Company Director Responsibilities and Duties in Singapore
A company director in Singapore holds a crucial role in managing the company’s affairs and setting its strategic direction. Under the Companies Act, directors must ensure accurate and timely record-keeping, prepare financial statements (if applicable), and comply with corporate filings and other disclosures. Additionally, directors have a legal duty to advance the company’s interests, act honestly, and exercise their powers in good faith.
Legal Consequences of Breaching Duties
Breaching director duties can lead to both civil and criminal penalties. Common offences may result in fines up to S$5,000 or imprisonment for up to two years. More severe breaches can lead to disqualification from being a director for up to five years.
Requirements for a Company Director
Every company in Singapore must have at least one director who is a local resident. The key requirements for a company director include:
- Being at least 18 years old
- Having full legal capacity
- Being a Singapore citizen, permanent resident, or holding an EntrePass or employment pass (EP)
- Not being disqualified from acting as a director (e.g., not being an undischarged bankrupt)
Foreign Identification Number (FIN) Holders
FIN holders should verify their eligibility with the relevant pass issuing authority before accepting a director appointment. Employment pass holders, for example, must obtain a Letter of Consent from the Ministry of Manpower (MOM). Foreigners wishing to relocate to Singapore to manage a company need MOM’s approval post-incorporation and must engage a registered filing agent to submit the application via Bizfile+.
Inactive or Sleeping Directors
Under the Companies Act, all directors, regardless of their level of activity, hold the same legal responsibilities. There is no distinction between “active” and “sleeping” directors, and all are accountable for any offences committed by the company.
Free Online Training for Company Directors
Aspiring and newly appointed company directors can enhance their understanding of statutory duties through ACRA’s free online Directors Training Programme. This two-hour programme covers:
- Requirements to be a director
- Key duties and responsibilities under the Companies Act
- Filing corporate income tax returns
- Contributing to employees’ CPF
- Ensuring workplace safety and health
Statutory and Common Law Duties of Directors
Statutory Duties
Under the Companies Act, directors have several key statutory duties:
- Duty to Disclose Interests in Transactions: Directors must disclose any interest in transactions with the company during a directors’ meeting. Failure to disclose can lead to fines up to S$5,000 or imprisonment for up to 12 months.
- Duty to Act Honestly and Use Reasonable Diligence: Directors must act honestly and with reasonable diligence. They should not misuse information gained from their position for personal gain or to the company’s detriment. Breaching this duty can result in liability for profits made and damages suffered by the company, along with potential criminal sanctions.
Common Law Duties
In addition to statutory duties, directors also have common law duties, including:
- Duty to Exercise Power in Good Faith for the Company’s Interests: Directors owe a fiduciary duty to act in the company’s best interests.
- Duty to Avoid Conflicts of Interest: Directors must avoid conflicts between their personal interests and the company’s interests.
- Duties of Skill, Care, and Diligence: Directors must perform their duties with the necessary skill, care, and diligence. Negligence can lead to legal action.
Other Duties
Directors must also comply with specific restrictions under the Companies Act, such as the prohibition on making loans to directors. Breaching these “negative duties” can result in indemnification liabilities and criminal sanctions.
This article provides a condensed overview of directors’ duties in Singapore. For more detailed legal advice, consulting a professional is recommended.
By understanding and adhering to these responsibilities and duties, company directors can ensure they effectively contribute to their company’s success while complying with Singapore’s legal framework.
Disclaimer: This article is for informational purposes only and does not constitute any professional advice. Feel free to contact us to consult with our professional advisors team for personalized advice and guidance.
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