Roles/Responsibility of Singapore Company Directors
A director holds an important position in a company and hence there are some important factors that govern the selection of a director of a company. Selecting a director is a major decision as he not only deals with the duties of managing the overall advancement and progress of the company but also holds responsibilities of acting wisely and honestly in using his diligence to render his services. The director also needs to act confidently in the maters that are for company’s interest. He is responsible to act using his skills, prevent conflicts and make use of his powers only for appropriate purposes.
This case is true for those who are not actually in Singapore but operate their business activities or company by hiring a Director based in the country. The director needs to ensure that he takes care of all the essential requirements of the company using his powers in accordance with the laws of the country and his position. Further below are discussed some key factors that will help you in appointing and choosing a skilled director for your business.
Qualifications for Being a Director of a company
For becoming the Director of a company a person should fulfill following requirements.
- A human being ( a business or a company cannot become a director)
- Resident of Singapore – the person should an ideal citizen of Singapore and also can be a permanent resident or one having a Employment Pass / Dependent’s Pass
- Should be at least 18 years of age
- Should not be lunatic and have a sound mind
Who elects a company director?
The Company Directors are mostly elected by the company’s shareholders. They are the ones who take part only in the major decisions of the business and direct and manage the corporation affairs. They also elect the officers and monitor their activities.
Who Cannot Be A Director?
There are some factors that might disqualify an individual from qualifying for the Post of a Director in a Company.
- Un-discharged bankrupt
- An individual involved in dishonesty or fraud charged with an imprisonment term of three or more months
- A director of another corporation considered as unfit for the post
- The director of an organization that was closed on the grounds of nationwide security and interest
- An individual convicted in the country of Singapore for connection in formation of a corporation
- An individual held guilty for three or more times with respect to the laws of Companies Act in a term of 5 years.
Duties of a company director with respect to law
The director has two kinds of duties, one which is in accordance with the law and the other which are certified by the statutes. If the director does not abide by the statutory duties which are enforced by CAD, Singapore Police Force or ACRA, he will be liable to undergo criminal sanctions and prosecution. However, if the common-law duties are tampered with, it might lead to civil remedies and liabilities.
If any act related to the breach of any of the duties is observed, the company has the right to sue the director for damages caused and can also ask for the secret profits made in the process.
Apart from this, if the director is found guilty of disobeying the laws and acting dishonestly making inappropriate use of company information, he can be fined by the authorities for an amount of maximum $5,000 and can be imprisoned for a term of maximum one year.
However, if the Director disqualifies himself or is disqualified, he needs to give the notice to the company in writing, which the company needs to report to the ACRA with a period of 1 month.
The Key duties of the Director Under the Companies Act
The director of a company needs to comply with the reporting requirements and disclosures under the Singapore Companies Act. The Directors are also required to comply with the obligations related to financial reporting under Companies Act. The duties include maintenance of financial statements; make the profit and loss accounts, director’s report and balance sheet before the company members at the annual meeting of the company and provide the members with the copies of those statements.
These duties are described under the Sections 145, 156, 157, 165 and 197 of the Companies Act. These are pretty different from the roles and responsibilities of a company director under common law and are explained below.
Other Director Duties Under Common-Law
Duties of Director under common law are as follows:
- Act wisely and in good faith with respect to company’s interest
- Act with appropriate skills and due care
- To avoid conflicts of interests
The Company Director should be able to avoid any kind of conflicts that arise between his own interests and that of the organization.
A director who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with the company shall as soon as practicable after the relevant facts have come to his knowledge declare the nature of his interest at a meeting of the directors of the company.
The director needs to declare in advance to the company if any of the subcontractors of the products of the company is his relative.
- To use his powers for appropriate purposes
The director should not use the powers provided to him for his personal benefits, improper purposes or collateral purposes. For Instance, the director cannot pass a resolution against the any of the shareholders whether or not he likes them.
Can A Director Resign?
Resigning from the position of Director is not allowed for a director (in accordance with the provisions mentioned in the memorandum of the company or any agreement with the company or with respect to any article of association) until and unless there is a director who is a Singaporean resident. If the director vacates his position or resigns breaching any of the discussed provisions, the resignation will be considered as invalid.