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Tag: ACRA Compliance

  • Dormant Company Singapore: Compliance Guide for Inactive Entities

    Dormant Company Singapore: Compliance Guide for Inactive Entities

    [SUMMARIES]

    A dormant company is defined differently by regulators: ACRA bases status on the absence of accounting transactions (excluding statutory fees), while IRAS focuses strictly on the lack of revenue or income generation.

    Strategic dormancy allows investors to cost-effectively hold assets like intellectual property and preserve corporate banking relationships without the administrative burden of active operations or mandatory audits.

    Directors must maintain strict compliance despite inactivity, as mandatory obligations like appointing a Company Secretary, maintaining a registered address, and filing Annual Returns remain enforceable to avoid penalties.

    [/SUMMARIES]

    Primary Keyword: Dormant Company Singapore

    Other Keywords: ACRA dormant company, IRAS dormant company, strike off vs dormant, inactive company singapore, dormant company requirements, company compliance singapore

    Dormant Company Singapore: Compliance Guide for Inactive Entities
    Dormant Company Singapore: Compliance Guide for Inactive Entities

    A Dormant Company in Singapore refers to a registered business entity that has temporarily ceased trading activities and stopped generating income but retains its registration with ACRA for future use or asset holding. For business owners, understanding this status is crucial because “dormant” does not mean “exempt from all laws”; it essentially means the company is in a state of hibernation yet must still acknowledge statutory obligations.

    While the primary intent of dormancy is often to pause operations, many investors often leverage this structure strategically to hold intellectual property or real estate without the administrative burden of an active trading firm. However, the concept of dormancy is not applied uniformly across Singapore’s regulatory framework. ACRA and IRAS assess dormancy based on different criteria, which means a company may qualify as dormant for corporate compliance purposes yet still be regarded as active from a tax perspective. Misunderstanding this distinction can lead to unintended non-compliance.To help you manage this effectively, this guide details the benefits, procedural steps for conversion, and the rigorous compliance checklist required to maintain a dormant status. Furthermore, we will explore the lifecycle options available to you, from “opening” a dormant entity with the help of incorporation experts like Koobiz, to eventually reactivating it when market conditions improve.

    What Defines a Dormant Company in Singapore?

    SG Dormant Company: ACRA & IRAS Definitions
    SG Dormant Company: ACRA & IRAS Definitions

    A dormant company is defined as a business entity that does not engage in significant accounting transactions or generate revenue during a specific financial period. To fully grasp this legal status, it is essential to distinguish between the definitions set by the two primary governing bodies in Singapore.

    How does ACRA Define a Dormant Company?

    ACRA determines a company’s dormant status primarily by assessing whether it has recorded any accounting transactions during the relevant financial year. Under Section 205B of the Companies Act, accounting transactions refer to entries that affect the company’s financial statements.Importantly, the legislation recognises that certain administrative activities are unavoidable. As such, a company remains dormant in the eyes of ACRA even if it engages in minimal administrative actions, such as paying fees to the Registrar, maintaining a registered office, or paying a penalty. This distinction ensures that paying for statutory compliance does not accidentally trigger “active” status.

    How does IRAS Define a Dormant Company?

    IRAS defines a dormant company differently, focusing entirely on the source of income rather than accounting entries. A company is considered dormant by IRAS if it does not carry on business and has no income for the whole of the basis period.

    In practical terms, a company may continue to incur routine expenses, such as secretarial or statutory fees, which may be recorded as transactions for corporate purposes. However, provided there is no revenue or income stream, IRAS will continue to treat the company as dormant for tax assessment. It is also important to note that the mere holding of assets does not, in itself, disqualify a company from dormant status. A company is only considered active for tax purposes if those assets generate income, such as dividends, rental income, or similar returns.

    What are the Benefits of Maintaining a Company Dormant?

    Benefits of maintaining a dormant company
    Benefits of maintaining a dormant company

    Maintaining a dormant company can offer meaningful strategic and financial advantages compared to permanently striking off the entity. Rather than dissolving the company, dormancy allows business owners to temporarily suspend operations while preserving the legal structure, historical standing, and underlying asset value of the company.

