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Singapore Private Company Registration Guide (6) - Appointment and Duties And Responsibilities Of Directors of a Singapore Company

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Singapore Private Company Registration Guide (6) - Appointment and Duties And Responsibilities Of Directors of a Singapore Company

1.

Appointment of Directors


In accordance with the Companies Act, a Singapore company can have any number of local and foreign directors. However, the company must have at least one director who is “ordinarily resident in Singapore?i.e. Singapore Citizen, Singapore Permanent Resident, or a person who has been issued an Entrepreneur Pass or Employment Pass. Any person above the age of 18 years may be appointed as a director. However, certain individuals e.g. bankrupts, are disqualified from holding director positions.


2.

Duties And Responsibilities Of Directors of a Singapore Company


DIRECTORS of a Singapore company must comply with the common law and specifically with the Companies Act of Singapore. As most of the company’s powers are vested in the board of directors, they actually control its affairs and are thus answerable to the company’s shareholders collectively.


Fiduciary Duties


Directors have a fiduciary duty to their company. This means that they must be loyal to the company and must act honestly and in good faith when exercising their powers. Where a director has a personal interest that may conflict with his fiduciary duties to the company, he should make disclosure to the company and obtain the approval of the company.


Statutory Books


Every company shall keep a register of its members and the various statutory books at the company’s registered office or some other appropriate place where notice of the place has been lodged with the Accounting and Corporate Regulatory Authority (ACRA). In addition, minutes of directors and shareholders?meeting must be maintained. Only the minutes of the shareholders?meeting can be inspected by the members.


Statutory Filings


Changes in certain statutory information (e.g. notification of a change of registered office address, appointment or resignation of directors, secretaries, or auditors, allotment of shares) must be lodged with the ACRA on the prescribed forms within specified time limits as stipulated by the Companies Act.


In addition, an annual return must be filed with the ACRA together with a copy of the audited accounts of the company within one month from the date of the annual general meeting of the company unless it is an exempt private company (a private company whereby its shares are not held directly or indirectly by any corporation and which has not more than twenty members). An exempt private company has to file an exempt private company certificate which states that the company is in a position to meet its liabilities as and when they fall due and that a set of audited accounts has been laid before the company aat the annual general meeting.


Accounting Records


The directors and managers of every company are required to keep proper accounting records to sufficiently explain the transactions and financial position of the company. The records usually contain entries of all receipts and payments, details of sales and purchases of goods, record of the company’s assets and liabilities and a records of annual stocktaking if the company deals in goods.


The accounting records must be kept at the company’s registered office or at such other place as the directors think fit. The Companies Act requires the accounting records to be kept for seven years.


Annual Accounts


The directors must prepare a profit and loss accounts and balance sheet together with notes to the accounts giving a true and fair view of the state of affairs of the company at the end of the financial year.


The director’s report attached to the accounts must be approved by the board and signed by two directors.


Appointment of Auditors


The directors of a company must appoint an auditor within three months of the company’s incorporation who will hold office until the conclusion of the first annual general meeting where they may be reappointed.


Directors?Meeting


Adequate notice should be given to allow full attendance of the directors. The relevant papers should be circulated together with the notice so that the directors are well prepared when attending the meeting. The directors should ensure tat there are regular meetings to review the company’s financial and trading position properly. The frequency of the meetings depend upon the nature and scale of the company’s operation.


Shareholders?Meeting


There are very specific rules laid down both by the Companies Act and the company’s articles on meeting of shareholders. Meetings may be convened by the directors or in certain circumstances by the shareholders themselves. The shareholders are required to meet with each other and vote on certain issues which require their agreement. The Companies Act lays down various types of resolutions with the period of notice required and the majority need to approve each issue. Minutes must be kept of all shareholders?meeting and signed by the chairman, recording the resolutions passed at the meetings. A copy of the special resolution passed at the shareholders?meeting must be lodged with the ACRA.


Usually a company has at least one meeting in a year which is known as the annual general meeting (AGM). The directors must ensure that the first AGM is held within 18 months of the incorporation of the company and, following that, in every calendar year at not more than 15 months interval. The Companies Act also requires that all AGMs must be held within six months from the financial year end of the company.


The directors themselves or on the requisition of members may convene any shareholders?meeting to vote on certain issues that require the agreement by the members. These are generally known as extraordinary general meetings.


3.

Role and Scope of Nominee Local Director Service


As stated above, each Singapore company must appoint one Singapore resident director. If you are a foreign business professional or a foreign entity who does not have a local director, you can utilize our Nominee Local Director service to satisfy this statutory requirement. The service can be provided on a short-term or annual basis as below:


  • If you are not relocating to Singapore, you will need our nominee director service on an annual basis.
  • If you are applying for employment pass, you will need our nominee director service on a temporary basis. Once your employment pass is approved, you will be able to take over as the local resident director.

Please note that in Singapore, a Nominee Director has the same responsibilities as any other director. Therefore providing a nominee director for your company imposes certain responsibilities on you as well as us and we would like to highlight the terms of our nominee director service as below.


  • We will appoint one of our team members as the nominee local director for your company
  • The service is offered for statutory compliance only. The nominee director will not be involved in any management, financial, or operational matters of the company. You must appoint one or more other individuals (who can be foreign individual(s) including yourself) as the executive directors who will be responsible for running the company.
  • In addition to our nominee director fee, we also collect a refundable security deposit for the provision of our nominee director service. The security deposit is collected to safeguard the interests of nominee director.
  • You can ask our nominee director to resign at any time by identifying another person who will be acting as the local director. We will refund the security deposit within 5 working days after the change has been affected with Company Registrar.
  • You must subscribe to our monthly bookkeeping service or if approved by Janus, provide copies of your company’s bank and financial statements on a monthly basis.
  • The bank account must be with a bank that’s on our list of approved banks.

Note that a higher nominee director or security deposit fee may apply if your company falls under any of the following:


  • The annual turnover of the company exceeds SGD1 million.
  • The company has external debt.
  • The company has a bank account with a bank that is not on our list of approved banks.

Disclaimer

All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.

If you wish to obtain more information or assistance, please visit the official website of Kaizen CPA Limited at www.kaizencpa.com or contact us through the following and talk to our professionals:

Email: info@kaizencpa.com
Tel: +852 2341 1444
Mobile : +852 5616 4140, +86 152 1943 4614
WhatsApp/ Line/ WeChat: +852 5616 4140
Skype: kaizencpa

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