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Question: Transparency of Activity(ies) on Appointment of Local (Nominee) Director

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Commoner
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Question: Transparency of Activity(ies) on Appointment of Local (Nominee) Director

Post by Commoner » Mon, 15 Apr 2024 4:02 pm

Hello All,

My first post here so pardon for any discrepancy/breach/err regarding my query.

Context
I used to run a pte ltd business (back in 2017) which has been strucked off. My ex-partner from previous digital marketing venture, whom is a foreigner facing limited cashflow, requested me to act as a local (nominee) director for a new incorporation doing grocery/minimart provision by FY 2024. And, I'm about to incorporate my own company doing currency futures.

Question
When I humbly requested for transparency on company's activity, inline with Company Act, she's unwilling to reveal the complete modus operandi - citing her shareholder(s) might not approve due to trademark/trade-secret infringement especially on product line & manufacturing concern.

Her sincerity to establish an incorporation with a business plan (including hiring locals with the potential to expand into a chain) is appealing. So, my promise to her is my business doing currency future has near-zero correlation and my domain doesn't include manufacturing, product research, or store management.

Separately, I too questioned on trust issues that she might hold back from engaging third-party corporate secretarial firm, and the revelation is on such firms holding multiple nominee directorships henceforth the risk of implication when lawsuit on other company(ies) arise.

Additional Info
a. We used to run a white-hat seo agency doing PR & Backlink (HARO) which brings me confidence she won't do shady activities.
b. The paid-up capital allotted to business is approximately SGD50-100K sizable enough to set up 2-3 stores.

Help!
Her sincerity to onboard certainly touches me.

If you're in my predicament, in light of almost-completed information on business operations especially on financial accounts, will you (all) take up this role as a local director (with +/-10% shareholder voting rights) and the potential of future prospect to run the business together with my ex-partner whom runs a small grocery distribution chain abroad.

Her agreement entails me to look into accounts, directorship, and overseeing the financial operations, and hers to oversee the distribution channels & production partners.

And, what questions to ask before the board meeting?

Note: Acra does not differentiate nominee or local directorship. This means the level of responsibilities remain ceteris paribus.

Thanks,
Commoner
Forum Member of Singapore Expat
Community of Business Partnership

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Strong Eagle
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Re: Question: Transparency of Activity(ies) on Appointment of Local (Nominee) Director

Post by Strong Eagle » Tue, 16 Apr 2024 12:24 am

Commoner wrote:
Mon, 15 Apr 2024 4:02 pm
Hello All,

My first post here so pardon for any discrepancy/breach/err regarding my query.

Context
I used to run a pte ltd business (back in 2017) which has been strucked off. My ex-partner from previous digital marketing venture, whom is a foreigner facing limited cashflow, requested me to act as a local (nominee) director for a new incorporation doing grocery/minimart provision by FY 2024. And, I'm about to incorporate my own company doing currency futures.

Question
When I humbly requested for transparency on company's activity, inline with Company Act, she's unwilling to reveal the complete modus operandi - citing her shareholder(s) might not approve due to trademark/trade-secret infringement especially on product line & manufacturing concern.

Her sincerity to establish an incorporation with a business plan (including hiring locals with the potential to expand into a chain) is appealing. So, my promise to her is my business doing currency future has near-zero correlation and my domain doesn't include manufacturing, product research, or store management.

Separately, I too questioned on trust issues that she might hold back from engaging third-party corporate secretarial firm, and the revelation is on such firms holding multiple nominee directorships henceforth the risk of implication when lawsuit on other company(ies) arise.

Additional Info
a. We used to run a white-hat seo agency doing PR & Backlink (HARO) which brings me confidence she won't do shady activities.
b. The paid-up capital allotted to business is approximately SGD50-100K sizable enough to set up 2-3 stores.

Help!
Her sincerity to onboard certainly touches me.

