Roles and Responsibilities of a Singapore Resident Director and the Risks Involved

In this respect, Singapore is well known as one of the most-preferred investment jurisdiction in Asia due to its thriving economy and strategic position as the leading financial hub in the region. It is regarded as a legitimate holding company jurisdiction with the Inland Revenue Authority of Singapore being vigilant on fraudulent activities and insists strongly on commercial substance on holding companies.

One of the key requirements for registration of a company is the appointment of at least one director, who is ordinarily resident in Singapore. Being “ordinarily resident in Singapore” means that the director’s usual place of residence is in Singapore. A Singapore citizen, Singapore Permanent Residence or an EntrePass holder can be accepted as a person ordinarily resident here. Subject to compliance with prevailing laws and regulations on employment of foreign manpower, an Employment Pass holder may be accepted as a director who is ordinarily resident here.

The purpose of this key requirement is to ensure that the government is able to contact and hold liable the resident director for all matters concerning the company.

Roles and responsibilities of a director

A director is the person responsible for managing the affairs of the company and providing it with directions. A director must make decisions objectively, act in the best interest of the company, and be honest and diligent in carrying out his duties.

1) Directors' Statutory Duties Under The Companies Act ("the Act")

Statutory duties are covered under Section 157 of the Companies Act, Cap. 50. A director is required to make a disclosure about the nature and extent of his interest in an entity that is transacting with the company. Additionally, the director must also disclose the nature, character, and extent of any conflicts with his directors’ duties that may (or may not) arise due to his holding any office or possessing any property.

2) Directors' Fiduciary Duties Under The Common Law

A fiduciary relationship arises when one party (the company) is entitled to expect that the other party (the director) will act in the first party’s interests to the exclusion of the second party’s separate interests. Of all the duties of a director, his fiduciary duty is conceptually the most demanding. A director’s duty is not merely to serve the company’s interests. He must avoid placing himself in a position where he prefers his own interests, or the interests of a third party, instead of or to the detriment of the company’s interests.

Possible risks as a resident director

In Singapore, money laundering and other financial crimes (or frauds) are serious offences and are being examined thoroughly by the authorities. All directors and officers should be vigilance in identifying and preventing unlawful activities within their companies. There is a real risk, especially for the resident director, will face the lawsuit and penalty, be it fine penalty or imprisonment, regardless of whether they engineered the financial crime. Additionally, the resident director can be prosecuted, fined, or summoned to court for non-filing of Annual Return and other statutory obligations required of a company. The Registrar is also empowered to debar any director that has failed to lodge any documents at least three months after the prescribed deadlines

To ensure that such negligence or mistake does not happen, foreign clients should engage reputable corporate service providers who are registered with the Accounting and Corporate Regulatory Authority of Singapore (“ACRA”), to ensure that their companies are in good professional hands. Zetland is a business consultancy service provider, registered with ACRA, provides a one-stop solution for all your company matters.

For more information, you may contact Ms Su Lee Chan, General Manager of Zetland Singapore at suleec@zetland.biz