Accurate guide on Singapore nominee director (ACRA insights)

You are planning to set up a private limited in Singapore as a foreigner, everything seems fine until you start to write down yourself as the sole director of the company. Your application is unacceptable from that point forward. 

The reason? To incorporate a company in Singapore, you need to appoint a local director for your Singapore private limited, and in this case, a Singapore nominee director.

So what is a nominee director and how can you appoint one for your local company in Singapore? In this comprehensive guide, you will learn exactly everything you need to know about the Singapore nominee director:

With this knowledge, you can confidently hire, and appoint a trusted nominee director, and even become one to start running a successful business with your Singapore company.

1. What is a nominee director?

Based on the official ACRA Register of Nominee Director - Guidance for Companies, and the Singapore Companies Act, the nominee director definition is as follows

“ A director is a nominee if the director is accustomed or under an obligation whether formal or informal to act in accordance with the directions, instructions or wishes of any other person”

In simple terms, if a local person, appointed by a nominator, becomes a director of a Singapore company to meet the rule that every company in Singapore must have at least one director who lives in Singapore, they're considered a nominee director.

A nominee director has no say or power over the company’s management or decision-making process. Their role is to be a representative for the Singapore company. A nominee director is also known as a non-executive director.

2. When do you need to have a nominee director for your Singapore company?

If you are wondering if your Singapore company needs a nominee director or not?  The answer depends on you.

• In the case of a foreigner or foreign entity incorporating a local company in Singapore, you need to find a local person to be one of your company's directors to follow Singapore's laws. Or, you can utilize the nominee’s local director service on a short-term or annual basis to satisfy this statutory requirement;
• If you do not plan to relocate to Singapore, you will need to find a nominee director;
• If you are a Singapore resident or an employment pass holder, you don’t need a nominee director at all;
• If you are applying for an employment pass, you will need the nominee director service temporarily until you have an employment pass.
• Foreign businesses need to consider nominee director services when forming a company in Singapore to succeed in the market and during the incorporation process.

Remember that you need to appoint your nominee director within 6 months of company incorporation. Failure to do so will lead to legal penalties.

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3. How much are the Singapore nominee director fees?

Nominee director fees in Singapore typically range from as low as SGD 1000 to SGD 5,000 annually or higher. Extra costs may arise for certain services. 

Corporate service providers might require a security deposit to cover risks associated with Singapore nominee directors, in case of compulsory company strike-off for undesirable circumstances (the executive director, and the shareholder don't appeal to the government court summon, or are not present to settle disputes or the company breaches law)

4. Why do you need to have a nominee director?

Besides the reason that you have to have a local resident director in the Singapore Companies Act, the reason why you as a foreigner need to have a nominee director is your uncertain presence in the country.

The Singapore government needs a person to communicate with if the company breaks any law, which ensures that foreign owners can not just leave the company and avoid any legal responsibilities if problems occur.

A local director helps by performing the required checks to ensure the company follows all laws. Even though they have no control over the company management, Singapore's Companies Act views them as having the same duties and liabilities as a regular director.

5. What are the roles and responsibilities of a Singapore nominee director? 

Even though the nominee director has no control over the company operations and management, they still have duties and responsibilities to uphold under the Singapore Companies Act.

Legal compliance

• Ensure the company complies with all applicable laws, regulations, and statutory requirements.
• Stay updated on changes in laws that may impact the company's operations.
• Maintain accurate records and help submit required documents to regulatory authorities on time.

Fiduciary responsibility

• Maintain confidentiality  of all involved parties to protect the company secrets
• Make decisions that keep the appointer's interests in mind, while still following Singapore's laws.
• Act honestly, professionally

Fulfillment in legal requirements

• Fulfill legal requirements for Singapore company formation: At least one resident director for all companies registered in Singapore.

Here is a simple table showing the role and responsibilities between you as the company founder and director and the nominee director:

Breaking the director's duties (No matter what your role is: nominee director or an executive director) can have serious consequences, both in civil court and in criminal court. The punishment depends on the severity of the offense. 

For minor offenses, a director might have to pay a fine of up to S$5,000 or go to jail for up to two years. 

More serious offenses could lead to being banned from being a director for five years.

6. Is there any difference between a nominee director, a company director, and a nominee shareholder?

Here is a table outlining the primary difference between a nominee director, a company director, and a nominee shareholder. Knowing this key difference allows you to understand more about the roles and responsibilities of a nominee director.

7. Who can be a nominee director? What are the eligibility criteria?

Not everyone can be a nominee director for your Singapore company. They need to satisfy the eligibility criteria set by the Singapore government. 

Based on the ACRA Appointing Directors section, the eligibility criteria are as follows

7.1. For a foreigner wanting to hire a nominee director

There are 3 most important criteria to become a legitimate nominee director, which are the age requirement (at least 18 years old),  no criminal records, and Singapore citizenship or permanent residency.

7.2. For foreigners wanting to be a sole director

One solution many foreign entrepreneurs have successfully done or are in the process of doing is to apply for a work pass such as employment Pass, Entrepreneur Pass, or one Pass. 

This would make you a resident of Singapore so you can be a director of the company.  However, bear in mind that this process can be complicated to get government approval.

In addition, you still need to fulfill other criteria listed above in the For a Singapore resident: At least 18 years old with full legal capacity, no criminal record, and no disqualification from acting as a director of a company.

8. Employment Pass or Nominee director, which one to choose?

One challenge a foreign entrepreneur might face is the need to appoint a local person as one of the company directors. Often, you don’t know which solution: employment pass or nominee direct is the right solution.

