Directors' Responsibilities and explaining more about it. We will be looking at regulations based in Singapore.
We will be discussing What are the directors’ responsibilities? What are the skills and duties of a director?
A Director in Singapore is a person who takes up Directorship positions in a Singapore Company, regardless of whether he or she is employed by the company or being assigned any job titles. To say in a simpler word, a member of the board of people that manages or oversees the affairs of a business not concerning any current job titles.
Being appointed as a Director, you are the fiduciary of the company that appoints you. A fiduciary is expected to act in the interests of another person and hence as a company’s director, you have to act in the way you truly believe is in the best interest and benefit of the company. Meaning, a fiduciary prudently takes care of money or other assets for another person.
Basically in Singapore, all the companies are required to have at least one director regardless of private limited or any other listed companies. The director should be a Singapore citizen, Singapore permanent residence, Entrepreneur pass (visa applicable to foreign entrepreneurs who wish to launch their start-up in Singapore and relocate to the country to run it) or employment pass from the existing employed company not from a different company. For example, Senior Finance Executive from Nestle company should not be the director of the Coca-cola company.
A Singapore company must appoint a minimum number of directors and maximum numbers depending on the company laws. If there is a possibility to appoint only one director, the company may do so. However, the sole director cannot be the company secretary. If there are 2 or more directors in a company, either one of the directors can be the company secretary.
Now, let's discuss on nominee director. The nominee director plays an important role in representing interest from another group or person. A Nominee director is a director appointed to the board of a company to represent the interests of his appointor on that board. He may be appointed by a shareholder, a creditor, or another stakeholder. There are some cases where a foreign director will appoint a local nominee to incorporate his entity, arrange account opening matters, or attend to board meetings, meaning to say, there are two different directors appointed for the company, one is a foreign director and another will be a local director.
Whether you are an active, in-active, shadow, or a sleeping director, you are an agent of the company appointing you. This means you act for the company and in turn, the company is bound by your acts. You must fulfill the key duties owed by Directors to a company as stipulated in the common law and the Companies Act.
The duties of the director are to act honestly and in good faith in the interest of the company, means, the personal and third party are not allowed to be part of the director's decision-making process and any decisions making or sharing of opinions with other parties will result to dishonesty, and it may lead to civil action or criminal prosecutions.
Avoiding conflict of interest is a must, where a director directly or indirectly buys from or sells the property to the company and taking advantage of corporation information or opportunities which can lead to a breach of duties. Most importantly, to not misuse power and information, all the power you hold as a Director should only be directed towards the benefit and proper purposes of the company, not vice versa.
The common statutory requirements under the company’s activities will be, as a Director, you are responsible to ensure the company complies with the requirements on time. Instead, an annual general meeting where the financial statements will be presented to our shareholders. Moreover, keeping records of the statutory register it includes important information about the company such as the names of members and how many shares each one holds and all changes in a Singapore company have to be documented and reported to ACRA, and Directors have to ensure these statutory records are properly maintained and updated.
It is not an easy job to become a director of the company it takes lots of effort, knowledge, and experiences to run a company.