Who can be a Nominee Director of my Company?

Incorporating a company in Singapore is a seamless process. However, foreigners may find it difficult to fulfil the requirement of having a local director. According to the Companies Act of 1967, you must appoint a local director who is a Singaporean or Singapore Permanent Resident. This is to make sure that your company has a local director who is accountable to Singapore corporate laws.

If you do not have a local director in mind for your company to control the management decisions of the company, you may choose to appoint a Nominee Director. In the eyes of Singapore Law, a Nominee Director is no different from a Director with executive authority of the company and thus, they have to meet certain requirements to qualify.

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Who can be a Nominee Director?

In Singapore, one of the qualifying requirements for a Nominee Director is residency. The candidate being nominated does not necessarily have to be a citizen of Singapore, but they need to have a permanent residence in the country.

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Form 45 requirements for Nominee Directors

Form 45 is a compulsory document that candidates must sign before assuming a director position. The document’s full name spells out its purpose: Consent to Act as Director and Statement of Non Disqualification to Act as Director.Form 45 outlines the clauses that could disqualify a candidate and functions as a consent form for those that qualify. These clauses dictate who can become a director, so let’s go through them.

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Age and legality

Since the legal requirements for Nominee Directors are the same as that of a Director, a Nominee Director has to be 18 years or older and of full capacity. To have full capacity would mean that he/she will have the ability to understand the nature of their obligations and consequences of their actions.

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Disqualification orders

A disqualification order is a court order that bars an individual from becoming a director, including a nominee director. Disqualification orders are issued through the Company Directors Disqualification Act of 1986, which lists all the reasons a person might be made ineligible for a directorship. For example, Form 45 states that a person is not disqualified from acting as a director if: “Within a period of 3 years preceding the date of this statement [the candidate has] not had any disqualification order made by the High Court of Singapore against [them] under section 149(1) of the Companies Act (“the Act”).”Disqualification orders are issued for unfit conduct and breaches of the Companies Act. The complete Companies Act can be found here. You can also read Form 45 and the full list of its disqualification clauses here.

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Convictions and candidate history

By law, a candidate is disqualified if they have been convicted of “any offence involving fraud or dishonesty punishable on conviction with imprisonment for 3 months or more”. The clause includes convictions in Singapore or abroad and covers the five years prior to Form 45 being signed.Convictions do not just cover textbook law-breaking like fraud or embezzlement, either – they include more subjective rulings like a “failure to act honestly and diligently as a director” and mismanaging a company’s statutory books.

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So, who can be a Nominee Director of your company?

The short answer: any permanent resident of Singapore of qualifying age and of good legal standing. When it comes to the position of nominee director, candidates are mostly defined by what could disqualify them. This might seem limiting, but it actually creates a wide scope for finding the right nominee director. Preferably, these are reliable and trustworthy persons with professional careers in a corporate setting who can be counted on to maintain the legal status of the company. The disqualifications only filter out people who have proven to be unreliable appointments. The Companies Act and Form 45 are meant to protect your company and the markets you operate in – just as a good director should.

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Engaging a Nominee Director at Sprout

A corporate service provider such as Sprout works with a panel of Nominee Directors who have proven track records and will help to protect the arrangements between the Nominee Director and yourself. At Sprout, clients who have signed up for our Nominee Director packages will be provided with an agreement that will capture the nature of the relationship and authority of the Nominee Directors.