Fundamentals of being a Director of a Singaporean Company

Fundamentals of being a Director involve understanding the core roles, responsibilities, and legal obligations that come with the position. Directors must oversee the company’s operations, act in its best interests, and comply with laws and regulations. They play a crucial role in decision-making, strategy development, and ensuring the company’s long-term success. To excel in this role, directors should prioritize effective communication, stakeholder engagement, and continuous learning. Here are some tips to enhance your effectiveness as a director:

Singapore Company Director: What are Their Duties and Liabilities?

A Singapore company director is the person who is in charge of running the company and making decisions for its future. The director has to follow the rules and regulations under the Companies Act, which governs the formation and operation of companies in Singapore. Some of the main responsibilities of a company director are:

Maintaining proper and up-to-date records of the company’s activities, finances, and accounts
Submitting annual reports, tax filings, and other required documents to the relevant authorities
Acting for the benefit of the company, its shareholders, and other parties involved
Acting with honesty and integrity in carrying out the duties and functions of the director
Avoiding any situations that may create a conflict of interest or affect the company negatively

A company director who breaches these duties may be subject to civil or criminal sanctions, depending on the type and gravity of the offence. The sanctions can include fines up to S$5,000, imprisonment up to two years, or disqualification from being a director for up to five years. Therefore, it is essential for a company director to know and fulfill their obligations carefully and professionally.

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Singapore Company Director: Key Facts, Eligibility and Requirements

Who is eligible to be a company director in Singapore?

According to the Companies Act, a company director must be:

A natural person, meaning a director cannot be another company or entity
At least 18 years old
A resident of Singapore, meaning a Singapore citizen, permanent resident, employment pass holder, or entrepass holder

A company must have at least one director who is a resident of Singapore. If you are a foreigner who wants to set up a company in Singapore but do not have a local person who can act as a resident director, you can hire a professional service provider who can offer you a nominee director service. A nominee director is a person who acts as a director for your company for a fee. Contact Hub for Nominee Director services.

What are the powers and duties of a company director in Singapore?

A company director in Singapore has the power to manage and operate the company according to its constitution (formerly known as memorandum and articles of association) and the Companies Act. The director has to act in the best interests of the company, its shareholders, and other stakeholders. Some of the key duties of a company director include:

Keeping proper and up-to-date records of the company’s transactions, accounts, and financial statements
Filing annual returns, tax returns, and other corporate documents with ACRA and other authorities
Acting in good faith and with honesty and integrity in carrying out the duties and functions of the director
Avoiding conflicts of interest and disclosing any personal interests that may affect the company

What are the liabilities and penalties of a company director in Singapore?

A company director who fails to perform his or her duties may face civil or criminal liabilities, depending on the nature and severity of the breach. The liabilities and penalties can range from fines up to S$5,000, imprisonment up to two years, or disqualification from being a director for up to five years. Therefore, it is important for a company director to understand and comply with his or her responsibilities diligently and professionally.

How do I appoint or remove a company director in Singapore?

The appointment or removal of a company director in Singapore is usually done by the shareholders of the company and is executed by the Corporate Secretary. The procedure for appointing or removing a company director is as follows:

The shareholders pass an ordinary resolution (a simple majority vote) at a general meeting or by written resolution to appoint or remove a director
The company notifies the Accounting and Corporate Regulatory Authority (ACRA) of the appointment or removal within 14 days by filing the relevant forms online
The company updates its register of directors accordingly
The appointment or removal of a company director takes effect from the date of the resolution passed by the shareholders, unless otherwise specified.

Who is not eligible to be a company director in Singapore?

There are some situations where a person may be disqualified from being a company director in Singapore. These include:

Being bankrupt
Being convicted of criminal offences that involve fraud or dishonesty
Being disqualified by an order made by the court
Being convicted of three or more filing related offences under the Companies Act within a period of five years
Having three or more High Court orders made against him or her compelling compliance with the relevant requirements of the Act within a period of five years
Having a company wound up for reasons of national security or interest

A disqualified person cannot be a director or manage any local or foreign company unless he or she obtains permission from the High Court or the Official Assignee (in case of bankruptcy).

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