Appointing Directors for a Singapore Company

Staff Writer

February 16, 2022

What’s in the article?

Directors of companies in Singapore are defined as “any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions or instructions the directors of a corporation are accustomed to act and an alternate or substitute director”

This definition ensures that there is no distinction between a ‘sleeping’, ’shadow’, ‘inactive’ and ‘active’ director.

In this guide, you will understand what are the roles and responsibilities of a director and how one can qualify to be a director of a locally Singapore incorporated company.

Who can be a company director?

  • A natural person (i.e. a company or business entity cannot be a director)
  • At least one ordinarily resident in Singapore— best case would be a Singaporean citizen, but can be a Singapore Permanent Resident or even a person with an Employment Pass/ Dependent’s Pass
  • Of a minimum age of 18

Who cannot be a company 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.

How many directors does a company need?

Each company needs at least one director who is ordinarily resident in Singapore.

What are the roles and responsibilities of a Director

Directors have 2 types of duties. These include statutory duties as well as duties under the common law. Statutory duty breaches will be enforced by ACRA while breaches of the common law would result in civil liabilities.

Statutory duties of directors

These are duties as dictated in the Companies Act.

Duty to Disclose interests in transactions

Under Section 156 of the Companies Act, a director is expected to disclose at a board meeting of his interest in making any transactions with the company.

Under Chapter 5 of Section 156, the director is also expected to disclose any potential conflicts of interest in aforementioned board meetings.

Duty to act honestly and use reasonable diligence

Under Section 157, a director is not permitted to use any information acquired by virtue of his position as an officer of the company to confer an advantage on himself or to cause detriment to other agents of the company.

Common Law duties of directors

Duty to exercise power in good faith for the company’s interests

Directors are bound by a fiduciary duty towards the company, and are expected to therefore act in the best interests of the company.

They should not be swayed by third-party interests or their personal commitments.

Duty to avoid conflicts of interest

A director is expected to ensure avoidance of conflicts of interests. Potential conflicts of interest are stated below

Transactions with company

A director is not allowed to buy or sell property to a company.

Taking advantage of corporation information
or opportunities

A director should not intentionally divert business from the company to a third party or himself, or set up a rival firm to siphon potential clients or leads.

Conflicting duties

A director should be wary of secondary directorships held by him and ensure that there is no potential conflict of interest. This should be declared at the first board meeting of the company. He should also abstain from attending meetings that involve discussion of competing elements between his companies.

Can a Director Resign?

A director is not allowed to resign or vacate his unless there is remaining in the company at least one director who is ordinarily resident in Singapore.

Once a director resigns, the company’s secretary will need to update the particulars of the company’s officers and state the relevant personnel as ‘Resigned’. This will need to be done within 14 days.

Who can elect directors?

Typically, directors are added when the company is incorporated with ACRA.

Subsequent appointment of directors would require filing of shareholder resolutions. A 50% majority is required before the resolution will be valid and the new directors can be added in.

Learn more about nominee director or anti-money laundering requirements in Singapore.

What's popular