    Here are the key advantages:

    • Asset & IP Protection: It allows you to hold intellectual property, trademarks, or real estate in a separate legal entity, insulating them from trading risks.
    • Brand Preservation: You retain ownership of your company name and brand identity, preventing competitors from claiming them, which would happen if you struck off the company.
    • Readiness for Funding: A company with an older incorporation date often appears more stable and established to investors and banks compared to a newly registered firm.
    • Banking Continuity: You can potentially maintain your corporate bank account (subject to bank activity fees), avoiding the rigorous and time-consuming KYC process required to open a new account later.
    • Cost Efficiency: Running a dormant company is significantly cheaper than an active one. You enjoy exemptions from audit requirements and can apply for waivers to skip filing complex tax returns (Form C-S/C).
    • Ease of Reactivation: Resuming business is as simple as notifying ACRA and IRAS, whereas restarting after striking off requires a full re-incorporation process.

    Koobiz Tip: While maintaining a dormant company is more cost-effective than operating an active entity, certain statutory obligations remain. These include maintaining a registered address and appointing a company secretary. Koobiz offers tailored solutions designed specifically to meet the compliance needs of dormant companies in a cost-efficient manner.

    How to “Open” or Convert to a Dormant Company?

    The process of “opening” a dormant company usually refers to either incorporating a new shelf company for asset holding or converting an existing active trading company into a dormant state. This procedure requires precise adherence to cessation protocols to ensure no loose ends trigger compliance issues.

    Steps to Convert an Active Company to Dormant Status

    Converting an active company to dormant involves three critical steps: ceasing trading, clearing liabilities, and notifying authorities.

    1. Cease Trading: Stop all business operations and issuing of invoices immediately.
    2. Clear Liabilities: Settle all outstanding debts, creditor payments, and staff salaries.
    3. Notify Authorities: Ensure all accounts are finalized up to the date of cessation.

    Specifically, you must ensure that no further income hits the bank account. Any trailing income received after the declared cessation date can void the dormant status for that financial year, forcing you to file full tax returns.

    Can You Incorporate a Company as Dormant from Day One?

    Yes. In Singapore, it is permissible to incorporate a company with the intention that it remains dormant from inception. This approach is commonly adopted by investors who wish to reserve a company name, establish a holding structure, or prepare a corporate vehicle for future use without commencing immediate commercial activity.To do this, you would go through the standard incorporation process with a provider like Koobiz. Once incorporated, the company simply refrains from entering into any significant accounting transactions. You will then declare this status in your very first Annual Return filing to ACRA.

    Ongoing Responsibilities and Compliance for Dormant Companies

    Responsibilities and Compliance for Dormant Companies
    Responsibilities and Compliance for Dormant Companies

    Even though a company is inactive, the directors are still legally responsible for specific statutory filings to maintain good standing. Ignoring these responsibilities can lead to penalties or involuntary striking off by ACRA.

    To ensure your dormant company remains compliant, you must adhere to the following checklist:

    • Annual Return (ACRA): You must continue to file an Annual Return via the BizFile+ portal every year. While “Dormant Relevant Companies” are exempt from preparing audited financial statements, lodging the return to confirm your status is mandatory to avoid composition fines.
    • Tax Return (IRAS): You are required to file the Income Tax Return (Form C-S/C) annually unless you have been granted a specific waiver. Once a company is dormant, you should apply for a Waiver of Income Tax Return Submission to skip this requirement for future years.
    • Corporate Secretary: You must appoint and maintain a qualified Corporate Secretary. This officer is essential for handling official communications with ACRA and IRAS and ensuring your registers are kept up to date.
    • Registered Address: You must maintain a physical registered office address in Singapore where official mail can be delivered. This cannot be a P.O. Box.

    Professional service providers such as Koobiz offer compliance-focused solutions specifically designed for dormant companies, enabling directors to meet these statutory requirements efficiently without incurring the costs associated with a fully active operating company.

