Resident Director in Singapore- Is their Appointment Mandatory?
Every company or body corporate in Singapore requires appointing a specific number of directors to run the company. The appointment of a resident director in Singapore has to satisfy specific criteria and requirements of the Singapore Companies Act (Chapter 50). Section 145 of the Singapore Companies Act requires every company to appoint a minimum number of directors. The director has to be a resident of Singapore. If the body corporate or entity has only one director, the director will be considered a shareholder of the company. Under section 145(2) of the Singapore Companies Act (Chapter 50) require the director to be a natural person. Natural person means an individual who is not a body corporate or any other entity.
Duties of Resident Directors in Singapore
Under section 157A of the Singapore Companies Act (Chapter 50), the director has the following duties :
The directors of the company have the power to supervise the affairs of the company. Directors are generally the agents of the company; hence all the decisions concerning the company are taken through the directors. The management of the company is carried out through the directors. All the directors' powers, which are conferred through the appointment, assist the directors in carry out activities for the company. Under section 157A, the business or company will be managed through the directors.
Act within the Powers of the Memorandum
The directors of the company can carry out all the company functions. However, in carrying out the company's functions, the directors must not go beyond the limits of the company's constitution. They must act within the powers of the constitution. If the constitution's articles permit the director to carry out activities, he is allowed to carry them out. This power must be according to the Companies Act of Singapore (Chapter 50). This provision is present under section 157A (2) of the act.
Carry out Duties and Responsibilities as required by the Company
A resident director in Singapore must carry out all the duties and responsibilities diligently to the best efforts to ensure that the interests of the company are promoted. This provision is present under section 157 of the Companies Act of Singapore. A director must not carry out any type of work or act, which causes a loss to the company. Such acts would be harmful to the profits, whether the loss is caused either directly or indirectly.
Disclosure of Specific Information
As an agent of the company, the director must carry out specific responsibilities such as disclosure of crucial information regarding the company. Though the director is an agent of the company, the information which is disclosed by the director must be carried out for the best interests of the company. When disclosing such information, it must be disclosed as an employee of the company. This provision is present under section 158 of the Companies Act of Singapore (Chapter 50). The duty here for the directors is twofold. As in, the director has a specific duty under the appointment towards the senior executives. Apart from this, the director would also have a duty towards the company.
Being appointed as a director of a company comes with certain amount of responsibility. Apart from fulfilling the interests of the company's stakeholders, the director must act in the interests of the company. The principle of directors' fiduciary duties comes from the common law principles that the director has a fiduciary duty towards a company. This is compared to a relationship that a trustee holds towards the company's trust and the beneficiary. A trustee must act in the best interests of carrying out all the responsibilities in managing the trust. This will ultimately be for the benefit of the beneficiary. Similarly, the company's director must carry out the roles and responsibilities according to the interests of the company.
Governing Body for Resident Director in Singapore
Resident Director in Singapore is governed by the Companies Act of Singapore (Chapter 50). The authority which governs the companies act of Singapore is the ACRA. The provisions related to the director's appointment, duties, and remuneration are present under Division 2 of the Companies Act of Singapore Chapter 50.
Eligibility Criteria for Being a Resident Director in Singapore
The following eligibility criteria have to be fulfilled for being a resident director in Singapore:
Natural person means an individual who is appointed for carrying out the duties of directors. A natural person is considered as an individual and not a body corporate. Some jurisdictions around the world allow the appointment of corporate bodies as directors. However, under section 145 of the Companies Act of Singapore requires the director to be a natural person and not a body corporate.
A director must be a natural person to be appointed for the company. Apart from this, the director must satisfy the criteria for the minimum age requirement. A resident director of Singapore has to be more than 18 years to be appointed as a resident director in Singapore. While there is no upper age limit for a director, the director usually should resign or stop performing services when the individual has reached 70 years. This requirement is under section 145(2) of the Companies Act of Singapore.
Requirement related to Resignation
A director in Singapore is not allowed to resign if there is no other resident director in Singapore. Therefore, according to the Singapore Companies Act requirement, a resident director has to be present in the board of directors of the company. This provision comes under section 145(5) of the Companies Act of Singapore.
A resident director in Singapore must not be qualified as Undischarged Bankrupt. If the director is undischarged bankrupt, the individual is not fit to carry out the director's activities. This provision is present under section 148(1) of the Companies Act of Singapore. Suppose the director of the company is undischarged insolvent either through a competent court of Singapore or a Foreign Court, then the individual cannot carry out any activities of a director.
