3 Ways of Appointing a Local Director for a Singapore Company
Looking to set up a company in Singapore but unsure how to fulfill the local director requirement? This article has got you covered with solutions such as obtaining a work visa, engaging a nominee director, or appointing an existing employee as a local director. Learn about the obstacles and solutions to meet this basic requirement for your company in Singapore.
Local Director Is One of the Basic Requirements
As you may already know, all Singapore companies must comply with the requirement to have at least one local director.
In order to meet these requirements, there are a few possible solutions. Which one is preferable for you will depend on your specific business plans. There is a high chance that the situation will change with time, as when the business grows there are always new options. We discuss these options below.
The basic requirements to establish a new private company in Singapore are quite straightforward. They include:
Minimum share capital of SGD 1
Minimum number of shareholders: One (100% foreign shareholding allowed)
Minimum number of directors: One. There is no limit to the maximum number of directors, but at least one of them must be local. Thus, if you are a foreign person starting a new company in Singapore, you will have to find a local director besides yourself.
Company secretary
Registration business address
Obstacle and Solutions
One obstacle for foreign entrepreneurs can be the need to appoint a local person as a director of the new company.
Very often, foreign entrepreneurs do not have anyone in mind who could be appointed as a local director of the company, as they just start their business and don’t have the right people for the job. However, there are at least three conventional solutions:
Solution 1: Obtaining a Work Visa and Appointing Yourself as a Local Director of the Company
If you are planning to actively manage your company from Singapore, you should start working on this option. There are 2 types of long-term working visas (passes) available for business people planning to relocate and run their companies in Singapore: Employment Pass (EP) and EntrePass. Both passes satisfy the criteria of the resident director, and they will be issued exactly for the company that hired you. The main issue is time lag: to get your EP issued, you need to file an application on behalf of the company, but the company can be registered only with the local director. In other words, you will still have one at least temporarily, until your own work pass is approved and issued.
EntrePass, on the other hand, can be approved even without registering the company. So you can become the only director of the new company if you decide to go by the EntrePass route.
There are some other important points to consider:
Work visas are issued by the Ministry of Manpower (MOM) and are not guaranteed to be approved. In some cases, especially for new companies, the process might be lengthy.
The minimum recommended monthly salary for senior-level applicants, like Managing Directors and CEOs must be at least S$7,000. The salary can vary depending on qualification, age, and working experience. There is a self-assessment tool provided by MOM which everyone can use to check what will be the qualifying salary in each particular case: https://www.mom.gov.sg/eservices/services/employment-s-pass-self-assessment-tool
The applicant who is granted Employment Pass (or EntrePass) will need to settle in Singapore. People who work in Singapore need to maintain their permanent place of stay – rent a flat, house or apartment; and notify MOM of any change of address. The place to live doesn’t have to be secured before the visa is approved, but it has to be settled soon after the arrival to Singapore.
It is expected that the Singapore company that employs the foreign director must have a substantial start-up capital; usually $50,000 or more. The business of the company must be commercially viable and able to generate enough cash flow and net profit to cover the remunerations of all staff, including the business owner seeking his/her own employment with their company.
Thus, this option is suitable if you really plan to move to Singapore for business and your company’s prospects are strong.
As mentioned earlier, you will still have to hire someone as a local nominee director for a short period – while applying for an Employment Pass and waiting for approval. The application process can take anywhere between 3 weeks and 3 months, so the hiring period should be at least 3 months. Corporate Service providers in Singapore usually have this option to assist their clients with new companies setup and employment pass application.
If you are not planning to move to Singapore, you have two other options to meet the requirement of a local director in Singapore
Solution 2: Engaging a Nominee Director
The appointment of a nominee local director is the most common solution for all offshore companies incorporated in Singapore in order to meet the requirement for the local director.
This service is usually provided by your corporate services provider who handles incorporation and other Singapore company compliance matters.
Business relationships with nominee directors are regulated by a legally binding agreement between them and the owners of the company. Such an agreement defines the rights and obligations of the nominee and the company, limitations of functions and liabilities, and terms of engagement, such as duration and remuneration. Payments are usually made on an annual basis, although it may be monthly if there is more work involved.
Solution 3: To Appoint One of the Company’s Employees as a Local Director of the Company
If you plan for your Singapore company to establish an office in Singapore and employ local staff, one of the company’s local employees can act as a local director.
If the company plans to hire local senior staff, then one of these employees can act as a local director of the company. The solution in this case is quite simple and straightforward.
All the relevant conditions will be expressly stated in the employment contract.
An employee acting as the director can be executive or non executive level. If the position is an executive level, the director’s primary function will be to manage the company, which largely coincides with the director’s functions. If the employee is not an executive level, then it will be necessary to more clearly define the conditions and responsibilities associated with the execution of the director’s function. There can be an option where the local employee acts as a specialist-cum-nominee director.
In any case, it should be kept in mind that finding such an employee can take some time and effort. The main challenge will be to find a person whom you can trust with the key affairs of your company and who will also be confident in his relationships with the company.
It is also important to remember that the situation changes, the company business evolves and it might be necessary to switch from one solution to another.
For example, you can temporarily hire a nominee director from a corporate service provider until you find a suitable local candidate to be appointed as your company’s local director.
If you are planning to actively manage your company from Singapore, you should start working on this option. There are 2 types of passes available for business people working at their companies: Employment Pass (EP) and EntrePass. Both passes will work to satisfy the criteria of resident director, and they will be issued exactly for the company that hired you. The main issue is time lag: to get your EP issued, you need to file an application on behalf of the company, but the company can be registered only with the local director. In other words, you will still have one at least temporarily, until your own work pass is approved and issued.
EntrePass, on the other hand, can be approved even without registering the company. SO you can become the only director of the new company if you decide to go by the EntrePass route.
There are some other important points to consider:
Work visas are issued by the Ministry of Manpower (MOM) and are not guaranteed to be approved. In some cases, especially for the new companies, the process might be lengthy.
The minimum recommended monthly salary for senior level applicants, like Managing Directors and CEOs must be at least S$7,000. The salary can vary depending on qualification, age and working experience. There is a self-assessment tool provided by MOM which everyone can use to check what will be the qualifying salary in each particular case: https://www.mom.gov.sg/eservices/services/employment-s-pass-self-assessment-tool
The applicant will need to settle in Singapore. People who work in Singapore need to maintain their permanent place of stay – rent a flat, house or apartment; and notify MOM of any change of address. The place to live doesn’t have to be found before the visa is approved, but it has to be settled soon after the arrival to Singapore.
It is expected that the Singapore company that employs the foren director must have a substantial start-up capital; usually $50,000 or more. The business of the company must be commercially viable and able to generate enough cash flow and net profit to cover the remunerations to all staff.
Thus, this option is suitable if you really plan to move to Singapore for business and your company’s prospects are strong.
As mentioned earlier, you will still have to hire someone as a local nominee director for a short period – while applying for an Employment Pass and waiting for the approval. The application process can take anywhere between 3 weeks and 3 months, so the hiring period should be at least 3 months. Corporate Service providers in Singapore usually have this option to assist their clients with new companies setup and employment pass application.
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