    Real-World Scenarios: Managing Dormancy Correctly

    To make the regulations easier to understand, let’s look at three common scenarios faced by Singapore business owners. These examples highlight the subtle difference between staying compliant and accidentally becoming “active.”

    Scenario 1: The “Safe” Holding Company (Compliant)

    Situation: TechHold Pte Ltd was incorporated solely to hold a patent. It has no employees and conducts no sales. Its only expense is the annual fee paid to Koobiz for secretarial services and the ACRA filing fee.

    Outcome: The company is regarded as dormant under both ACRA and IRAS..

    • Why? The expenses (Secretarial/ACRA fees) are statutory requirements, which are “disregarded transactions” by ACRA. Since there is no income, it also satisfies IRAS rules.

    Scenario 2: The “Accidental” Activation (Non-Compliant)

    Situation: OldBiz Pte Ltd ceased trading two years ago. However, the director forgot to close a corporate subscription for a software tool, and the monthly fee of $50 continues to be deducted from the company bank account.

    Outcome: The company is considered active by ACRA but remains dormant for IRAS purposes.

    • Why? The software payment is an “accounting transaction” that is not a statutory requirement. Therefore, ACRA views the company as active, meaning it cannot claim the audit exemption for dormant companies if it crosses other thresholds. However, since it earned no income, IRAS still treats it as dormant for tax purposes.

    Scenario 3: The Investment Income Trap (Tax Active)

    Situation: WealthNest Pte Ltd holds shares in several other companies. It has no operations, but this year it received a $10,000 dividend from one of its investments.

    Outcome:The company is considered dormant by ACRA but active by IRAS.

    • Why? Receiving a dividend is income. Therefore, the IRAS tax waiver is revoked, and the company must file a tax return (Form C-S/C). However, ACRA may still consider it dormant if no other administrative costs were incurred, as the receipt of money itself might not count as a significant accounting transaction depending on how it’s recorded (though often it triggers administrative costs that would break dormancy).

    How to Close a Dormant Company in Singapore

    Striking off the company
    Striking off the company

    When the ongoing maintenance costs of a dormant company no longer justify its strategic or commercial value, directors may decide to permanently exit the structure. For solvent dormant companies, the most commonly adopted exit route is the striking-off procedure administered by ACRA.

    Understanding the Striking-Off Process

    Striking off is the process of removing the company’s name from the official register, effectively dissolving the entity. This is submitted via ACRA’s BizFile+ portal and is significantly faster and cheaper than a formal winding-up process (liquidation).

    Specifically, the application takes approximately 4 to 5 months to process. Once approved, a notice will be published in the Government Gazette. If there are no objections from the public or tax authorities after a specific period, the company is struck off.

    Key Pre-Conditions for a Successful Strike-Off

    There are strictly four groups of conditions that must be met before ACRA will approve a strike-off application.

    1. No Assets/Liabilities: The company must have disposed of all assets and settled all debts.
    2. No Outstanding Tax: IRAS must have no outstanding tax queries.
    3. No Legal Proceedings: The company cannot be involved in any court cases.
    4. Unanimous Consent: All shareholders must agree to the striking off.

    How to Reactivate a Dormant Company

    One of the principal advantages of maintaining a dormant company is the ability to reactivate it efficiently when business opportunities arise. Reactivation does not require a complex approval process, but it must be handled carefully to ensure compliance with both ACRA and IRAS requirements.

    Steps to Notify ACRA and IRAS of Reactivation

    To reactivate, you primarily need to recommence business activities and notify the relevant authorities through your filings. There is no special “reactivation form” for ACRA; the change in status is simply reflected in your next Annual Return where you will no longer declare the company as dormant.

    For IRAS, you must notify them within one month of recommencing business if you previously held a tax waiver. You will then be issued a Form C-S/C to file for the coming Year of Assessment. It is crucial to engage your Corporate Secretary or Koobiz to ensure these notifications are timed correctly to avoid penalties.

