Key‌ ‌Compliances‌ ‌for‌ ‌Appointment‌ ‌of‌ ‌ Directors‌ ‌under‌ ‌Singapore‌ ‌Companies‌ ‌Act‌ ‌

The provisions relating to the appointment of directors in Singapore are present under the Singapore Companies Act (Cap 50) (“Act”). In this guide, you will understand the key compliances for the appointment of directors in Singapore.

Definition of Directors under the Singapore Companies Act (Cap 50)

Under section 2 of the Act, a director is an individual who occupies the position of directorship in the company. If an individual has the authority to direct another employee then the individual is referred to as director. Director is an individual who takes care of all the compliances and manages the company.

Provisions related to the appointment of Directors in Singapore

The following provisions deal with the criteria, eligibility, and restrictions on the appointment of Directors in Singapore:

Appointing a Director

Under Division 2 of the Singapore Companies Act, section 145(1) speaks about the appointment of a director. As per the above section, you require to have at least one director appointed for your company. This provision requires you to carry out the appointment of a director immediately.

Section 145(2) requires you to appoint a director who is not a minor. Hence an individual who is 18 years or above can be appointed as a director of a company. A director who is appointed for a term in the company cannot resign until the company has appointed another director. Such provisions are present under section 145(5) of the Singapore Companies Act.

If you do not follow the above provisions, then you would be ordered by the Registrar of Companies (ROC) or any other authority to carry out the appointment. If you still disobey the above rules, then your company would be charged with a penalty of SG$ 2,000. Further contravention of the same would make the company liable to pay SG$ 1,000 daily. The above provisions come under section 145(7) & 145(8) of the Act.

Under section 145(10) of the Act, any member of the company who does not appoint a director for a period of six months, even after having knowledge of the rules would be liable to pay any debts due as a result of entering into contracts. 

Hence you must follow the above provisions in order to comply with the rules related to appointment of directors.

Restrictions on Appointment

As per section 146(1) of the Act, no individual or any other person can be added as a proposed director or appointed director in any document or certificate, until the company is incorporated. Only when the ACRA, provides the certificate of incorporation, you would be allowed to add the name of the individual in any documents.

If your company goes ahead with filing returns and carrying out compliances required by the Chief Executive Officer, then the name of the individual can be added. Along with this, the individual must have complied with the conditions laid down under section 146(1A).

Under section 146(1A) (a) an individual can only be appointed as a director if:

• If he has, or through an authorized agent provided the consent to act as a director of the company.[section 146(1A) a(i)]
• If the director has provided any form of a statement that he is not disqualified from acting as a director.[ section 146(1A)a(ii)]
• If the individual is not debarred under any law being in force to act as a director under section 155 of the Singapore Companies Act. [section 146(1A)a(iii)

With the above, the following provisions would be applicable to directors:

Under section 146(1A)(b):

• If he has, or through an authorized agent made some form of declaration with the registrar regarding the amount of qualification shares.[ section 146(1A)b(i)]
• Make an undertaking with the company that the amount of qualification shares taken by him. In this undertaking also a mention would be made regarding the payment of qualification shares. [section 146(1A)b(ii)]
• Make a declaration that the specified number of qualification shares is not less than the required qualification. [section 146(1A)b(iii)]

Breach of Section 146

If the director breaches the above provisions then a fine of SG$ 10,000 would be levied on the director. Along with this, the director would also face additional penalties.

Qualification Shares

When you appoint a director for the company, there is specific amount of qualification shares which has to be taken by him. Under section 147(1) of the Act, a director of a company must hold qualification shares in the company. Within two months of appointment in the company, the director must hold such shares.

If any of the above provisions are breached, then under section 147(4) a director and every member of the company would be liable to pay a fine of SG$ 4,000. 

Criteria for Appointment of Director

Under section 145 of the Act, a director of a company has to be more than 18 years of age. Along with this, there are several criteria that have to be checked for the appointment of directors. A director appointed for a company in Singapore must not be an undischarged insolvent. Such provision is present under section 148(1) of the Singapore Companies Act.

If a director is undischarged insolvent and resumes office, then a penalty of SG$ 10,000 would be charged along with imprisonment for a period of 2 years. 

A director who is not considered fit to manage the company is known as an unfit director. The Singapore Companies Act, does not allow any individual to take the responsibilities of a director, if such individual is unfit. The provisions related to this is present under section 149(1) of the Act. Under any authority, a director would be unfit for a period of not exceeding 5 years.

If a director is unfit and acting in the authority of a director, then the individual would be penalized for the following:

• Penalty of SG$ 10,000; and/or
• Imprisonment for a period of two years.

Procedure for Appointment of Directors (section 149(B)]

If your company wants to appoint directors, then a resolution has to be first passed for such an appointment. At the general meeting of the members, the resolution for the appointment of directors must be passed. A vote on appointing directors of the company must also be passed. For the appointment of directors, the members of the company must pass an ordinary resolution.

Companies are allowed to have more than two directors. However, when an ordinary resolution is passed, a company can only pass one vote individually for appointing one director. A vote for appointing two directors cannot be passed. Individual appointments must be voted individually. Such provisions is present under section 150(1).

Filing Appointment with ACRA

When you appoint a director for your company, you have to file such appointment with the Accounting and Corporate Regulatory Authority of Singapore (ACRA). An appointment must be filed within a period of 14 days to the ACRA. Such filing can be done through the BizFile+ portal

Once the BizFile+ portal receives a notification of an appointment, then the director would be contacted. The director would require to provide consent for such appointment. If the director appointed is a local resident, then an existing director of the company can go ahead with filing the application on the BizFile+ Portal.

If you are a foreign business, then you have to use the services of a registered filing agent for filing the appointment with BizFile+. The following details have to be provided while appointing a director:

• Name of the Director
• Registered Address of the Director
• Identification Details
• Visa (In case the director is a foreign national)
• Contact Number and Email
• Date of Appointment

When the appointment is filed with the ACRA, then the director can assume his responsibilities.

Every company in Singapore requires at least one director. Such provision is mandatory under the Singapore Companies Act. Compliance with the above would allow your business to fulfill its goals.

Conclusion

A company in Singapore has to have a director. Whether you incorporate a private limited company in Singapore or a Start-up, it is mandatory for you to have a director. The provisions related to appointment of directors is present under the Singapore Companies Act.

You must make sure that directors who are appointed do not have any criminal liabilities and are major. Along with this, you must follow the appropriate procedures to carry out such appointments.

If you require more information on compliances for appointment of directors, please contact us for a free consultation.