A nominee director can be defined as a director who achieves a seat on a company board at the request of the company owners. As per the Companies Act in Singapore, a company should have a minimum of one director who is ordinarily a resident of Singapore. Choosing this director is not a walk in the park, especially if you want to get more than just fulfilling the law requirement. Here are a few tips provided by ValueAddSys nominee director services on how to select a good director in the nominated capacity for your Singapore Company.
Understand the role.
It is a requirement to appoint a director in the nominated capacity if you want to register a private company in Singapore. Before you even start thinking of who to appoint, take your time to go through the law carefully and understand it. Get a good idea of the role of this type of a director and what qualities are required to serve in this capacity. The fundamental role of this type of a director is to ensure that the company adheres to all the mandatory requirements stipulated in the Singapore Companies Act. Consequently, the director must have proper knowledge of the laws and regulations governing companies in Singapore. They also serve as non-executive directors, bringing the “outside perspective’ into the company. In addition, the director is also a trustee of the company.
Adhere to the terms and conditions.
You are supposed to select a director who is a Singapore Citizen or Singapore Permanent Resident. A professional with a dependent pass, employment pass or entrepreneur pass provided by the government is eligible for selection as well. The selected director is not involved in the day-to-day operations of the business. Adhere to these terms and conditions and any other that may come up when the contract is in force to the latter. This is not the time to take legal issues lightly.
KYC (Know-Your-Client) assessment
The director must have a good knowledge of your company. He or she must be able to have an idea of the financial position, background, key shareholders and the products and services offered by the company. This is known as the KYC assessment. It is supposed to done periodically from time to time to furnish the director with any new information.
Keep conflict of interest at bay.
Having known the role of this type of a director, make a deliberate effort to choose a person who will not work against the company’s interests. Some providers of director services are just in the business of helping you fulfill the legal requirement. Once that is done, they add no other value to the company. Although the legal requirement may be the main aim of appointing the director, it is also good to choose a person who will add more value to your company. As a matter of good governance, all company directors must act in the company interests and benefits. This can lead to a conflict of interest for a nominee director. You have to be careful to ensure that you don’t create agency problems by selecting a certain director.
The chosen director must be able to take information about the company with care.
The basic principle is that information received by a director at board meetings is confidential to the board. It is the company’s property and directors cannot use it for other purposes other than what is considered to be in the best interests of that company. Some directors may divulge this information to unintended parties such as competitors. Where this is common, the board may require that such directors must apply to the board on each and every occasion when they want to pass board information to other parties. In general, the person to be chosen as director must have an understanding of the importance of treating confidential data about the company with care.
Fees obviously, you will want to go for the lowest fees, but make sure that a low fee is not an indication of compromised services. There are some organizations which will charge high fees but ensure that their services are worth your money. All said and done, choosing a nominee director is not easy. You need to appoint a person you trust, given that getting it wrong may create cans of worms in your business.