    Frequently Asked Questions on Dormant Companies

    Can a Dormant Company Hire Employees?

    No, a dormant company generally cannot hire employees because paying salaries constitutes an accounting transaction. Under ACRA’s definition, an accounting transaction (other than statutory compliance costs) breaks the dormant status.

    If a company hires staff and pays CPF (Central Provident Fund) contributions or salaries, it is engaging in operational activities. Therefore, if you intend to hire, the company must transition to “active” status and comply with all relevant employment and financial reporting standards.

    Can a Dormant Company Hold Shares in Another Company?

    Yes, a dormant company can hold shares in another company, and this is a very common structure for holding companies. Holding shares itself is a passive activity and does not trigger “active” status.

    However, the nuance lies in the income. If the dormant company receives dividends from these shares, it may still be considered “dormant” by ACRA (if no accounting entry is required beyond receipt) but might be considered “active” for tax purposes by IRAS if that dividend income is taxable. Always consult a tax professional or Koobiz to understand the specific tax implications of your holding structure.

    Ready to incorporate or manage your Singapore company?

    Whether you are establishing a dormant holding company or require ongoing Company Secretary services to maintain compliance for an inactive entity, professional guidance can help minimise regulatory risk. Service providers such as Koobiz assist clients in navigating ACRA and IRAS requirements efficiently, allowing business owners to focus on long-term strategic planning.

    Contact Koobiz Today for a Consultation

  • Understanding the Singapore Company Constitution: M&AA vs. Model Clauses

    Understanding the Singapore Company Constitution: M&AA vs. Model Clauses

    [SUMMARIES]

    The Singapore Company Constitution replaces the former Memorandum and Articles of Association as the supreme binding document governing internal management and shareholder rights.

    Founders must choose between ACRA’s standard Model Constitution for cost-efficiency or a Customized Constitution to accommodate complex share structures and investor needs.

    Amendments to this statutory contract require a Special Resolution with a 75% shareholder majority, ensuring rigorous consensus for governance changes.

    [/SUMMARIES]

    The Singapore Company Constitution is the supreme legal document that governs the internal management, rights, and obligations of a company and its members under the Companies Act 1967. For business owners, understanding this document is the foundation of corporate governance. Previously known as the Memorandum and Articles of Association (M&AA), the modern Constitution consolidates these regulations into a single, cohesive framework essential for every locally incorporated entity.

    Koobiz specializes in helping businesses navigate these requirements seamlessly during incorporation. Whether you choose the standard model or a bespoke document, getting this right from the start is critical.

    To comprehend the evolution of this document, one must look at the legislative changes introduced by the Companies (Amendment) Act 2014, effective from January 3, 2016. Before this, companies maintained two separate documents (Memorandum and Articles). Today, this distinction is abolished for new companies, streamlining the process. Older companies can continue using their existing M&AA, which is now legally “deemed” to be their constitution, though updating it to align with modern provisions is highly recommended.

    The most pressing decision for new entrepreneurs is choosing between the standard “Model Constitution” provided by ACRA and a “Customized Constitution.” This choice dictates the flexibility of your company regarding share transfers and decision-making.

    What is a Singapore Company Constitution?

    A Singapore Company Constitution acts as a binding contract between the company and its members. Deriving its authority from Section 22 of the Companies Act 1967, it serves as the ultimate rulebook for internal administration.

    Singapore Constitution: contract & internal management rules
    Singapore Constitution: contract & internal management rules

    Unlike commercial contracts, the Constitution governs the relationship between directors and shareholders including decision-making processes, power distribution, and member rights. If no specific constitution is filed during incorporation, the Model Constitution applies by default.

    Furthermore, the Constitution is a public document available for purchase via ACRA’s BizFile+ portal, allowing creditors and investors to review key rules regarding borrowing limits and share-transfer restrictions before entering into businesses.

    What are the Mandatory Sections Required by Law?

