Outline
- Introduction
- What Is a Nominee Director?
- Why Is a Nominee Director Necessary?
- Eligibility Criteria for a Nominee Director
- Role of a Nominee Director
- Advantages of Using a Nominee Director in Singapore
- Types of Nominee Director Services in Singapore
- How to Incorporate a Company with a Nominee Director
- Nominee Director vs. Nominee Shareholder – What’s the Difference?
- Debunking Common Misconceptions About Nominee Directors
- Legal Risks of Nominee Directors and How to Mitigate Them
- Conclusion: Why a Trusted Nominee Director Service Matters
- FAQs
Introduction
If you’re planning to set up a business in Singapore as a foreigner, you’ve likely come across the requirement to appoint a nominee director. But what exactly does this mean, and why is it essential?
Singapore’s Accounting & Corporate Regulatory Authority (ACRA) requires every company to have at least one local director who is a Singapore Citizen, Permanent Resident (PR), or an EntrePass holder. This is where nominee directors play a crucial role—they help foreign entrepreneurs fulfill the legal requirements without taking part in company operations.
In this guide, we’ll break down what a nominee director does, the risks and benefits, and how to appoint one the right way.
What Is a Nominee Director?
A nominee director is an individual appointed as a legal director of a company on behalf of the actual business owner, purely to meet Singapore’s statutory requirements.
Why Is a Nominee Director Necessary?
When incorporating a company in Singapore, you must meet these requirements:
- A minimum paid-up capital of SGD 1
- A local registered office address
- At least one shareholder
- A local company secretary
- At least one local director
Foreigners setting up a company in Singapore must appoint a nominee director if they do not have a Singapore-resident partner or director. Without fulfilling this requirement, ACRA will not approve the company’s registration.
Eligibility Criteria for a Nominee Director
A nominee director must meet specific qualifications to ensure they can legally hold the position:
- Must be an individual (not a corporate entity)
- Must be a Singapore Citizen, PR, or EntrePass holder
- Must be at least 18 years old
- Cannot be bankrupt or disqualified from holding a directorship
- Must not be the company’s auditor
A nominee director has no involvement in daily business operations, financial decisions, or company strategy. Their role is strictly to fulfill legal compliance requirements.
Role of a Nominee Director
A nominee director is not involved in the company’s decision-making, management, or financial matters. However, they do play a crucial role in maintaining compliance.
Key Responsibilities
- Ensuring the company meets Singapore’s legal and regulatory requirements
- Attending and documenting Annual General Meetings (AGMs)
- Filing annual returns with ACRA
- Signing non-operational company documents, such as statutory filings and compliance reports
- Acting as a liaison between the company and ACRA
What a Nominee Director Cannot Do
- They do not sign operational contracts (e.g., supplier or customer agreements)
- They do not control finances or business activities
- They do not interfere in company decision-making
Advantages of Using a Nominee Director in Singapore
For foreign entrepreneurs, appointing a nominee director is not just an option—it’s a necessity. Here’s why it’s beneficial:
- Fulfills ACRA’s Local Director Requirement – Without a local director, your company cannot be registered in Singapore. A nominee director helps meet this mandatory requirement so you can legally incorporate your business.
- Ensures Compliance with Singapore Laws – A nominee director understands corporate regulations and ensures that your business complies with ACRA, IRAS, and other government authorities. This minimizes legal risks.
- Provides a Physical Business Presence – Having a nominee director strengthens your company’s credibility by offering a legitimate business presence in Singapore. This is particularly useful for clients, investors, and regulatory authorities.
- Supports Due Diligence & Governance – Many nominee directors perform due diligence checks to ensure your company remains compliant and legally sound. This provides additional oversight for ethical business operations.
Types of Nominee Director Services in Singapore
When appointing a nominee director, you can choose from different service durations depending on your business needs.
Long-Term Nominee Director (LTND) – 12 Months
- Best for foreign entrepreneurs who don’t plan to relocate to Singapore
- Helps avoid personal income tax liabilities
- Ensures ongoing compliance with ACRA
Short-Term Nominee Director (STND) – 2 to 6 Months
- Ideal for businesses needing a nominee director only for company incorporation
- Suitable for entrepreneurs planning to appoint a local director soon
- More cost-effective for businesses that don’t need long-term compliance support
How to Incorporate a Company with a Nominee Director
Incorporating your company with a nominee director is a simple process. Here’s how it works:
Step 1: Sign a Nominee Director Agreement
Before appointing a nominee director, sign a legally binding agreement outlining:
- Their responsibilities and limitations
- The duration of their appointment
- A clause ensuring they do not interfere with business operations
Step 2: Submit Business Incorporation Documents
To register a company in Singapore, you must provide:
- Passport copy of all foreign directors and shareholders
- Proof of residential address (e.g., utility bill or bank statement)
- Proposed company name and business activities
- Shareholding structure and company constitution
Step 3: Pay Service Fees & Register with ACRA
After signing the agreement and submitting documents, you will:
- Pay nominee director service fees
- Submit an application through ACRA’s BizFile+
- Receive approval within 24 to 48 hours if all documents are in order
Nominee Director vs. Nominee Shareholder – What’s the Difference?
A nominee director and nominee shareholder serve different roles in a company.
