Why Nominee Director?
A common statutory requirement around the world for setting up a company is to have at least one director.
To fulfill this requirement, many entrepreneurs turn to nominee directors, who act as company director but in a passive role.
Here are 4 reasons for engaging the services of a nominee director :
1. Companies Act provides strict guidelines when it comes to the registration of a foreign-based or foreign-owned company.
Unless the director of the company has the legal right to work in Singapore, or is a Singapore national, a foreign-based or foreign-owned company must have a local director who is a Singapore national.
That is to say, when setting up a private limited company, you need to have at least one local director who is an ordinary resident of Singapore being either:
- Singapore citizen; OR
- Singapore permanent resident; OR
- Singapore employment/dependant pass holder.
2. Meet statutory requirements about residency
- A nominee director may be required to meet certain statutory requirements. Singapore, for example, requires newly registered companies to appoint a resident director who has been residing in the country in which the offshore company is formed for a certain amount of time.
- A nominee director who is a resident/citizen of the jurisdiction is fully capable of meeting this statutory requirement on behalf of the company.
- For entrepreneurs looking to manage their business from their own country, a nominee director would allow them to meet company law requirements while still being able to live where they choose.
3. Logistical benefits
- Nominee directors can also be immensely beneficial for logistical reasons.
- Offshore companies often require the opening of a corporate bank account to complete company incorporation and the corporate bank account applications often require the director of the company to meet with the bank in person.
- A nominee director can save the investors the time and money required to travel to meet the bank by meeting with the bank on their behalf.
- The nominated director may also complete other legal requirements that may arise, such as the need to register with certain government organizations, the need to register for taxes, and the need to obtain special licenses.
- Thus, a nominee director is capable of saving the investors significant amounts of money despite having to pay a fee for the nominee director’s services.
4. The risks
- Hiring a nominee director is not without risk.
- While a nominee director should act in a passive manner, with all business decisions being deferred to the investors, the nominee director is bestowed with power in the company.
- The nominee director is capable of making strategic decisions related to the operations and management of the company and may also act on behalf of the company with clients, suppliers and governments without the expressed consent of the investors.
- Thus, it is very important that only a professional corporate services firm with available references be hired to provide a nominee director.
- Consideration can be given to including special clauses in the contract to stipulate specific guidelines regarding decision-making responsibilities. This can help to ensure that the nominee director fulfills their role effectively and the company achieves the desired objectives for its investors.
A nominee director stands apart from his fellow directors by virtue of having been nominated by a shareholder or other stakeholder of a company to represent the stakeholder’s particular interests.
However, despite his special interest appointment, a nominee director is usually a de jure director of the company to whose board he has been appointed.
The Companies Act states that “any person occupying the position of director, by whatever name called” is a director and, therefore, subject to the same directors’ duties.
Based in Singapore, Corporate BackOffice Pte Ltd provides Nominee Director Services for foreign-owned companies who want to conduct business in Singapore, i.e. act as your company’s local director if you have difficulties appointing a director of your own.
The service is offered for statutory compliance only.
The Nominee Director will not be involved in operational, management or financial matters of the company.
We may request for further KYC reports on foreign directors (additional fees will be applicable for report purchase) and reserve the right to abstain from providing our Nominee Director Service, if foreign directors do not satisfy KYC requirements.
You are also required to execute our Engagement and Indemnity Agreement.
We will require a refundable security deposit and Professional Fees for the provision of the Nominee Director Service.
The service can also be terminated upon expiry, upon your request. However, you must appoint a new Singapore resident director to meet the statutory requirement.
For renewal of contractual agreement, we reserve the right to dis-continue Nominee Director Service, if foreign directors do not satisfy on-going KYC requirements or the Company is insolvent.
If you need help, feel free to contact us at :
(O) +65 63851011
(M) +65 90880669