    The Mandatory Sections Required by Law
    The Mandatory Sections Required by Law

    While modern constitutions are flexible, Section 22 of the Companies Act mandates certain clauses to establish the entity’s identity and scope. The following four sections are standard and essential:

    1. Name Clause: The full, approved name of the company, matching exactly with the name reserved with ACRA. Private limited companies must include “Private Limited” or “Pte. Ltd.” as part of the name.
    2. Registered Office Clause: The constitution must declare that the registered office is situated in the Republic of Singapore. This establishes jurisdiction and the address for official legal notices.
    3. Liability Clause: For a company limited by shares, it must explicitly state that “the liability of the members is limited.” with a view to protecting shareholders from personal liability for company debts.
    4. Subscriber Clause: The document must state each initial subscriber’s full name, addresses and occupations along with a declaration that they desire to form the company and agree to take up the number of shares specified.

    Note: The Capital Clause (specifying authorized capital) is no longer mandatory following the abolition of authorized share capital and par value. Share capital is now declared directly via share allotment filings on BizFile+.

    5 Critical Considerations When Drafting Your Constitution

    5 Critical Considerations When Drafting Your Company Constitution
    5 Critical Considerations When Drafting Your Company Constitution

    Before adopting a standard template, evaluate these five strategic factors that determine power balance and financial fluidity:

    • Share Classes (Ordinary vs. Preference): Startups seeking investment often need “Preference Shares” (priority on dividends, no voting rights). The standard Model Constitution usually accounts only for ordinary shares.
    • Pre-emption Rights: This protects existing shareholders from dilution by requiring any selling shareholders to offer their shares to current members before external parties This is vital for maintaining control in private companies.
    • Board Dynamics & Casting Vote: A clause giving the Chairman a “casting vote” to prevent deadlock in case of a tie vote
    • Conflict Resolution: Your constitution can outline mediation or arbitration mechanisms to resolve disputes without resorting to winding up the company.
    • Dividend Policy: our constitution sets specific rules on how and when these are declared, offering transparency to investors.

    Model Constitution vs. Customized Constitution: Which is Right for You?

    The Model Constitution offers cost-efficiency while a Customized Constitution offers flexibility.

    The Model Constitution: A statutory template provided in the Companies (Model Constitutions) Regulations 2015.

    • Pros: Free, legally robust, and automatically compliant. Ideal for single-shareholder companies.
    • Cons: Rigid. Lacking specific protections like “tag-along” or “drag-along” rights crucial for VC-backed startups in a standard scenario.

    The Customized Constitution: A bespoke document drafted by professionals.

    • Pros: Tailored to specific needs. Allows for dual-class share structures and entrenched provisions.
    • Cons: Incurs legal drafting fees and requires more preparation time.

    How to Register and Submit Your Constitution to ACRA

    Submission is a mandatory step in the incorporation workflow via the BizFile+ portal.

    Log in to BizFile+: Use your SingPass to access ACRA’s filing system. Navigate to “Start a New Local Company”.

    Select Constitution Type:

    1. If adopting the Model Constitution, simply check the box for “Constitution of a Private Company Limited by Shares”.
    2. If using a Custom Constitution, upload the full PDF document containing the mandatory clauses.

    Digital Endorsement: ACRA sends an email notification to all appointed directors and shareholders. They must log in to BizFile+ and digitally endorse the application to confirm their agreement.

    Koobiz can handle this entire submission process for you, ensuring your Constitution is correctly formatted and lodged so you can focus on your business.

    How to “Buy” or Retrieve a Company Constitution?

    You can retrieve a constitution in two ways:

    • Adoption (Free): New business owners can download or select the Model Constitution for free during incorporation.
    • Due Diligence (Purchase): To view another company’s constitution (e.g., a competitor or partner), you can purchase “Extracts” from the ACRA iShop. As a public record, any member of the public can buy a copy (typically SGD 11 to SGD 26) to verify governance rules.

    Can You Amend the Constitution After Incorporation?

    Yes, via a Special Resolution, which requires at least 75% of the votes from shareholders.