Nominee Director
- Appointed to fulfill ACRA’s local director requirement
- Has no ownership or decision-making powers
- Ensures the company meets statutory compliance obligations
Nominee Shareholder
- Holds shares on behalf of the actual business owner
- Helps maintain shareholder anonymity
- Company ownership rights remain with the ultimate business owner
Some businesses appoint both a nominee director and a nominee shareholder, but their roles remain separate.
Debunking Common Misconceptions About Nominee Directors
Many foreign entrepreneurs misunderstand the role of a nominee director when setting up a business in Singapore. Some assume that nominee directors have control over business operations, while others mistakenly believe they are not necessary at all. Let’s clear up the most common misconceptions.
Myth 1: A Nominee Director Can Manage the Company
Reality: A nominee director is not involved in the management or daily operations of the company. Their sole function is to fulfill Singapore’s legal requirement that at least one company director must be a Singapore resident.
Myth 2: Appointing a Nominee Director is Optional
Reality: If you’re a foreign entrepreneur and don’t have a local partner or director, you must appoint a nominee director to legally incorporate your company. Without one, your company cannot be registered with the Accounting and Corporate Regulatory Authority (ACRA).
Myth 3: A Nominee Director Can Make Business Decisions
Reality: A nominee director does not have decision-making authority over your business. They do not sign contracts, manage funds, or influence business operations. Their role is purely statutory, and their powers are limited by a Nominee Director Agreement.
Myth 4: The Nominee Director is Personally Liable for the Business
Reality: While nominee directors are responsible for compliance matters, they are not personally liable for company debts or financial obligations, provided the business follows legal and ethical practices. However, if a company engages in fraudulent activities, the nominee director may face regulatory scrutiny—which is why choosing a reputable service provider is essential.
Legal Risks of Nominee Directors and How to Mitigate Them
Even though a nominee director does not actively participate in a company’s operations, they still carry legal responsibilities and may face risks if the company fails to meet its compliance obligations.
1. Risk of Liability for Non-Compliance
A nominee director is legally responsible for ensuring that the company submits annual returns, follows regulatory guidelines, and remains in good standing with ACRA. If the company fails to comply, penalties or disqualification from directorship may occur.
2. Potential Legal Consequences
If a company engages in fraudulent activities (such as money laundering or tax evasion), the nominee director could be investigated, even if they were unaware of the wrongdoing. This is why reputable nominee directors conduct due diligence before agreeing to act in the role.
3. How to Minimize Legal Risks
To protect yourself when appointing a nominee director, take these steps:
- Sign a Nominee Director Agreement – Clearly outline their limited responsibilities and remove any operational control.
- Include an Indemnity Clause – This protects the nominee from liabilities arising from business activities.
- Use a Trusted Nominee Director Service Provider – Ensure they have experience in regulatory compliance and corporate governance.
- Ensure Your Business Operates Legally – Keep clear financial records, file tax returns on time, and follow all statutory requirements.
By taking these precautions, you ensure that both your business and your nominee director remain legally protected.
Conclusion: Why a Trusted Nominee Director Service Matters
A nominee director is essential for foreign entrepreneurs setting up a business in Singapore. While they do not interfere with operations, their presence ensures your company remains legally compliant.
However, appointing the wrong nominee director can expose your company to legal and financial risks. Always choose a trusted corporate service provider that specializes in compliance-focused nominee director services.
FAQs
In Singapore, there are two primary reasons why appointing a nominee director is essential:
- Short-term necessity during Employment Pass (EP) application: When applying for an EP in Singapore, having a local nominee director can be crucial for meeting regulatory requirements.
- Long-term operational needs for offshore company management: If you’re considering remote operation of an offshore company in Singapore, a nominee director may be necessary for compliance and administrative purposes.
If you’re in the process of obtaining an EP, our handbook can guide you through the essential steps for success. Additionally, for those planning long-term usage of a nominee director, we’ll delve into the pros and cons to help you make informed decisions.
Yes. A foreigner can be a director for a company in Singapore. This can be done by setting up a registered company in Singapore through a company registration service provider.
So If you are a foreigner planning to set up company in Singapore and want become director of the company, here’s what you should need to know:
- You must have at least one local director.
You can hire a local nominee director for 2 months and then once your company is incorporated, you can transfer the full ownership to you. In other words, you become a director in 2 months after your company is incorporated.
- You must have at least one local secretary
Next, In order for your company registration to be successful, you must appoint one local secretary who knows about the industry and all the filings requirements of your company.
This is where service providers can be useful because there are services like 2 months short term nominee director services as well as long term nominee director services. Moreover, they also provide professional corporate secretary services from business registration all the way to applying for a work visa so you won’t need to worry about setting up a company and can just focus on achieving your company goals.
No, a nominee director cannot be a foreigner. This is because a nominee director is appointed to fulfill the requirement of at least one local director of a Singapore company, thus, no foreigner is allowed.
Yes, you can resign the nominee director at any time once you have obtained your Employment Pass or / you have identified another person who can satisfy the local director’s requirement.
A nominee director is not granted the same powers and privileges as those granted to a conventional director. A nominee director is only the director of the company in a name. Therefore, the nominee director’s position within the company ought to be limited.
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