Nominee Director vs Local Director: What Foreign Entrepreneurs Must Know in Singapore

Singapore companies must have at least one locally resident director. Learn the key differences between nominee (local) directors and resident directors, and why this matters for foreign entrepreneurs.

Singapore’s business-friendly environment makes it a top choice for global entrepreneurs. However, the Companies Act strictly requires every company to have at least one resident director – a person who is a Singapore citizen, permanent resident, or holder of a valid Employment/EntrePass. Foreign founders who cannot fill this residency requirement themselves often appoint a nominee director: a locally resident individual (usually provided by a corporate service firm) who serves as the official director in name.

This article explains what these roles mean under Singapore law, current ACRA/IRAS/MAS rules (2024–2025), and everything a foreign entrepreneur must consider – from responsibilities and risks to common pitfalls and how to comply fully.

Definitions: Local (Resident) Director vs Nominee Director

• Resident (Local) Director: Singapore law mandates at least one director be “ordinarily resident” in Singapore (i.e. a citizen, permanent resident, or Employment/EntrePass holder). In practice, a resident director can be one of the company’s founders or an employee based in Singapore. They may take an active role in management, attending board meetings and making strategic decisions.
• Nominee Director: This is a resident director appointed primarily to satisfy the legal requirement. Nominee directors are usually non-executive and act “as a local person” on paper. They typically do not participate in day-to-day management; their role is to fulfill statutory duties and sign necessary documents. In effect, a nominee is a placeholder who formally ensures compliance with the resident-director rule. Singapore’s regulators treat nominee directors the same as any other director under the law. They owe fiduciary duties to the company, must act in good faith, avoid conflicts of interest, and ensure legal compliance. Notably, recent ACRA guidance (effective June 2025) will publicly flag any director’s “nominee” status in the company’s profile, so this role is no longer a secret.

Why Singapore Requires a Local Director

Under section 145 of the Companies Act, “every company shall have at least one director who is ordinarily resident in Singapore”. ACRA’s guidelines confirm this rule: a foreign entrepreneur looking to incorporate “whilst continuing to reside outside the country, must appoint a locally resident director”. The intent is to ensure the company has a local point of contact for legal compliance and regulation. Singapore’s official guide notes that a local director (or authorised representative) must be a Singapore Citizen, Permanent Resident, or valid pass-holder.

For foreign founders, there are essentially three options:

1. Obtain a Pass and Act as Director: For example, apply for an Employment Pass (EP) or EntrePass and relocate. Then the founder qualifies as the resident director. This involves immigration approvals and is not always possible.
2. Hire a Local Director: Appoint a trusted Singapore resident (citizen/PR) to serve as director. The local director may be an acquaintance or professional. They can actively manage the company.
3. Use a Nominee Service: Engage a licensed corporate service provider to supply a nominee director. This person meets the residency criteria but has limited involvement beyond compliance. As Vero notes, many overseas founders appoint “a trusted Singapore resident as your director—or use a nominee service” to satisfy legal requirements.

If the founder later becomes a Singapore resident (e.g. obtains an EP), they could replace the nominee with themselves. But at incorporation time, a local director is mandatory.

Appointment Process for a Nominee Director

Appointing a nominee director involves formal steps to ensure compliance:

1. Due Diligence (KYC): The corporate service provider will carry out Know-Your-Customer checks on the company’s beneficial owners and structure. This is required by law to prevent illicit use of nominee services. You will submit personal and business documents for review.
2. Service Agreement: You sign a nominee director agreement with the firm. This contract limits the nominee’s authority (they act only under instruction) and indemnifies the company against misuse. It typically ensures the nominee cannot make decisions without approval.
3. Board Resolution: The company’s board passes a resolution formally appointing the nominee as a non-executive director. The nominee also signs a Consent to Act form, confirming they accept the appointment.
4. ACRA Filing: Finally, the appointment is registered with ACRA via Bizfile+. The nominee’s details (and, from June 2025, the nominator’s details) are lodged on the company’s records.

These steps ensure the nominee director is properly authorised. Without a licensed Corporate Service Provider (CSP), appointing a nominee is illegal and heavily penalised.

Responsibilities and Risks for Directors

Whether nominee or active, every director in Singapore must obey the Companies Act. Key duties include:

• Fiduciary Duty: Directors must act in the company’s best interests, exercising care and skill in their role. They must avoid conflicts of interest and cannot benefit personally from their position unless disclosed.
• Statutory Compliance: Directors are legally responsible for statutory obligations. For example, under section 201 of the Companies Act, “directors are responsible to present and lay… financial statements at the AGM that give a true and fair view of the company”. They must maintain proper accounting records and internal controls.
• Filing and Notifications: Directors must ensure annual returns, financial statements, and changes (director resignations, address changes, etc.) are filed on time. Under section 173A, failing to notify ACRA of a director change can incur up to S$5,000 in fines (plus default penalties).
• Tax Compliance: While companies pay corporate tax, any director’s fees paid to non-residents attract a 24% withholding tax under IRAS rules. The company must withhold and remit this tax if it pays any director’s remuneration.