A director, facing some form of insolvency proceedings under any competent court of jurisdiction, will not be allowed to be eligible to carry out the activities which are performed by directors. The provision for insolvency against the director is present under section 149 of the Companies Act of Singapore.
Convicted under any law in force
Apart from not being bankrupt and is discharged as an insolvent, the director of a company must not be convicted under any law in force in the country. Therefore, the director must not be convicted under any law which can be tried in the courts of Singapore. Apart from this, the director must not be convicted under any law which is triable in the jurisdiction of international courts. This provision is present under section 149 (10) of the Singapore Companies Act.
Apart from this, the director must comply with the Companies Act of Singapore's requirements and abide by the roles laid down by the Articles of Association and Memorandum of Association.
Procedure of Appointment of Resident Directors in Singapore
Every company is required to have a minimum number of directors in Singapore. The appointment of a resident director in Singapore is mandatory as per the requirement of the Singapore Companies Act. The procedure to appoint a resident director in Singapore is as follows:
The appointment of directors can occur through an ordinary resolution taken by the company. A resolution where no majority vote of the members is required is known as an ordinary resolution. Under section 149B of the Companies Act of Singapore states the appointment of directors of a company. If any specific provision is not mentioned regarding the appointment of directors, the same must be carried out through an ordinary resolution. In an ordinary resolution, the decision of the shareholders is taken into consideration.
The appointment of Resident Director in Singapore can also occur through the process of voting.The provisions of the appointment of directors through the system of voting are present under section 150(1). This provision is required for public companies where the minimum amount of directors to be appointed for the company is two. Here a resolution will not be taken for the appointment of directors until a vote is taken before the resolution.
If any form of resolution or decision is taken in the general meeting, the decision will not be valid. Hence, it is important to follow the proper procedure for appointing a public company director through the system of proper voting. This provision is under section 150(2) of the Companies Act of Singapore.
Once the appointment of the director is carried out. The same must be filed with the ACRA regarding the appointment.
Responsibilities of Resident Director in Singapore
Like the duties of directors, a resident director in Singapore has to carry out specific responsibilities to comply with the provisions. The following responsibilities have to be carried out by a resident director in Singapore:
Attending the Meetings of the Company
A director must meet the responsibilities such as attending essential meetings such as the company's annual general meeting (AGM). Apart from attending the annual general meeting, it is the director's responsibility to convene the Annual Meeting. In the AGM, financial statements of the company are put forth before the shareholders and directors. In compliance with the AGM, the financial reports and other information must be sent to shareholders and directors 14 days before the meeting. Compliance under the ACRA has to be met by the company. Within a month of the AGM, such annual returns have to be filed with the ACRA.
Appointment of Auditors of the Company
The directors are responsible for appointing the company's auditors. The appointment of auditors for the company must be carried out within a specific period. Under section 205(1) of the Companies Act of Singapore, the directors are responsible for appointing the company's auditors. This must be carried out within three months of the incorporation of the company. The auditors of the company can be either an accounting entity or an individual accountant. The auditors will hold office in the company until the conclusion of one annual general meeting.
For a public company, the company has to have meetings as required, according to the Companies Act of Singapore. This requirement is present under section 174(1) of the Companies’ Act of Singapore. The directors of the company have to chair the meetings. The directors have to provide a report regarding the statutory meeting. This report must be provided seven days before holding the meeting. The report has to be forwarded to all members and shareholders of the company. This provision is present under section 174(2) of the Companies Act of Singapore. The directors also have to sign the agenda regarding the meeting.
Under the Singapore Companies Act, every company is required to maintain statutory records of the accounts maintained by the company. The accounts would be related to the annual accounts of the company. Under section 199(1) of the Companies Act of Singapore, the accounting records have to be maintained by the company's directors. Apart from filing these records, the records have to be maintained by the company in the registered office of the company with the ACRA. This is required when the director has to inspect specific books and records of the company.
Documents for Appointment of a Resident Director in Singapore
The following documents are required for appointing a resident director in Singapore:
- A declaration from the individual who is appointed as a director. This must be in form-45.
- The director appointed must disclose all the interests.
- The board members also have to provide approval through a resolution. The approval has to be made in a document format.
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