRA states: “A director must make decisions objectively, act in the best interest of the company, avoid conflicts of interest, and be honest and diligent in carrying out his duties.”
Definition of a Resident Director in a Singapore
It is vital to understand that Singapore’s law doesn’t recognize the difference between either an active, inactive, shadow, or even a sleeping director.
According to the Singapore Company act, a director as “any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions or instructions the directors of a corporation are accustomed to act and an alternate or substitute director”.
Hence, it is important to understand that even though a person is not formally appointed as a director, ACRA will still “recognize that person as a director if other directors of the company follow his instructions or if he is involved in the management of the company”.
However, the same person who’s appointed as the company director cannot also serve as the company secretary.
Role of a Nominee Director in a Singapore Company
In Singapore, a nominee director has the same obligations and responsibilities as those imposed on a regular director by the Companies Act and all abiding law in Singapore. However, point to be taken, a nominee director never was and will never be named as the legal owners of a business.