Risks for Directors: Directors face serious personal liability for breaches of law. For instance:

• False statements or fraud in company documents carry penalties up to S$50,000 and/or 2 years’ imprisonment.
• Persistent defaulters or bankrupt individuals can be fined (up to S$10,000) and barred from acting as director.
• New 2025 regulations mean that failing to lodge nominee registers with ACRA will attract prosecution (up to S$25,000 fine).

Nominee Director Risks: A nominee must be especially careful. Although non-executive, they are fully liable for legal compliance. Corporate service providers typically require nominees to carry Directors & Officers (D&O) insurance and indemnities to mitigate risk. Nonetheless, the nominee is penalised if the company violates laws. Equally, founders face risk if an improperly appointed nominee (e.g. a personal friend) is used. Engaging a nominee outside a licensed CSP is illegal, and can invalidate filings.

Safeguards: To protect all parties, reputable CSPs use:

• Detailed Agreements: Clear nominee director contracts limit authority to compliance duties only.
• Insurance: Nominees often have D&O insurance or indemnities covering them against claims arising from the appointment.
• Ongoing Monitoring: CSPs will remind directors of filing deadlines (e.g. Annual Returns, AGMs) and help maintain registers (including the new nominee register) to avoid penalties.
• Exemptions: Certain companies (e.g. listed entities or financial institutions) are exempt from nominee registers, but even they must maintain a resident director under general rules.

Comparison: Nominee Director vs Local Director

Feature	Nominee Director	Local (Resident) Director
Residency Status	Must be Singapore citizen, PR, or Employment/EntrePass holder (ordinarily resident). Appointed via licensed CSP.	Same requirement (SC/PR/pass holder). Can be any local hire.
Appointment Method	Appointed formally through a CSP; illegal to appoint an unregistered friend or associate.	Appointed by the company normally (no special service needed).
Role	Non-executive. Serves as a placeholder for legal compliance. Does not manage business operations.	Often executive. Can be a founder or active manager. Controls company decisions.
Fiduciary Duties	Same duties under law – must act in company’s best interest and avoid conflicts.	Same fiduciary duties, plus active engagement in strategy.
Legal Liability	Fully liable for compliance failures (must file returns, ensure books kept, etc.). CSPs usually provide indemnities.	Fully liable; normally enjoys full control and insight into compliance.
Costs	Service fee paid to provider (approx. S$1,500–4,000/year).	May be paid salary or equity; no CSP fee if an in-house hire.
Public Disclosure	Status as “nominee” will be publicly listed on ACRA business profile from mid-2025.	Not labeled as nominee; only director’s name is listed.
Typical Use-case	Used by foreigners who remain abroad. Helps fulfill ACRA’s one-local-director rule without relocating founders.	Often founders or local executives who actually reside and work in SG.
Restrictions	Must be 18+, not bankrupt or convicted of dishonesty, and appointed through CSP.	Same legal restrictions (age, bankruptcy, past offences).

This comparison highlights the key trade-offs. A nominee director satisfies regulatory needs quickly but comes with service fees and strict oversight. An active local director adds management bandwidth but requires finding a qualified resident who can commit to the role.

When and Why Foreigners Need a Nominee Director: Step-by-Step

1. Assess Director Eligibility: If the entrepreneur already holds a valid Singapore work pass (e.g. Employment Pass) and plans to move here, they can serve as the resident director themselves. Otherwise, one must appoint a local.
2. Choose Appointment Method: Options include hiring an employee or friend (who meets residency criteria) or using a licensed nominee service. Given the 2025 crackdown on informal arrangements, most foreign entrepreneurs opt for a professional nominee director service.
3. Due Diligence and Agreements: Engage a corporate service provider (CSP) early. The CSP will conduct KYC on the foreign principals and draft nominee director agreements. These contracts explicitly limit the nominee’s role to compliance duties.
4. Company Secretary: Simultaneously, appoint a company secretary (required within six months of incorporation). This officer handles filings and maintains registers (including the new Nominee Director register), relieving the nominee of administrative burden. Vero’s experts note, “the secretary is responsible for ensuring compliance with all statutory requirements (e.g., filing annual returns, preparing resolutions, AGMs)”.
5. Open Bank Account (with Care): Banks perform due diligence on the board. A reputable nominee director (often someone with relevant industry experience) can reassure banks during account opening. Without a proper local director, some banks may refuse a corporate account.
6. Monitor and Comply: Once appointed, both the nominee and the company must fulfill ongoing obligations (see next section). Many entrepreneurs forget that the nominee must attend board/AGM meetings or sign forms – failing which the company risks non-compliance.

