If you’re planning to set up a business in Singapore, you’ve probably heard about the option of appointing a nominee director. So, Why is it so important for foreigners who are planning to set up a company in Singapore? Well, We’ve got you covered!
Importance of Nominee Director for Foreigners in Business Registration
What is a Nominee Director? Nominee director is an individual who is appointed to act as a director of the company on behalf of another individual or entity.
For all foreigners establishing businesses in Singapore, having a nominee director is essential due to regulations from the Accounting & Corporate Regulatory Authority (ACRA).
When incorporating a company in Singapore, there are some requirements that need to be met. The company must have:-
- A paid-up share capital of min $1
- A local registered office address
- At least one shareholder
- Local company secretary
- At least one local director
Under the provisions of the Singapore Companies Act, it is important for every company to have at least one director who is a resident of Singapore. Although a company can appoint multiple directors, ACRA will prohibit registration if none of them are local residents.
This is where nominee directors play a crucial role.They’re appointed to meet legal requirements without actively managing the company. Since a resident director must be a Singapore citizen or Permanent Resident, having a Nominee Director will help to fulfill these requirements and thus allow the foreign entrepreneurs to start a business in Singapore.
The criterias required for a nominee director are as follows:
- Must be an individual, not a corporate entity.
- Must be at least 16 years old in the UK and over 18 in other jurisdictions.
- Has never faced disqualification from serving as a director.
- Is not bankrupt.
- Is not the company’s auditor.
Role of Nominee Director
Despite being a part of a requirement for incorporating your business, a Nominee director also plays a crucial role in your business. Their primary responsibility is to ensure that your company is in compliance with Singapore’s laws and regulations.
They handle important tasks such as:
- Attending and documenting annual general meetings (AGMs)
- Filing annual returns with the ACRA
- Signing company documents, including contracts and resolutions
- Serving as a liaison between the company and ACRA
However, you can be rest assured as the Nominee Director will not have any operational or functional role of your company and that you can limit a nominee’s ability to influence your company through a written agreement with them.