Resident (Nominee) Director Obligations and Risks

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Resident (Nominee) Directors

The Companies Act (Cap. 50) (Companies Act) has been amended to introduce Registers of Nominee Directors of companies under the new Part XIA which came into effect on 31 March 2017.

Companies incorporated under the Companies Act are required to:

• Keep a register of its nominee directors containing the particulars of the nominators of the company’s nominee directors; and
• Produce the register of nominee directors and any related document to the registrar, an officer of ACRA or a public agency, upon request.

A director is a nominee if the director acts in accordance with the directions, instructions, or wishes of another person.

The obligation to act in accordance with the directions, instructions or wishes of another person may arise from legal obligations (e.g., contract; trust) or informal arrangements.

For example, a director is a nominee of a person with a shareholding in a company if that person appoints him to the board of directors of the company and he acts in accordance with the directions, instructions or wishes of that person.

For example, a person appointed as a director of a company for compliance with the requirement that every company registered in Singapore must have at least one director who is ordinarily a resident in Singapore would generally fall within the definition of a director who is a nominee. This is the usual scenario when most foreign business owners use a nominee director.

In most cases, the corporate services provider that you use to incorporate your company will offer a resident director service that allows you to comply with the regulations.  

Obligations Of Nominee Directors

Directors who are nominees should, within the applicable timelines, (i) inform their respective companies of that fact and (ii) provide the particulars of their nominators. In addition, nominee directors must inform their companies when they cease to be a nominee and of any change to the nominator’s particulars provided to the company.

For nominators who are individuals:

• Full name
• Residential address
• Nationality
• Identity card number or passport number
• Date of birth
• The date on which the director became the individual’s nominee

For nominators who are legal entities:

• Name
• Unique entity number issued by the registrar, if any
• Address of registered office
• Legal form of the legal entity
• Jurisdiction of entity registration
• Legal form of the legal entity
• The jurisdiction where the legal entity is formed or incorporated
• Name of corporate entity register of the jurisdiction where the legal entity is formed or incorporated (if applicable)
• Identification number or registration number of the legal entity on the corporate entity register of the jurisdiction where the legal entity is formed or incorporated (if applicable)
• Date on which the director became the legal entity’s nominee

Nominee Directors’ Risks

As long as you have engaged a reputable corporate service provider, you do not run any risks in using a nominee director.

The nominee director, in this case, will be contractually prohibited to engage in the management of the company, will not come to your offices, will not participate in negotiations, run the day-to-day business or have any saying in board meetings. He/she will only be utilised to comply with the local director requirement, and the operations of the company will be entirely left to the real directors.

Nevertheless, since the nominee director is a director of the company, he/she must act as a fiduciary of the company and always act in the interests of the company and in compliance with the laws and regulations of Singapore. This means that in the event the real directors break the law, the nominee director will also be held accountable for this breach.