In summary, any foreigner who is not a Singapore resident will need a local director at incorporation. A nominee director service helps meet this requirement without relocating the founder. After setup, if founders obtain residency, they may replace the nominee with themselves, but until then the nominee’s presence is mandatory under Singapore law.

“I needed a locally resident director to incorporate my startup in Singapore,” says Raj Kumar, an Indian tech entrepreneur. “Vero assigned a nominee who handled all the paperwork. The process was seamless – I could focus on growing my business while compliance was managed by experts.” (Raj Kumar, founder of TechNova Ltd., India)

Responsibilities, Risks, Compliance, and Safeguards

Director Responsibilities: Every director must ensure the company complies with Singapore’s Companies Act. This means:

• Statutory Filings: Submit annual returns and financial statements to ACRA on time. If the company is dormant, ensure it qualifies under Section 201A.
• Financial Reporting: Present true-and-fair financial statements at the AGM and keep proper accounting records.
• Meetings: Convene Annual General Meetings as required (at least once a year). Approve resolutions and sign minutes.
• Records and Registers: Maintain statutory registers, including shareholders, directors, and (from mid-2025) the Register of Nominee Directors and Beneficial Owners. Failure to do so can incur fines (e.g. not updating director changes carries S$5,000+ penalties).
• Tax & Licensing: Ensure corporate taxes and GST (if registered) are filed with IRAS. Directors in regulated industries (e.g. finance) must meet MAS fit-and-proper requirements.

Key Risks:

• Legal Penalties: As noted, false statements or fraud can draw up to S$50,000 fines or 2 years’ jail. Directors who are undischarged bankrupts or convicted of serious offences are disqualified. Persistent defaulters face criminal penalties.
• Personal Liability: Creditors may sue directors personally for wrongful trading. Banks and clients may blacklist the company if compliance lapses occur.
• Financial Risk: Nominee directors often pay penalties or suffer D&O insurance claims if the company errs – this is why CSPs secure indemnities.
• Reputational Risk: If regulators discover a nominee arrangement was misused (e.g. to hide ultimate ownership), the company may be barred from future benefits or face enforcement actions.

Compliance Requirements (2024–2025):

• Register of Nominee Directors: From June 2025, companies must file a central register with ACRA containing all nominee directors and their nominators (beneficial owners). After initial submission by Dec 2025, any changes must be updated within 2 business days. The nominee’s status will appear on the company’s public profile. Exemptions apply only to publicly-listed or wholly government-owned firms.
• Beneficial Ownership: Singapore already requires Disclosure of Registrable Controllers (beneficial owners) at incorporation and on changes (via Bizfile+). Ensure these details are accurate, as both ACRA and MAS use them for AML/CFT screening.
• Tax Reporting: Directors must ensure corporate tax returns are filed by specified deadlines. If the nominee receives a director’s fee, the company must withhold 24% tax (non-resident director rule).
• Employment Pass Holder as Director: If the founder later obtains an EP and becomes a director, the company’s compliance does not change – another resident director is still required at all times, so if only one director remains (the founder), they satisfy the rule.

Safeguards:

• Licensed CSP: Always use a licensed corporate service provider (LCS in Singapore). By law, nominee directors must be appointed only through a registered CSP. Engaging a private individual (even if they have a pass) risks heavy penalties (fines up to S$50,000 and jail).
• Insurance/Indemnity: Confirm the nominee has D&O insurance or a signed indemnity from the company protecting them against liabilities arising from following management’s instructions.
• Document Checks: Conduct your own due diligence on any nominee service. Ensure the CSP will handle AGM/AR filings and notify you of deadlines.
• Transparent Records: Keep copies of all board resolutions, agreements, and approvals. After June 2025, be prepared to provide nominee/nominator details promptly for ACRA’s central register. Failure to lodge information can cost up to S$25,000.