If you're in my predicament, in light of almost-completed information on business operations especially on financial accounts, will you (all) take up this role as a local director (with +/-10% shareholder voting rights) and the potential of future prospect to run the business together with my ex-partner whom runs a small grocery distribution chain abroad.

Her agreement entails me to look into accounts, directorship, and overseeing the financial operations, and hers to oversee the distribution channels & production partners.

And, what questions to ask before the board meeting?

Note: Acra does not differentiate nominee or local directorship. This means the level of responsibilities remain ceteris paribus.

Thanks,
Commoner
Forum Member of Singapore Expat
Community of Business Partnership
Short answer: You are out of your mind to agree to become a director of a company for which you do not completely understand, nor trust, its operations. Withholding information from you is a serious red flag. The "trademark/trade-secret infringement" is complete bullshit.

As a director, YOU ARE ONE HUNDRED PERCENT CIVILLY AND CRIMINALLY LIABLE FOR THE ACTIONS OF THE COMPANY. Period. End. You have a right to know every detail of the business, and you are a fool if you do not and choose to become a director.

Despite the names of nominee director, local director, non-resident director, managing director, or president, EVERY director in a Singapore company has equal rights, responsibilities, and duties.

She doesn't want to engage a third party rented director firm for several reasons.
  1. They will charge a lot of money for their rented director.
  2. They will insist on being her accounting company, for more money.
  3. They will insist on being the secretarial company for more money.
  4. They will insist that she also be registered as a non-resident director so that if something does completely f*ck up, they can attempt to blame her as the "real" director.
  5. They will insist on having at least view access into your bank account and any other financial accounts.
  6. They will insist on having the rights of approval over any electronic funds transfers.
  7. They will want to approve any and all contracts, work permits, distribution of funds.
Why do they do this? Because they know that they are ONE HUNDRED PERCENT CIVILLY AND CRIMINALLY LIABLE FOR THE ACTIONS OF THE COMPANY. They don't want to get f*cked when the company does something illegal.

So, if a rented director company wants 100 percent visibility into the company's operations, why would you even consider it, unless you're a major partner and owner of the company, sharing in the profits? Why would you take a paltry 10 percent of a private limited to face potentially unlimited liability?

And finally, is your foreign partner aware that because she is a non resident director/manager, she will be automatically taxed at 24 percent for salaries and fees, to be withheld before the money is sent overseas? Oh, you say she's not registered with ACRA as a director, just running things from afar while you're left holding the bag as a sole director? That's even more dodgy.

Commoner
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Joined: Mon, 15 Apr 2024 3:32 pm

Re: Question: Transparency of Activity(ies) on Appointment of Local (Nominee) Director

Post by Commoner » Wed, 17 Apr 2024 4:47 pm

Strong Eagle wrote:
Tue, 16 Apr 2024 12:24 am
Commoner wrote:
Mon, 15 Apr 2024 4:02 pm
Hello All,

My first post here so pardon for any discrepancy/breach/err regarding my query.

Context
I used to run a pte ltd business (back in 2017) which has been strucked off. My ex-partner from previous digital marketing venture, whom is a foreigner facing limited cashflow, requested me to act as a local (nominee) director for a new incorporation doing grocery/minimart provision by FY 2024. And, I'm about to incorporate my own company doing currency futures.

Question
When I humbly requested for transparency on company's activity, inline with Company Act, she's unwilling to reveal the complete modus operandi - citing her shareholder(s) might not approve due to trademark/trade-secret infringement especially on product line & manufacturing concern.

Her sincerity to establish an incorporation with a business plan (including hiring locals with the potential to expand into a chain) is appealing. So, my promise to her is my business doing currency future has near-zero correlation and my domain doesn't include manufacturing, product research, or store management.

Separately, I too questioned on trust issues that she might hold back from engaging third-party corporate secretarial firm, and the revelation is on such firms holding multiple nominee directorships henceforth the risk of implication when lawsuit on other company(ies) arise.

