3 Basic Requirements for Company Registration in Singapore

A company in Singapore cannot be registered without at least one resident director. For simplicity, it is common to call it a local director. It can be any individual who is at least 18 years of age. He or she must not be bankrupt and must not be disqualified from being director. Besides the local director,  an unlimited number of additional directors can be appointed. Every director’s minimum age must be the same, and there are no restrictions on nationality. 

Who is considered to be resident? It can be a Singapore Citizen or Singapore Permanent Resident. It can also be a holder of a long-term work pass in Singapore (Employment Pass), but generally such persons can work for one company only. In other words, if they are employed by one particular company, they cannot randomly hold directors’ positions in other companies in Singapore. They need to obtain a permission from MOM, which is also called Letter of Consent (LOC).

Besides, in order to get the permission from MOM for such candidates, the companies must be connected to each other by business. For example, they can belong to one group or one can be a subsidiary of the other.

Read this article about 3 Different Ways of appointing a Local Director in Singapore

A Nominee Director

There are many thousands of companies formed in Singapore every year. This is because of the popularity of Singapore as a South-East Asia hub and friendly tax regime. Obviously, many of these companies do not have local staff or partners. This is the reason why the service of Nominee Director is so popular and widely used. This is a common practice for the purpose of company setup in Singapore and it is used virtually by all corporate service providers. 

Local nominee directors receive annual remuneration (director’s fee) and they are essentially “sleeping” members of the company. Their role is limited to signing the company’s statutory resolutions, such as the annual general meeting (AGM).

Nominee Directors might be required to sign some company documents from time to time, as this may be necessary due to the quorum requirements according to the company’s Constitution.

However, nominee directors do not hold any management roles and are not involved in any business decisions of the company.

However, there could be arrangements in which such directors are more actively involved, depending on the company’s business needs. In other words, they can transition to be an employee of the company,whether on a part-time or a full-time basis. There are no strict rules, the arrangements can be agreed between the parties in the course of business. Otherwise, their activities are limited by the agreement on the provision of nominee service, concluded between them and the company. 

At the same time, a nominee director may be subject to legal liability if the company violates certain provisions of the Companies Act. When a company is punished for breaches, the authorities may inquire whether a particular director properly exercised director’s duty, for the purpose of compliance with regulations. Thus, it is in everyone’s best interest, both owners of the company and local director, that there is proper communication going on, to ensure timely compliance and smooth processes.

Local directors are usually represented by the corporate service provider and protected by the Indemnity Agreement.