Nominee Directors Responsibilities Explained
Incorporating a company takes more than just one person. In fact, you need at least three if you want to incorporate in Singapore. There might be an instance when one of your company directors does not want to disclose his or her interest in the company. In this case, it is perfectly legal to hire a “front man,” which is formally called a nominee director, to do that director’s duties to the company. There are a lot of nominee directors responsibilities, all of which are for the company’s best interest.
A nominee director is technically someone who rents his or her name to the company for the incorporation documents. He or she shields a company executive from public disclosure requirements in Singapore, which means they essentially preserve the privacy of an individual who does not want to reveal their interest in the company.
Foreigners who wish to incorporate their business in the country often need a nominee director because one of the requirements in company incorporation is a local resident director. The nominee director’s duties usually end when the foreign investor completes his immigration requirements.
They get the position after their appointment to the board, just like any other directors. But unlike other directors, nominee directors get their appointment openly usually when a third person who has interest in the company requests such to look after the company’s interest.
Where Does The Loyalty Of Nominee Directors Responsibilities And Duties Lie
And although they are just the front men for others and they are only taking the position of the company’s director on paper, they have certain responsibilities to the company. A nominee director owes his duties to the company and not to the one who appointed him. He has a bigger responsibility to the company than to the one who appointed him.
The nominee directors responsibilities are well within the scope of the Singapore Companies Act. Their role comes within the range of assuming all the fiduciary duties of a company director. And while he was appointed to protect the interest of the appointer, he can exercise independent judgment to promote the best interest of the company first and foremost.