Here is an overview of the 5 solutions with scenarios for satisfying the local director’s requirement. The right solution is the one that fits your plan and needs.

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If you are still unsure which path to take for your situation, book a free call with Global Link Asia Consulting today, and let us show you the most suitable solution.

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8.1. Solution 1: Employment Pass (EP) option

Scenario: You plan to relocate to Singapore and actively manage the business.

Benefits:

• You can legally work in Singapore.
• You can bring eligible family members on Dependant's Pass or Long-Term Visit Pass.
• The EP is renewable as long as employment conditions are met.
• You become the sole director of your Singapore company

8.2. Solution 2: Nominee Director

Scenario: You want to incorporate a company in Singapore but not relocate or actively manage the business on-site.

When to apply:

• Appoint a Nominee Director if you prefer to remain outside Singapore or manage your business remotely.
• Required if none of the company’s directors are Singapore residents (citizens, Permanent Residents, or holders of EP or EntrePass).

Benefits:

• It ensures compliance with the statutory requirement of having a local resident director.
• The Nominee Director does not need to be involved in the day-to-day management, allowing you to retain control over business operations.
• Flexibility to appoint additional directors as needed.

8.3. Solution 3: EP with Local Resident Director

Scenario: You intend to relocate to Singapore and manage the business, but you need immediate incorporation before your EP is approved.

When to apply:

• Apply for an EP and simultaneously appoint a local resident as an initial director to meet the incorporation requirements.
• Once your EP is approved, you can take over the director role and relieve the Nominee Director if preferred.

Benefits:

• Immediate compliance with local directorship requirements.
• Smooth business operations while waiting for your EP approval.
• Full control of your business in Singapore.

8.4. Solution 4: Nominee Director with Potential EP Later

Scenario: You initially want to set up the company quickly and explore the market before deciding on relocation.

When to apply:

• Appoint a Nominee Director for the initial setup and market exploration phase.
• Apply for an EP later if the business proves viable and you decide to relocate.

Benefits:

• Quick incorporation without immediate personal relocation;
• Flexibility to gauge business potential before committing to moving;
• Strategic planning and seamless transition to an EP if you decide to manage the business on-site later.

8.5. Solution 5: Local staff appointment

Scenario: You appoint senior-level local staff to be your local director. He/she can be your family, close ones, or hired local staff.

Things to note:

• The time and effort it takes to find a suitable candidate can be great;
• You should find a trustworthy person who meets the eligibility criteria for such a role;
• If you choose to hire a nominee director, the next step is to understand how to appoint one.

9. How to appoint a nominee director with success?

Whether you choose to entrust to a trusted corporate service provider for support or do it yourself, the process will involve the following steps:

• 1

  Step 1: Incorporate your Singapore company

• 2

  Step 2: Execute a nominee director service agreement

• 3

  Step 3: Submit application to ACRA

• 4

  Step 4: Fulfill statutory obligations

10. How to replace or remove a nominee director?

When considering the replacement or removal of a nominee director, it's important to ensure that your Singaporean company always has at least one local or nominee director. 

To replace or remove a nominee director, you should follow your company’s constitution, shareholders' agreement, and other legal documents, which the registered agent prepared for you during the incorporation process.

The benefit of having a registered agent is that they can help do everything for you with your decision regarding the nominee director position. You should make sure to get support from your corporate provider to make the process more seamless.

A typical process would look something like this

11. What are the risks of hiring a Singapore nominee director?

If you use nominee director service from a certified registered agent, there is usually little to no risk at all on your part since the appointed director has to uphold his or her fiduciary duty to the company and the registered agent. 

Additionally, if the nominee directors commit any offenses or break their duties, they have to face serious consequences.

That is why, to protect the rights and benefits of the nominee director, many corporate service providers conduct a Know Your Client (KYC) due diligence rigorously to ensure your company does not violate any laws, that could potentially put the nominee director at harm.

However, there are still certain risks and considerations you need to know when hiring a nominee director.

• Confidentiality issues: The nominee director may have access to sensitive company data. Establishing clear confidentiality agreements and safeguards (NDAs) can be a solution.
• Unclear nominee director service agreement: The contract does not state clearly the director’s duties,  terms, conditions, and responsibilities, which can lead to a conflict of interest. You should clearly understand the agreement before signing for the service
• Unfullied duties: The director does not uphold their responsibilities as stated in the contract and the Companies Act. Although rare, some directors, in fear of fines and imprisonment from law breaches of a foreign-owned company, do not appear to the government or registered agent request.

12. How can Global Link Asia Consulting help you appoint a reliable nominee director for your Singapore company?

For many foreign entrepreneurs and business owners who love to work remotely while still adhering to Singapore law, finding a trusted nominee director is crucial for the company’s sustainable success.

With a proven track record of helping nearly thousands of foreign business owners start and manage their businesses in Singapore with success with our nominee direct service. We know the secret to helping your business flourish with little investment and maximum benefits. 

Many entrepreneurs place their trust in us and see their worthy results. And you can too today.

As your one-stop corporate service provider, we can help you

• Register a company in Singapore;
• Open a corporate bank account in Singapore with a 99% success rate;
• Appoint a reliable nominee director and an experienced secretary;
• Choose the right company types for tax optimization in Singapore;
• Apply for Singapore business licenses;
• Get an affordable, professional registered office address for business;
• Support to open, authenticate, and manage Stripe Paypal Business in Singapore, Hong Kong, and the U.S;
• Handle all your tax accounting needs, timely annual filings, auditing, and more.

13. FAQs about Singapore nominee director

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