Duties and Responsibilities of a Company Director
Under Singapore law, a private company must have at least one director, and a public company must have at three or more. One director must be a local resident of Singapore, who is either a Singapore citizen, Singapore permanent resident or a holder of an Entrepreneur Pass or Employment Pass.
“A director must make decisions objectively, act in the best interest of the company, avoid conflicts of interest, and be honest and diligent in carrying out his duties.”
Directors have broad powers of management, as defined by Singapore’s Companies Act and the particular company’s Constitution. In smaller, private companies, the director likely will manage the company’s business, making most of the day-to-day decisions. In larger companies, a director will take on a more supervisory and visionary role while a management team will perform the day-to-day operations. Whether or not directors are employed by the company or being assigned any job titles, they owe the company a fiduciary duty and are expected to perform in the way that best serves the company’s interests.
Fiduciary Duties of Directors include:
- Act in good faith: Directors must act honestly when dealing with shareholders, creditors, employees, customers, other companies and the community.
- Use discretion: Directors must use their freedom in making decisions about the company.
- Avoid conflicts of interest: Directors cannot put themselves in situations where their personal interest conflicts with that of the company.
- Avoid debts that cannot be paid: The Companies Act prohibits directors from incurring debts that it knows the company cannot pay.
- No insider trading: The Companies Act prohibits directors from using information gotten through their position at the company for personal gain or for the detriment of the company
Administrative duties are enforced by the Accounting and Corporate Regulatory Authority of Singapore (ACRA) and include:
- Satisfy the duty to disclose
- Hire an auditor within 3 months of Incorporation
- Maintain a register of the company members and other statutory books at the Registrar
- Maintain proper accounting records
- Hold the first Annual General Meeting within 18 months of incorporation and every year thereafter, at an interval not to exceed 15 months
- Prepare a financial statement for the company’s Annual General Meeting
- Hold regular shareholder and director meetings to review the company’s trading and financial position