Director Of A Company
Being a company Director is not a trivial matter – Director must :
* oversee the overall advancement of the company’s business
* act honestly & to use reasonable diligence in the discharge of his duties
* act in good faith in the interests of the company
* act with due care and skill;
* avoid conflicts of interests
* use his powers for proper purposes
* ensure comply with all the requirements & laws
Who can be a company Director?
* a natural person (i.e. a company or business entity cannot be a director)
* ordinarily resident in Singapore— ideally Singaporean citizen, but can be a Singapore Permanent
Resident or a person with an Employment Pass/ Dependent’s Pass
* of a minimum age of 18
* of sound mind
Who elects a Company Director?
* Directors are elected by the shareholders
Who cannot be a Director?
* An undischarged bankrupt;
* A person convicted in Singapore or elsewhere of any offence involving fraud or dishonesty punishable with imprisonment for 3 months or more;
* An unfit director of another company;
* A director of a company which was wound up on grounds of national security or interest;
* A person convicted in Singapore of any offence in connection with the formation or management of a corporation;
* A person who has been adjudged guilty of 3 or more offences in relation to the requirements of the Companies Act within a period of 5 years.
What are the duties of a Director, under the law?
* In the event a breach of duty has been committed, the company can sue the directors for damages or for the return of specific property or secret profits they have made.
* A director who is guilty of an offence of failing to act honestly & use reasonable diligence or making improper use of information shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding one year.
* If in the event the Director is disqualified or disqualifies himself, the director also has a duty to give notice in writing to the company of his disqualification, which will then need to be reported to ACRA within 1 month.
What are Directors key duties under the Companies Act?
* need to comply with disclosure / reporting requirements under the Singapore Companies Act.
* need to comply with their financial reporting obligations under the Companies Act, i.e. maintaining financial statements, to lay the profit & loss account, balance sheet and directors’ report before the members at the Annual General Meeting or AGM to report on the state of the company’s affairs and to provide members with copies of the financial statements
Statutory Duties
The statutory duties of the Director are outlined in the Companies Act, namely Sections 145, 156, 157, 165 and 197.
Other Director duties under common-law
The Director’s duties under common-law are namely as follows:
* To act in good faith in the company’s interests – the interests of all its shareholders & employees. A director should not do any act to further his own personal interests.
* To act with due care and skill
The director is required to exercise reasonable care & skill in undertaking his responsibilities. The standard of skill and care is one that may reasonably be expected from a person of his knowledge and experience.
* To avoid conflicts of interests
The director must avoid conflicts between his personal interests & those of the company.
* To use his powers for proper purposes.
A director shall not use his/her powers for personal benefit, collateral purposes or improper purposes.
Can a Director resign?
A director is not allowed to resign or vacate his office unless there is remaining in the company at least one director who is ordinarily resident in Singapore. A resignation or vacation of office of a director in breach of these provisions will be deemed invalid.
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