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Under the Companies Act, a Singapore-based firm must have at least one director of the company, who is a resident of Singapore. An ordinary resident shall be identified as any person who is a Singapore Citizen, a Singapore Permanent Resident, an Employment Pass or an EntrePass holder.
This article will elaborate on the rules concerning the mandatory time period of stay of local resident director in Singapore. For example a question can be, can a person who is Singapore Citizen, but who stays primarily out of Singapore act as a local Director of the company?
As mentioned before, any company registered in Singapore must have at least one director who is a resident of the country. But in case, a foreigner registers his business in Singapore but does not have a local person who could be appointed as the resident director of his new Singapore company; then the foreigner may "hire" a person to act as a director for a pay. Such director is referred to as the Nominee Director or ND; often the term "local director" is used for all such appointees. According to law, the Nominee Director must be a citizen or permanent resident of Singapore and therefore should have a permanent address located in Singapore.
Singapore companies act allows all local citizens and foreigners to be employed as directors as long as they comply with the following requirements:
The appointment of a local director at Singapore Company is must because the local director is considered to be the responsible contact for any business or legal matters pertaining to the Singapore Company. The local director is the first person to be contacted in case of any legal, official or business related matter as he / she is has a permanent address in Singapore and is more likely to be available for consultation.
Let's explain this with an Example. There is a Singapore company which manufactures electronics and exports them to foreign countries. An international client who bought some goods from this company lately is not happy with the delivery. He has filed a complaint with Singapore Authorities against the company for fraudulently delivering him obsolete equipment. Now the authorities need to get a first hand version of the company on this issue. Therefore, in this case, the Singapore authorities would approach the resident director that can be contacted with reference to the issue at hand. Likewise, if there is a query regarding the filing of tax by the company, the IRS will contact the local resident director for it.
The directors in general and the resident director, in particular, is responsible for ensuring that the company meets the two most important statutory requirements of the ACRA, which are mentioned below:
If the above two requirements have not been complied with, then either a penalty is imposed on the company, or legal action is taken against the directors of the company.
Though there is no specific period mentioned in the Singapore Companies Act, a local director, however, must on average be present in Singapore. For instance, if there is a citizen of Singapore, who himself stays in another country for 90% of the year. Then he is not eligible to become the local director of Singapore company.
This does not mean that a local director is not allowed to travel abroad. Generally, a local director may travel out of Singapore for business and other temporary purposes as long as his general place of stay in Singapore.
Singapore law requires at least one of the directors of the Singapore Company to be local resident. Though there is no mention of the period of stay, the word "Residing" in our opinion implies that the local resident should live in Singapore for the most part of the year.
As a rule of thumb, we presume that a local director must stay in Singapore for at least 183 days or more in an accounting year.
It must, however, be noted that this compulsion is for local director only and doesn't apply for any other directors of the Singapore Company.
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