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by Strong Eagle » Thu, 20 Dec 2018 5:08 am
Here's your Singapore director education. The ACRA requires virtually nothing to start a company. The accounting firm will want a lot.
Nominee Director - A person identified as having a special representation or relationship with a person or organization. For example, a person owning 15 percent of a company's shares might have a director on the board to represent her interests, and this person would register as a nominee director so that all other directors know that the nominee director's interests might be skewed in favor of the shareholder and not the company.
Firms that provide you with rented directors call their directors "nominee" directors because they represent you, but the term is rather meaningless since there are only one or two shareholders setting up the company anyway.
Regardless of whether you have a nominee director, a rented director, a managing director, or a plain ole vanilla director, a director is a director is a director, and a director's rights, duties and responsibilities are clearly specified in the Singapore Companies Act. Except in very special cases, you may not, in any way, curtail those rights, duties, and responsibilities through job descriptions or anything in your articles of incorporation.
Therefore, your rented director could do anything to your company, and your only real recourse is a signed, undated director resignation letter which you could use to demonstrate that the director took actions after his termination.
Your director is also responsible for the actions of your company, and that includes you. He can be charged in court, both civilly and criminally, both as a director and as a person, for acts you or your company may commit. This is key to understanding why we are where we are today.
Back in about 2000, when Singapore made it real easy to setup a new company, all sorts of accounting companies would find some old "uncle" or "auntie" somewhere and for a $1000 to $1500 per year, would prop this person up as your director. This person did absolutely nothing except fulfill the legal requirement that you have at least one "normally resident" director.
Then the money launderers and thieves and scammers and crooks entered the picture. Companies started getting sued and so did the directors that were supposed to have financial oversight and responsibility for the company. All of a sudden, the easy money rented director because a serious liability, and all the accounting firms in Singapore were warned to stay away from this kind of business... warned by their professional associations.
The firms that will offer a rented director these days know the risks, and that is why they want to crawl up your ass with a microscope. They want to know that you're not Romanian mafia, trying to launder trafficking funds. Or a corrupt Indonesian general who is laundering bribe money through a Singapore private limited. You get the drift.
Thus, besides all the upfront information they want, they will also want full visibility into your company's operations. They will review and approve all your supplier contracts. They will verify that your customers are real and legit. They will approve your employment passes. They want access to your bank records and transactions to make sure you're not sliding the cash under the table to someone. This is all to protect themselves.
You can pitch this to your investor as due diligence, ensuring that companies are squeaky clean like the ACRA and police like them. You could try to find a normally resident Singapore citizen or PR to act as your director but with the potential risks involved, most people won't touch it.