What is the Role of a Nominee Director
A person appointed as a director of a company for the purpose of compliance with the requirement that every company registered in Singapore must have at least one director who is ordinarily a resident in Singapore would generally fall within the definition of a director who is a nominee.
A director is a nominee if the director is accustomed or under an obligation whether formal or informal to act in accordance with the directions, instructions or wishes of any other person. The obligation to act in accordance with the directions, instructions or wishes of any other person may arise from legal obligations (e.g. contract; trust) or informal arrangements.
For example, a director is a nominee of a person with a shareholding in a company if he is appointed by that person to the board of directors of the company and he acts in accordance with the directions, instructions or wishes of that person. This obligation may arise from legal obligations (e.g. contract, trust) or informal arrangements.
If you are appointed a resident director to help clients meet the legal requirement, you and the companies you are appointed to may have an increased risk of being misused to facilitate money laundering (ML), terrorism financing (TF) and proliferation financing (PF). As such, it is imperative that you exercise reasonable card and take adequate steps to meet and discharge your obligations under the law as directors.
A resident director is subject to a broad range of statutory obligations under the Companies Act (CA), as well as fiduciary duties to act in the best interests of the company. These include having an understanding of the business affairs of the company, performing reasonable due diligence on corporate activities and banking transactions to prevent the company and its funds from being misused for ML, TF or PF, as well as maintaining accurate and up-to-date accounting records and financial statements. You should also ensure that you can identify the controllers/beneficial owners of the company.
If a company is misused for criminal purposes, for example, receiving and/or transferring proceeds of crime through its bank account, due to the resident director's neglect or consent, the resident director may also be subject to criminal investigations and prosecution.
Nominee directors are required to comply with the anti-money laundering and counter terrorism financing requirements. To ensure this, appointed nominee directors should perform compliance reviews on customers.
The compliance review undertaken by the nominee director will include the following areas:
general information about the customer’s business activities, and overall assessment of its money laundering and terrorism financing risks;
the customer due diligence and enhanced customer due diligence;
the obtaining of beneficial ownership information; and
suspicious transaction reporting.
If you wish to better understand your statutory duties and responsibilities under the CA, you may wish to sign up for ACRA's complimentary online Directors' Training Programme.
Bestar provides nominee resident director and branch’s resident agent service by our external working panels to help clients meet the legal requirement for a company and branch to have a resident director and agent. If you would like to know more, please contact us.