Additional Info
a. We used to run a white-hat seo agency doing PR & Backlink (HARO) which brings me confidence she won't do shady activities.
b. The paid-up capital allotted to business is approximately SGD50-100K sizable enough to set up 2-3 stores.

Help!
Her sincerity to onboard certainly touches me.

If you're in my predicament, in light of almost-completed information on business operations especially on financial accounts, will you (all) take up this role as a local director (with +/-10% shareholder voting rights) and the potential of future prospect to run the business together with my ex-partner whom runs a small grocery distribution chain abroad.

Her agreement entails me to look into accounts, directorship, and overseeing the financial operations, and hers to oversee the distribution channels & production partners.

And, what questions to ask before the board meeting?

Note: Acra does not differentiate nominee or local directorship. This means the level of responsibilities remain ceteris paribus.

Thanks,
Commoner
Forum Member of Singapore Expat
Community of Business Partnership
Short answer: You are out of your mind to agree to become a director of a company for which you do not completely understand, nor trust, its operations. Withholding information from you is a serious red flag. The "trademark/trade-secret infringement" is complete bullshit.

As a director, YOU ARE ONE HUNDRED PERCENT CIVILLY AND CRIMINALLY LIABLE FOR THE ACTIONS OF THE COMPANY. Period. End. You have a right to know every detail of the business, and you are a fool if you do not and choose to become a director.

Despite the names of nominee director, local director, non-resident director, managing director, or president, EVERY director in a Singapore company has equal rights, responsibilities, and duties.

She doesn't want to engage a third party rented director firm for several reasons.
  1. They will charge a lot of money for their rented director.
  2. They will insist on being her accounting company, for more money.
  3. They will insist on being the secretarial company for more money.
  4. They will insist that she also be registered as a non-resident director so that if something does completely f*ck up, they can attempt to blame her as the "real" director.
  5. They will insist on having at least view access into your bank account and any other financial accounts.
  6. They will insist on having the rights of approval over any electronic funds transfers.
  7. They will want to approve any and all contracts, work permits, distribution of funds.
Why do they do this? Because they know that they are ONE HUNDRED PERCENT CIVILLY AND CRIMINALLY LIABLE FOR THE ACTIONS OF THE COMPANY. They don't want to get f*cked when the company does something illegal.

So, if a rented director company wants 100 percent visibility into the company's operations, why would you even consider it, unless you're a major partner and owner of the company, sharing in the profits? Why would you take a paltry 10 percent of a private limited to face potentially unlimited liability?

And finally, is your foreign partner aware that because she is a non resident director/manager, she will be automatically taxed at 24 percent for salaries and fees, to be withheld before the money is sent overseas? Oh, you say she's not registered with ACRA as a director, just running things from afar while you're left holding the bag as a sole director? That's even more dodgy.
Hello Strong Eagle,

Thanks for your kind sharing.

My ex-partner would be classified as a non-resident director of 50% shareholding, and the residual to respective partner(s) - everyone has a shared (legal) responsibility with legal repercussion.

What an outsourced firm rendering corporate secretarial services can only do so much to protect in-house nominee director while also being liable albeit contractual agreement(s).

100% Visibility
Rather than business or compliance, it would be difficult or potential discrepancy to unveil trade-secret (regardless of trust issue). This is agreeable to any sme business owner.

What I proposed is to remain vigilant on company operation, accounting book, and record of transaction, in which she obliges.

Nature of Operation
Given the operational aspects primarily domicile in SG, there are deterrent to commit fraud/crime apart from the export side of goods especially LoC/SBLC and/or the differences arise in GST claim.

Hard Learning
Your perspective is deemed serious under regulatory compliance. Let me think carefully before actioning.

Even if I possess 100% visibility of structure, there will always be a potential mistake or fraud occurrence - no matter how bullet-proof the business model is.

Thanks,
Commoner
Forum Member of Singapore Expat
Community of Business Partnership

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