About company director
Under the Singapore Companies Act, a Singapore registered company must have at least one director originally residing in Singapore. In addition, the local director must be a natural person over the age of 18, and a natural person who is physically and mentally able to perform the duties and responsibilities of the director may be appointed as a director of the company.
Directors can be Singapore citizens, Singapore permanent residents or holders of employment permits or EntrePass.
In the case of directors of a private enterprise as long as they are over 18 years of age, there is no upper age requirement, but if they are a listed company or a subsidiary of a listed company, they may not be appointed as directors after the age of 70 (unless reappointed at the company’s annual general meeting).
Who cannot be a director?
- A person who has been adjudged guilty of 3 or more offences in relation to the requirements of the Company Act within a period of 5 years
- A person convicted in Singapore of any offence in connection with the formation or management of a corporation
- A director of a company which was wound up on grounds of national security or interest
- An undischarged bankrupt
- A person convicted in Singapore or elsewhere of any offence involving fraud or dishonesty punishable with imprisonment for 3 months or more.
- An unfit director of another company
Duties of a director
A directors need to comply with disclosure or reporting requirements under the Singapore Companies Act. Directors also need to comply with their financial reporting obligations under the Companies Act. This entails maintaining financial statements, to lay the profit and loss account, balance sheet and directors’ report before the members at the annual general meeting, to report on the state of the company’s affairs and to provide members with copies of the financial statements.
Who can become a company shareholder?
- A PTE company must have at least one shareholder, up to a maximum of 50 shareholders
- Shareholders can be natural persons or companies, locals or foreigners
- Singapore allows foreign shareholders to hold 100% of the company
- To become a shareholder, individuals must first buy company shares
- Shareholders do not hold any company assets and are not responsible for the company’s debts because the company is a separate legal entity.
Rights and powers of a company shareholder
- Voting rights
Shareholders exercise voting rights if ordinary resolutions are required. Examples of general resolutions include:
- Appointment and removal of auditors
- Election of new directors or replacement of retiring directors
- Amendment of the Articles of Association
- Change of the Company’s Equity
- Change of company name
- Right to attend and hold meetings
Shareholders have the right to participate in the annual general meeting and to speak directly to other shareholders and the Board of Directors.
- Right to fair treatment
Under section 216 of the Singapore Companies Act, shareholders may seek redress from the Government of Singapore if:
- The conduct of a company or director is oppressive or disregards the interests of one or more shareholders
- The actions of the Company, shareholders, bondholders or directors unfairly discriminate against or harm one or more shareholders
- Dividend distribution rights
Directors of a company have the right to recommend a fixed number of dividends. However, to formally distribute dividends, the company must pass a shareholder vote. In general, preferred shares have a preference over common stock when dividends are paid and liquidated.
- Rights to close a company
In some cases, shareholders may seek to dissolve the company, including:
- The directors of the company harm the interests of the company for their own benefit
- This company is used for illegal purposes
- The company is running a multi-level MLM or MLM program
- Ownership of assets at the time of liquidation
If the company fails, shareholders have the right to use the company’s assets. Typically, common shareholders have final ownership of the company’s remaining assets, with the exception of debt holders and preferred shareholders
The differences between shareholders and directors
- Different identities
Shareholders are investors in a joint stock company, and directors are elected by shareholders and belong to the management of the company. Shareholders’ meetings are the authorities in the company that make substantive decisions about the management of the company, and the board of directors is the executive body, not the authority, of the company’s decision-making.
- Produces different elements
Shareholders are the basis of the existence of the company, is the core elements of the company, directors are elected by the shareholders’ meeting or general meeting of shareholders, can be shareholders or non-shareholders
- The conditions are different
A shareholder is participating in the sale of a company’s interests, and the director has the authority of the board of directors of a large investor in the company or enterprise, which can generally be determined in three ways:
- By law
- As stipulated in the articles of association of the company
- A resolution shall be made by the general meeting of shareholders.
In three ways, the law is the most basic and authoritative, so the company law on the board of directors of the authority of the provisions, the board of directors must be in accordance with the law