What is a Nominee Director in Singapore & Do You Need One?

Before you can incorporate a company in Singapore, there’s a key legal requirement: every Singapore-registered company needs at least one local director.

For foreign founders without a local resident partner, this can be a challenge. That’s where a nominee director becomes essential.

This guide will walk you through what nominee directors are, why they matter for international business owners in Singapore, and how to appoint one properly to ensure compliance and a smooth start.

In Singapore, a nominee director is a local resident appointed to a company’s board to fulfill the legal incorporation requirement of having at least one local director. Nominee directors are especially common in foreign-owned businesses where the owner does not have permanent residency in the country.

Unlike regular executive directors of the company, nominee directors usually don't have direct authority in managing the company or making decisions. 

If none of your company’s directors are Singapore residents or hold an approved Employment Pass or EntrePass,  you must appoint a nominee director.

According to the Companies Act 197, in order to legally register a company in Singapore, at least one director must be a Singapore citizen, permanent resident, or holder of an approved pass with a residential address in Singapore. There must also be at least one local director on the company’s board of directors at all times. 

If your company already has a director who is a Singapore resident, then there is no need for a nominee director. 

In addition to the legal requirements, appointing a local nominee director also benefits your company in the following ways:

• Local Expertise: A local director can offer insight into legal and regulatory requirements, supporting smooth operations within Singapore’s business landscape.
• Local Representation: Having a nominee director provides a local point of contact, which can simplify interactions with Singaporean authorities and streamline administrative processes.
• Privacy and Confidentiality: For foreign owners who prefer to keep their names off certain public records, a nominee director offers a layer of privacy.

A nominee director primarily serves to fulfill legal obligations. They are not extensively involved in the day-to-day operation or decision making process.

In general, the responsibilities of a nominee director in Singapore include:

• Serving as the local resident director on record
• Acting as a local representative, ensuring the company complies with statutory obligations
• Attending annual general meetings

Despite their non-executive role, nominee directors also have a fiduciary duty to commit to the best interests of the company, avoiding any personal gain that might create a conflict of interest with the company’s objectives. This commitment aligns with broader principles of corporate governance and regulatory compliance.

Now that the role of nominee director has been covered. Let’s quickly look at the differences between a nominee director, a company director, and another similarly named role you may come across called “the nominee shareholder”

• A nominee shareholder holds shares on behalf of the actual owner but does not have any real ownership rights. This practice is often employed to maintain privacy and confidentiality.
• A company director is actively involved in managing the company and making strategic decisions that shape its direction.
• A nominee director is officially listed as a board member but typically does not take part in daily operations or decision-making. Their role is mainly to fulfill legal or regulatory requirements.

To qualify as a nominee director in Singapore, an individual must be:

• A Singapore citizen, permanent resident of Singapore, EntrePass holder, or Employment Pass (EP) holder* with a permanent address. 
• At least 18 years old and of full legal capacity.
• Have a clean criminal record and must not have been disqualified from acting as a director of a company.

*An Employment Pass (EP) holder can be appointed as a nominee director only if they obtain approval from the Ministry of Manpower (MOM) by applying for a Letter of Consent (LOC). The process takes 5 weeks, and the EP holder must carry out directorship duties.

MOM usually approves an LOC only if the company shares ownership ties with the EP holder’s employer, as recorded with Accounting and Corporate Regulatory Authority (ACRA), and the director role is directly related to the EP holder’s main job.

If you're considering appointing an EP holder as your nominee director, note that this is only possible after the company has been incorporated  because a business must be established before it can sponsor an EP.

After understanding the nominee director’s eligibility criteria and responsibilities, it is time to appoint one. Here are the steps to appoint a nominee director:

Start by picking a qualified individual to be a nominee director of your company. It could be someone you know well, a reliable business partner, or a professional company that offers nominee director services as long as they tick all the eligibility criteria. 

No matter your choice, it's crucial to conduct due diligence to ensure the nominee director is good at their job, dependable, has the right qualifications, and meets all the requirements. This way, you can feel at ease knowing you have a trusted and knowledgeable local director, especially when managing things from overseas.

