Company Directors and Shareholders FAQs
Yes the directors are held responsible for the company’s CPF contribution.
Directors are required to hold the first Board Meeting after the company is incorporated to approve the appointment of the officers of the company and other related matters.
The directors should ensure that there are regular meetings to review the company’s financial and trading position properly. The frequency of the meetings depends upon the nature and scale of the company’s operation.
Usually a company has at least one meeting in a year which is known as the annual general meeting (AGM). The directors must ensure that the first AGM is held within 18 months of the incorporation of the company and, following that, in every calendar year at not more than 15 months interval. The Companies Act also requires that all AGMs must be held within six months from the financial year end of the company.
The directors themselves or on the requisition of members may convene any shareholders’ meeting to vote on certain issues that require the agreement by the members. These are generally known as extraordinary general meetings (EGM).
For a successful Singapore business incorporation you will need the following information and documents:
- Company Name
- Registered Address
- A Description of Business Activities
- Shareholders Particulars
- Directors Particulars
- Company Secretary Particulars
- Memorandum and Articles of Association (MAA).
- A copy of Singapore identity card (IC) for Singapore Residents or a copy of passport, overseas residential address proof, and other information for foreigners.
- If the shareholder is a corporate entity, you need to submit a copy of registration documents such as Certificate of Incorporation and Memorandum & Articles of Association.
For non-English documents, an officially-endorsed translated version is required.
Singapore Company Act requires all Singapore incorporated company must have at least one director who is “ordinarily resident in Singapore” i.e. Singapore Citizen, Singapore Permanent Resident, or a person who has been issued with a work pass such as EntrePass/Employment Pass/Dependant Pass.
Any person above the age of 18 years may be appointed as a director. However, certain individuals e.g. bankrupts, are disqualified from holding director positions.
A Director shall disclose to the company:
- any material personal interest they have in a matter which relates to the affairs of the company; and
- any other interest which the Director believes is appropriate to disclose in order to avoid an actual conflict of interest
A shareholder can be an individual or a company (commonly known as a corporate shareholder) who owns a share or multiple shares of the company. A company can be owned by multiple individuals or a single corporate shareholder. To be considered a shareholder, you must own at least one share of the company. Shareholders (often referred to as, “the members”) are the actual owners of the company. The minimum number of shareholders is one; the maximum number of shareholders is twenty in the case of an exempt private limited company.
Singapore Companies Act allows local and foreign Corporate and Individual shareholders to own 100% of Singapore companies.
“Can One Person or a company own all the company Shares? How many Shareholders must a company have?”
Yes, Singapore companies Act allows a minimum of one individual or corporate shareholder. A Singapore Company may be registered with only one shareholder who can be an individual or a corporation.
“Does Singapore have any restrictions on foreign ownership?”
Singapore has no restrictions on foreign individual or corporate shareholder owning 100% of the company.
No, shareholders are not the employees, but are the owners of the company.
The task of running the company is given to the Managing Director(s). Shareholders can also but not necessarily be the directors of the company.
When you set up a company, you will decide on the number of share capital and its value per share. This is then included in the company’s Memorandum of Association.
This sets out:
- the amount of share capital the company will have
- the division of the share capital
- the founders of the company who will need to sign on the memorandum and state the number of shares subscribed by them
The certificate constitutes proof of share ownership. Persons owning shares in a company are called “shareholders”.
A shareholder is not liable for the debts or other obligations of the company except to the extent of any commitment made to buy shares. The benefits of owning shares include a right to participate in profits (through dividends) and the right to share the residue of assets of the company, once liabilities have been paid off, if it is ever dissolved.
“What are dividends and do Shareholders have to pay any tax on dividends in Singapore?”
During the year, a company’s board decides whether the business has done well enough to pay the shareholders an interim dividend and at the end of the financial year, the shareholders can pay themselves a final dividend. Dividends can be paid from the company’s profits or reserves. Dividends are paid according to the number of shares held by the shareholders, so the more shares you own, the more money you get. Singapore practices one tier tax system which means shareholders are not taxed on the dividends they receive from Singapore companies.
A Director is an individual, who must be at least 18 years of age, who is elected by the shareholders to manage the affairs of the Company.
The following persons are prohibited from acting as directors:
- A person who has been convicted for fraud or dishonesty punishable on conviction with imprisonment for 3 months
- An undischarged bankrupt
- A person who is disqualified by the High Court of Singapore
A director is an officer of the company. All directors must carry out their duties and responsibilities in accordance with the law and the objectives of the business.
Singapore company act requires a minimum of one director who must be a Singapore resident.
A foreigner who wants to register a new company in Singapore and act as a resident director of the company must obtain a work pass before he can act as the local resident director.
Singapore Companies Act requires that at least one of the company directors must be ordinarily resident in Singapore i.e. Singapore citizen, Singapore Permanent Resident, employment pass, EntrePass or dependent pass holder. We can provide Nominee Director Service to meet this statutory requirement, if you do not have a local resident director.
The paid-up capital can be of any legal currency.
The directors duties, responsibilities and liabilities specified in the Act as well as under the common law where applicable, include the following key administrative and substantive duties, that is, to:
- discharge their responsibilities in the company;
- ensure that they have a reasonable degree of skill and knowledge to handle the affairs of the company;
- act honestly and be reasonably diligent in discharging their duties and act in the interest of the company without putting themselves in a position of conflict of interest.
- employ the powers and assets that they are entrusted with for the proper purposes of the company and not for any collateral purpose;
- to comply with all the requirements and obligations under the Act including those in respect of meetings, requisitions, resolutions, accounts, reports, statements, records and other documents on the company, filing and notices and any other prerequisites; and
- account to the shareholders for their conduct of affairs of the company and make such disclosures that are incumbent upon them under the Act.
The directors and managers of every company are required to keep proper accounting records to sufficiently explain the transactions and financial position of the company. The records usually contain entries of all receipts and payments, details of sales and purchases of goods, record of the company’s assets and liabilities and a record of annual stocktaking if the company deals in goods. The directors must prepare a profit and loss accounts and balance sheet together with notes to the accounts giving a true and fair view of the state of affairs of the company at the end of the financial year.
The director’s report attached to the accounts must be approved by the board and signed by two directors. The accounting records must be kept at the company’s registered office or at such other place as the directors think fit. The Companies Act requires the accounting records to be kept for seven years.
The directors’ are required to file the company’s annual tax filing, GST filing (if necessary) on timely basis.
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