    The Process:

    1. Proposal & Meeting: Directors/Shareholders propose the change at a General Meeting.
    2. Voting: A 75% majority is required to pass the resolution.
    3. Lodgement: The company must file a “Notice of Resolution” and the new constitution via BizFile+ within 14 days.

    Important Note on Entrenched Provisions:

    If you wish to add or remove “Entrenched Provisions” (clauses deliberately made difficult to change), Section 26A of the Companies Act usually requires unanimous agreement (100%) from all members,.

    Start Your Incorporation Journey with Koobiz

    Ready to incorporate your Singapore company with the right governance structure?

    Whether you need a simple Model Constitution or complex customized clauses, Koobiz provides expert incorporation and corporate secretarial services to ensure your business foundation is legally sound. We handle the drafting, registration, and ACRA submission so you can focus on growth.

    Visit koobiz.com today to incorporate your company with confidence.

    Frequently Asked Questions (FAQs)

    Does a Sole Proprietorship need a constitution?

    No. A constitution is only required for incorporated companies (e.g., Private Limited companies). Sole proprietorships and partnerships are not separate legal entities and do not require this document.

    How much does it cost to adopt the Model Constitution?

    There is no additional fee to adopt the Model Constitution itself—it is free. You only pay the standard company incorporation fees (SGD 315) to ACRA. Legal fees apply only if you hire a professional to draft a Custom Constitution.

    Do I need to physically sign the constitution?

    No. The incorporation process is fully digital. Directors and shareholders “sign” by digitally endorsing the application via email link using their SingPass.

  • Nominee Director in Singapore: Rules, Risks, and Requirements (2026 Guide)

    Nominee Director in Singapore: Rules, Risks, and Requirements (2026 Guide)

    [SUMMARIES]

    • Essential for Compliance: Every Singapore company requires at least one resident director; nominees fulfill this for foreign owners, enabling 100% foreign ownership without local partners.
    • Benefits: Immediate incorporation, full control retention, privacy protection, and faster market entry for overseas entrepreneurs.
    • Roles & Risks: Nominees manage statutory duties such as ACRA filings but also share legal liability. Key risks include trust, transparency, and compliance gaps. These can be reduced with clear agreements and proper oversight.
    • Appointment Process: Choose qualified residents (Citizens/PR preferred), execute NDA/Indemnity, file with ACRA within 14 days, and update Central Registers per 2025 regulations.
    • Replacement: Appoint new director before removing sole resident to avoid breaches; update ACRA and registers promptly.
    • Key Advice: It is safer to use licensed professional companies that provide corporate services, because they know the rules and can help reduce risks when you appoint a nominee director.

    [/SUMMARIES]

    What is a Nominee Director in Singapore?

    A Nominee Director in Singapore is a locally resident individual appointed to meet the legal requirement for every company to have at least one Singapore-based director. They act in a non-executive role solely to fulfil this statutory obligation.

    Nominee director generally does not participate in the commercial management, financial decisions, or daily operations. Their primary function is to ensure the company stays compliant with the Accounting and Corporate Regulatory Authority (ACRA).

    Key characteristics:

    • Statutory Compliance: They serve as the official local representative.
    • Non-Executive: They do not influence business strategy or operations.
    • Safety Mechanism: They allow foreign owners to maintain full control of the business while satisfying local laws.

    Benefits of Having a Nominee Director

    For foreign entrepreneurs and international companies, appointing a Nominee Director is often the most strategic path to entering the Singapore market.

    Benefits of a Nominee Director
    Benefits of a Nominee Director
    • 100% Foreign Ownership: You may incorporate and fully own your Singapore company without engaging a local partner.
    • Immediate Legal Compliance:. A nominee fulfills this statutory obligation instantly, keeping your business compliant with ACRA regulations.
    • Full Operational Control: Beneficiary Owners retain complete authority over the company’s bank accounts, strategy, and day-to-day decision-making without interference.
    • Faster Market Entry: You can register your company immediately, even if you are currently overseas.
    • Privacy Protection: For owners seeking privacy, a nominee shields the identity of the executive team, though shareholding structures remain visible.

