A nominee director, service provider or nominee business allows a Director to serve on the Board of Directors of a Singaporean company without disclosing their personal details.
Nominee director services in Singapore are offered by nominated directors, who provide the nominee director services through their practices. Service providers work with individuals or corporate entities that render them certain tasks and responsibilities. The nominee director service providers act as directors on companies they do not own to ensure compliance with corporate laws and regulations. This is beneficial for the company as it frees up management time and energy as the nominee directors take full charge of managing company affairs.
Expanding on Singapore’s Financial Year, individuals who wish to start a business in Singapore must first incorporate a company as there is no such thing as an individual sole proprietorship like in some other countries. This company holds the name of the business owner, which can be either an individual or a corporation. The fact that the owner of the company is also its director means that he or she has to take on all legal responsibilities as required by law, even outside company business.
This causes potential problems for the company’s directors who are too busy managing their own businesses. When this happens it is beneficial to hire a nominee director, who can be either an individual or a company. Acting as the director of the company and managing its affairs allows the owner-director to focus on their work while limiting their legal responsibilities towards other matters.
Potential problems with using nominee directors services in Singapore:
The use of nominee director services in Singapore can be beneficial to those who wish to start a business and do not have the time or desire to take on all responsibilities as required by law. Nominee directors offer all-inclusive services, which include: taking care of necessary requirements and documentation (SOA and COC), maintenance and filing of statutory records such as share registry, minutes, and resolutions (preparation of resolutions in lieu of meetings), Annual Return filing at ACRA, preparation of notices for shareholders’/directors’ meetings, review the company’s books and records, statutory inspections in lieu of directors, management of business bank accounts (for private limited companies only), taxation filings.
As part of his or her nominee director services, the director is required to sign a service agreement with the company’s shareholder(s). This contract defines the nature of business relations between shareholders and nominee directors. It also describes exactly what is expected of both parties during the term of their relationship. If any changes are to be made to this agreement, it is crucial for both parties to be kept informed and agree on the proposed amendments.
The services that a nominee director offers depend entirely on what has been agreed upon in the service contract. The company (shareholders) is at liberty to determine such factors as: how often nominee director services are needed, duration of appointment, if communications will be oral or written, and whether the nominee director will have any authority to bind the company.
In addition, it is also necessary for nominees to keep their own professional indemnity insurance, as well as the company’s directors and officers liability insurance. This protects both shareholders/directors and nominee directors against errors or omissions made by either party during the course of business.
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