Once you’ve found the right candidate, the next step is to draft a Nominee Director Service Agreement. This document should clearly lay out the roles, responsibilities, and limitations of their powers and should cover the following:

• The terms of the arrangement between the company and the nominee director.
• The nominee director’s obligations.
• The extent of the responsibilities of the nominee director, such as not having any operational or management role.
• The restriction of the nominee director’s authority.
• A confidentiality agreement designed to secure sensitive business information.
• The preferred method of dispute resolution.

A thorough review of the agreement, along with ensuring both parties are aligned, is essential before signing, as the document has legal effect for both the nominee director and the client.

The final step is to submit the incorporation documents to ACRA. To do so, ensure that you have:

1. Identification document and proof of address of the nominee director; and
2. Board Resolution by way of written means to appoint the nominee director. 

Additionally, companies are required to maintain a Register of Nominee Directors at their registered office or the office of their filing agent. This register records the details of any director acting on behalf of a nominator (another person or entity) and must be made available to ACRA upon request. 

The easiest way to find a suitable nominee director is to use a company incorporation service or a corporate service provider that also handles other parts of the incorporation process for you. 

Many businesses, especially foreign companies, engage the services of incorporation service providers. These providers often offer nominee director services as part of their comprehensive package. These providers not only help you appoint a nominee director but also assist with other essential tasks, such as preparing incorporation documents, ensuring compliance with local laws, and handling ongoing administrative needs, saving you both time and cost.

Nominee directors may not be paid the same salary as a regular director, but they typically receive a fixed director’s fee or an annual service fee for their role. This fee compensates them for the legal responsibilities and potential liabilities they take on by allowing their name to be listed on the company documents.

According to the Accounting and Corporate Regulatory Authority (ACRA), all directors, regardless of their actual involvement in the company’s operations, are held equally responsible under the Companies Act. This means that a nominee director will be held legally accountable for the company’s actions, even if they were not directly involved in management decisions. Offences may lead to disqualification from serving as a director for up to 5 years.

Given this legal risk, along with the potential impact on their reputation and, in some cases, personal liability, nominee director services often command a premium. Fees typically range from SGD 1,500 to SGD 5,000 per year, with most nominee directors charging SGD 2,400+. In addition, many require a refundable security deposit between SGD 1,000 and SGD 5,000, depending on the provider.

Appointing a local director in Singapore can help your business meet legal requirements, but it’s not without risks. Here are a few things to keep in mind:

• Legal and Regulatory Risks: Under Singapore law, if the nominee director fails to meet regulatory requirements or engages in misconduct, the company may face penalties, fines, or legal consequences, even if the nominee director was acting independently.
• Reputational Damage: Any involvement of the nominee director in legal disputes or unethical conduct can harm the company’s public image and damage trust with stakeholders.
• Financial Costs: The company will likely incur ongoing service fees and additional compliance-related expenses when appointing a nominee director. Some nominee directors charge for their signature in each document.

When replacing or removing a nominee director, you can follow the steps outlined in the company’s constitution, Articles of Association, shareholders’ agreement, or other legal documents. This process may involve submitting a resignation letter or filing a notification of cessation of agreement. 

However, it’s important to remember that a Singapore company must always have at least one local director on the board. 

According to ACRA, any changes in the particulars of company officers, including nominee directors, must be updated in BizFile+ within 14 days from the date of the change, and a penalty fee may be imposed for late filing. 

Crucially, when replacing or removing a nominee director, securing a suitable replacement is important before the current one steps down or is removed. Failing to do so could lead to non-compliance with local laws and potential legal repercussions. Opting for professional nominee director services during this transition ensures that the process is carried out accurately and in accordance with local laws and regulations. 

Statrys provides an all-inclusive package, covering everything you need to register a company in Singapore.

When you incorporate your company with Statrys, we include a nominee director in our one package at no extra cost. This means you avoid the average annual fee of SGD 2,400 that most companies pay for this service. Beyond that, we also offer you company secretary services and provide a registered address in Singapore, so you don’t have to worry about these mandatory requirements. Everything you need is included in a single, transparent price.

You simply provide your details and documents, and our team manages the incorporation and filing process. All processes, including electronic signing, can be completed online. 

Plus, we offer a 30-day money-back guarantee to ensure your peace of mind.