Why is it important to use Nominee Directors provided by your corporate secretary?

For foreigners who wish to start a company in Singapore, there are a few regulations to follow. Here is a guideline to do so. One important aspect is getting Nominee Directors.

What exactly is the role of the Nominee Directors (NDs)?

As shared in the guideline earlier, the law mandates that you need a resident in Singapore onboard as your officer. This person does not have to be a Singapore citizen or permanent resident (PR). But he or she must be living in Singapore. The ND does not have any executive powers in your company’s operations unless you choose to give vested powers to him or her.

The ND is only responsible for certain tasks, such as opening a bank account, answering the relevant authorities, or signing off your Annual General Meeting minutes.

Naturally, this will lead to some people asking, if that is the case, can I engage my own friend (who is a foreigner) to be my company’s Nominee Director? In such a case I can probably save a substantial amount on the ND fees and deposit. The simple answer is yes you may do so. But we strongly discourage you to do so. Why? For the simple reason of professionalism.

Reasons for engaging an independent ND

Ask any business owners and they will be able to share with you cases where either their ex-partners or employees were not acting professionally. The same goes for ND. If you engage your friend or relative as your ND, naturally you will not be paying them the full fees as corporate service providers charge.

This will easily lead to them thinking that they do not have to be responsive or even responsible for your company matters. However,, there are certain tasks that only an officer of a company can do or access, such as CPF portals or the Inland Revenue Authority of Singapore portal. Because they are friends of yours, they may not understand the gravity or urgency of certain matters and tasks. Such delays can be very costly for your business. We recently had a client who encountered this issue, resulting in a lapse. And the client has to restart the entire process again, and worse still, paying the fees to authorities again.

Truth be told, most of the laypeople out there will not understand the gravity and importance of a responsible ND.

When you engage us as your corporate secretary, we will provide the option of choosing from our panel of independent professional NDs. And of course, we also do not recommend engaging us as your corporate secretary but getting your own ND externally.

Our NDs are all bound by us to a strict code of conduct, so they have a contractual obligation to us. If they are deemed to be unresponsive or irresponsible, they will face certain consequences imposed by us.

If you have any more questions concerning this topic, feel free to contact us today.

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