    Roles and Responsibilities of a Nominee Director

    A Nominee Director’s role is strictly administrative and statutory. Key responsibilities include:

    Nominee Director: Administrative, ACRA compliance, shared legal liability.
    Nominee Director: Administrative, ACRA compliance, shared legal liability.
    • Handling ACRA Compliance: Filing insurance ofAnnual Returns and Annual General Meeting (AGM) to avoid penalties.
    • Meeting Residency Requirements: Serves as the required local director, fulfilling the obligations under the Singapore Companies Act..
    • Receiving Official Correspondence: As the local representative, Nominee Director receive and forward important notices from government agencies
    • Shared Legal Liability: A Nominee Director carries the same legal responsibilities as any director if the company violates the law.

    Risks of Appointing a Nominee Director in Singapore

    While essential for compliance, this arrangement carries specific risks that business owners must manage:

    • Operational Disconnect (Limited Oversight): Since the nominee is not involved in daily operations, there can be a gap between what the company does and what the director knows. This disconnect can lead to accidental compliance lapses if communication is poor.
    • The “Rogue Director” Risk (Trust Issues): The relationship relies heavily on trust. Without a strong legal agreement, there is a theoretical risk of a nominee acting without authorization or resigning suddenly, leaving the company legally vulnerable.
    • Strict Liability Friction: Because nominees face personal jail time and fines for company breaches, they are extremely risk-averse and may refuse to sign documents that lack clarity.
    • Conflicts of Interest: If you appoint a non-professional nominee (like a friend or associate) who has other business interests, their loyalties may be divided, potentially jeopardizing your company’s confidentiality.
    • Reputation Damage: Your company’s credibility is linked to its directors. Appointing a nominee with a poor track record or connections to suspicious entities can negatively impact your business reputation with banks and partners.

    How to Appoint a Nominee Director in Singapore

    This is the fully updated step-by-step process, revised to include the critical 2025 “Central Register” regulations and the correct advice regarding Employment Pass holders.

    New Process: Revised for
    New Process: Revised for “Central Register 2025” & EP

    Step 1: Identify a Qualified Candidate

    You must select an individual who meets the strict residency criteria set by ACRA.

    • Who Qualifies: A Singapore Citizen or Permanent Resident (PR).
    • Who to Avoid: Employment Pass (EP) holders. Using an EP holder as a nominee for an unrelated business without a “Letter of Consent” is a breach of work pass conditions.
    • Best Practice: Engage a licensed Corporate Service Provider (CSP). They provide professional nominees who are pre-vetted, ensuring you avoid the risks of appointing friends or unqualified individuals.

    Step 2: Execute Legal Agreements

    Before the appointment becomes official, you must protect your assets with proper documentation.

    • Nominee Director Agreement (NDA): A contract stating the nominee acts only on your instructions and has no executive power.
    • Deed of Indemnity: This protects the nominee against financial penalties, provided they have acted honestly.
    • Undated Resignation Letter: Have the nominee sign a resignation letter with the date left blank. This effectively gives you the power to remove them immediately whenever you choose.

    Step 3: Pass a Board Resolution

    The company’s existing directors must formally approve the appointment.

    • The Action: Hold a board meeting (or circulate a written resolution) to approve the new director.
    • The Record: This resolution must be signed and filed in the company’s Minute Book by the Company Secretary.

    Step 4: File the Appointment with ACRA

    Once the paperwork is signed, the appointment must be registered with the government.

    • The Deadline: The filing must be submitted within 14 days of the appointment.
    • The Process: Your Company Secretary or Filing Agent will log into the ACRA BizFile+ portal to submit the appointment.
    • The Result: The nominee’s name will appear on the company’s public Business Profile.

    Step 5: Maintain the “Register of Nominee Directors” (Transparency Requirement)

    Crucial Update: Singapore law now requires a secondary layer of disclosure to prevent money laundering.

    • Private Register: You must update your internal Register of Nominee Directors (kept at your registered office).
    • Central Register: You must update the company’s internal Register of Nominee Directors kept at your registered office. Unlike the Register of Controllers, this is not currently filed centrally but must be available to authorities upon request.

