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Here’s What the Role of Director is in a S’pore Company in the Eyes of the Law

2021-10-26 , 12:41 pm

Did you know that you can’t anyhowly resign as a company director?

Now, do note that we’re referring to the director role that’ll be included in the ACRA records for a company, not any role that property agents like to give to themselves.

You can only leave your company if there’s another director who can take over your duties once you bow out.

This may explain why NOC’s Ryan found it difficult to resign as director of the company, as Sylvia claimed he is still the sole director of the organisation.

See, according to Singapore Companies Act, all companies need the following in order to register:

at least one shareholder (individual or corporate entity)
at least one resident director
one company secretary
initial paid-up share capital of at least S$1
a physical Singapore office address

So, if you have no director, you won’t have a company.

The main role of a director in a Singapore company is to manage the affairs of the business and help provide guidance on major issues.

But they also have a number of duties they’re required to undertake in the eyes of the law.

Who Can Be a Company Director in Singapore?

Firstly, there are certain conditions you have to meet before becoming director of a company in Singapore.

In order to be a company director, you’ll need to be:

over 18 years old
a natural person (not a business entity or a business, that is)
of sound mind

Both locals and foreigners can be directors, but a company must have at least one director who is “ordinarily resident” in Singapore.

You cannot be a company director if you’re an undischarged bankrupt, convicted in Singapore or abroad of an offence involving fraud or dishonesty punishable with imprisonment for 3 months or more, or deemed to be an unfit director of another company, among other things.

Duties of a Company Director Under the Law

Under the Companies Act, directors have certain disclosure and financial reporting obligations that they have to adhere to.

These include a duty to avoid conflicts of interest, meaning they need to separate their personal interests from that of the company. So, if a director has an interest in a transaction involving the company, they must declare it.

A duty to act in good faith in the interest of the company also falls at the door of the director, meaning they should act honestly and not be influenced by third-party personal interests.

Additionally, company directors have a duty to exercise skill, care, and diligence when managing the affairs of the company. Failure to do so could result in them being sued for negligence.

Lastly, a director is obliged to use their powers for the right purpose, meaning they should not abuse their power or misuse any information they have on the company. One common misuse of power is the issuing of shares to raise capital.

In addition to these duties, company directors are required to have an Annual General Meeting (AGM), file annual returns, and maintain a local registered business address – all the boring paperwork that are, however, important since the authorities would look for the director if they are not done.

The director in a company in Singapore is a pretty powerful individual, as you can tell from the description provided in the Companies Act:

“The directors may exercise all the powers of a company except any power that [the Companies Act] or the constitution of the company requires the company to exercise in general meeting”.

This means that generally, directors have the power to make decisions on behalf of the company.

All important transaction, like opening a bank account, would need to be done by the director and not anyone else – even if that “anyone else” has the title of “President”.

Difference Between Director and Shareholder

It’s should, however, be noted that a director might not be a shareholder (i.e. owner of the company).

To put things into context, let’s use a listed company as an example: Amazon. People who buy Amazon shares are the real owners of the company, but the director is someone engaged by, technically, the shareholders.

In a small company, the shareholder and director might be the same person, but in larger companies, they’re usually different people.

Overall, just think of it this way in the eyes of the law: the majority shareholder (or shareholders) is owner of the company, the director is selected by the majority shareholder to fulfil the legal aspects of the company.

If it’s too confusing, think of it this way: shareholders are like Singaporeans, and directors are like politicians. Now, that’s easier to understand, right?

You easily find out who’s the director of a company by buying its business profile from ACRA for $5.50.

Here’s What the Role of Director is in a S’pore Company in the Eyes of the Law

Who Can Be a Company Director in Singapore?

Duties of a Company Director Under the Law

Difference Between Director and Shareholder

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