The Nominee Director

Under the Singapore Companies Act, every Private Limited company must have at least one director who is ordinarily resident in Singapore.

If you are a foreign founder incorporating from abroad, or if your Employment Pass hasn't been approved yet, you cannot fulfill this requirement. This is where a Nominee Director comes in.

What is a Nominee Director?

A Nominee Director is a local resident (Singapore Citizen or Permanent Resident) appointed to your company's board purely to satisfy the statutory requirement.

Crucial Facts:

• They have no operational, financial, or management control over your business.
• They do not sign checks, manage the bank account, or negotiate contracts.
• Their role is strictly for compliance.

Risks and Protections

While they don't run the business, Nominee Directors take on significant legal risk. Under Singapore law, directors can be held personally liable for the company's statutory breaches (e.g., failing to file annual returns, unpaid taxes, illegal activities).

Because of this risk, Corporate Service Providers (CSPs) that provide Nominee Director services will protect themselves through:

1. Indemnity Agreement: You will sign a deed of indemnity stating you will not hold the nominee liable and will cover any costs arising from their directorship.
2. Security Deposit: CSPs usually require a refundable security deposit (typically S$2,000 to S$3,000). If you abandon the company, they use this money to legally strike off the company and remove themselves from ACRA.
3. Strict Compliance: They will force you to use their corporate secretarial and accounting services to ensure the company stays compliant.

Moving to an Employment Pass (EP)

Once your company is incorporated using a Nominee Director, you can apply for an Employment Pass (EP) to work in Singapore. Once your EP is approved and you relocate, you become the resident director, and you can terminate the Nominee Director service and get your deposit back.