    Privacy Note: Unlike the public profile, the detailed information in this Central Register is not open to the public; it is accessible only to law enforcement agencies.

    By following these steps, you ensure your nominee arrangement is legally watertight, transparent to authorities, and secure for your business ownership.

    Replacing or Removing a Nominee Director

    Replacing a Nominee Director is a precise legal process. You must follow the correct order of operations to ensure your company does not breach the “local resident director” requirement during the transition.

    Nominee Director - 6 Legal Steps, Avoid ACRA Breach.
    Nominee Director – 6 Legal Steps, Avoid ACRA Breach.

    1. Check the “Sole Local Director” Rule

    Before you do anything, check if the current nominee is the only director residing in Singapore.

    • The Rule: Under Section 145(1) of the Companies Act, a company cannot accept the resignation of its sole local director until a replacement has been appointed.
    • The Action: If they are the only local director, you must appoint a new Singapore-resident director (or a new nominee) before the resignation can take effect.

    2. Review the Nominee Agreement

    Check the termination clause in your Nominee Director Agreement.

    • Most professional agreements include a pre-signed, undated resignation letter.
    • To remove the director, you simply “date” this letter effective as of the day you wish them to leave.

    3. Pass a Board Resolution

    The company’s Board of Directors must formally approve the change.

    • The Meeting: Hold a board meeting (or circulate a written resolution) to accept the resignation of the outgoing director and approve the appointment of the incoming one.
    • The Record: File this resolution in your company Minute Book.

    4. Update ACRA (Public Register)

    Your Company Secretary must log the change with the Accounting and Corporate Regulatory Authority (ACRA).

    • The Deadline: You have 14 days from the effective date of resignation to update ACRA via the BizFile+ portal.
    • The Result: The public register will reflect the new director’s name.

    5. Update the “Register of Nominee Directors” (Critical 2025 Step)

    You must update the transparency registers to reflect that the individual is no longer a nominee.

    • Private Register: Update your internal register kept at the registered office.
    • Central Register: Your Filing Agent must update ACRA’s Central Register of Nominee Directors (usually within 2 business days of the internal update) to remove the nominee’s status.

    6. Finalize the Handover

    • Ensure the outgoing nominee returns any company property or tokens.
    • If they were a bank signatory (rare for professional nominees), strictly remove their authorization from the corporate bank account immediately.

    Following these steps ensures a smooth, compliant transition when removing or switching a nominee director in Singapore.

    Common Questions about Singapore Nominee Directors

    1. Is a nominee director required for every Singapore company?

    Yes, every Singapore company must have at least one director who is ordinarily resident in Singapore. If there are no eligible local directors, appointing a nominee director fulfills this legal requirement.

    2. Does a nominee director control the company?

    No, a nominee director does not manage or control the company. Their role is limited to legal compliance and formal representation. Business decisions remain with the actual owners or directors.

    3. Can a nominee director be held liable for company misconduct?

    Yes. Under Singapore law, there is no distinction between a “nominee” and a “real” director. They face full criminal and civil liability for the company’s compliance failures.

    4. How long can a nominee director serve?

    A nominee director can serve as long as required by the company, as defined in the appointment agreement. They can be replaced or removed by following legal and procedural steps.

    5. Can a nominee director be a foreigner?

    No, the nominee director must be a Singapore citizen, permanent resident, or someone with a valid employment pass and a local address.

    6. Is the name of the nominee director public?

    Yes, the nominee director’s name appears in the company’s public records filed with ACRA.

    7. What are the costs involved?

    Nominee directors typically charge an annual fee, which varies depending on the service provider and scope of responsibility. Costs should be clarified in the appointment agreement.

    8. Can the nominee director open or operate company bank accounts?

    They can, but CSPs almost never agree due to liability and AML risks. Professional nominee directors almost never act as bank signatories. Banking authority is exclusively retained by the foreign owners to ensure fund safety.