Comparison: Nominee vs Local Director

	Nominee Director	Local (Resident) Director
Legal Basis	Singapore law requires a Singapore-resident director. A nominee is simply fulfilling that requirement.	Meets the same legal requirement.
Selection	Provided by a licensed firm. Appointment must be done via a CSP.	Hired or assigned by the company directly.
Role in Business	Non-executive and inactive in daily operations. Acts only on formal paperwork (signing documents, convening mandated meetings).	Can be an active manager or founder. Involved in strategic and operational decisions.
Control & Authority	Limited by agreement. Cannot sign major contracts or make business decisions without board approval. Primarily ensures regulatory compliance.	Full authority as a director. May also hold other roles (CEO, MD) and manage the company fully.
Fiduciary Duty	Exactly the same obligations under law – must act in the company’s best interests and avoid conflicts.	Same obligations. Typically exercise them through active oversight.
Liability	Fully liable for breaches of law (e.g. false filings). Professional firms indemnify the nominee against authorised actions.	Fully liable. If a director pays himself, income is taxed normally; still subject to Singapore law.
Cost	Service fee (roughly S$1.5K–4K/year). No equity is given in company.	Salary or profit share as negotiated. No CSP fee if you recruit independently.
Disclosure	Will be shown as a “nominee director” in ACRA profile from June 2025. The beneficial owner (nominator) is private.	Just listed as director; no special tag or public link to shareholder.
Ideal for	Founders who stay abroad, or who don’t have a work pass immediately. Ensures compliance without relocation.	Founders or locals who are committed to Singapore. Good for investors/partners who want active on-site management.
Restrictions	Must meet director qualifications (not bankrupt, etc.). Appointment only via licensed CSP; direct appointment of a personal contact is illegal.	Same qualifications (age 18+, sound mind, not disqualified) but no restriction on hiring channel.

Common Mistakes to Avoid

• Skipping the Company Secretary: Singapore law requires every company to appoint a qualified company secretary within 6 months. The secretary handles AGM/AR filings on time. Failing to do so (a common oversight) leads to penalties. Pro tip: Engage a professional corporate secretary (see Vero’s [services][16]) early.
• Using Unlicensed Nominees: Do not appoint a friend or offshore contact as director thinking it’s simpler. As of 2025, ACRA strictly mandates using licensed CSPs for nominee directors. Non-compliance can void your registration or incur fines up to S$50,000.
• Delaying Registrations: Many founders delay appointing the nominee or registering it with ACRA. Remember: the resident-director requirement applies at incorporation and continuously. If your sole local director resigns, you must immediately replace them. Late filings (e.g. for change of director) carry default penalties (see Section 173A).
• Ignoring AGM and Return Deadlines: Directors are liable if the company fails to hold an AGM or file its annual return on time. Late ARs attract default penalties (around S$200 plus $50/day), while refusing to file can lead to prosecution. Nominee directors often sign these documents – coordinate closely with your company secretary to meet deadlines.
• Overlooking the Nominee’s Qualifications: Ensure your nominee director genuinely meets criteria (local residential address, valid pass) and understands the role. An unqualified nominee (e.g. an underage or bankrupt person) invalidates the appointment. CSPs typically vet nominees, but double-check.
• Neglecting Tax Formalities: If you pay fees or dividends to foreign directors or shareholders, keep IRAS guidelines in mind. Failing to withhold taxes on director’s fees (24% for non-residents) can result in penalties. Usually, nominee directors are paid by the CSP, but always clarify the tax treatment with your accountant.

Case Example: Expanding to Singapore

Case Study: BrightTech Solutions, an Indian software startup, decided in 2024 to incorporate in Singapore to tap ASEAN markets. The two co-founders, living in Bengaluru, had no local contacts. They engaged Vero’s incorporation service. First, Vero helped them register a Singapore Pte Ltd with the required local director. Through Vero’s [nominee director service], a qualified Singapore PR with a tech background was appointed. This nominee handled opening a corporate bank account, signing initial contracts, and attending the first Annual General Meeting. Meanwhile, BrightTech focused on product development. Six months later, one founder obtained an Employment Pass and moved to Singapore. At that point, he was added as a resident director, and the nominee smoothly resigned.

Testimonial: “Appointing a nominee director through a professional firm was a game-changer for us,” recalls Arjun Malhotra, CEO of BrightTech (India). “I was concerned about compliance and bank relations. Vero’s nominee ensured our filings were perfect and even helped open our company bank account without delay. It let me focus entirely on growth while experts managed the Singapore-specific legalities.”

This example illustrates how a nominee director can simplify expansion. In reality, many Chinese and Indian startups follow a similar path: incorporate a Singapore entity with a nominee director, use Vero’s [incorporation for foreigners] services, then later replace or supplement the nominee when a founder arrives on an EntrePass.

Conclusion and Next Steps

Understanding the difference between a nominee director and a local (resident) director is crucial when setting up a business in Singapore. In short, any foreign-owned company must have one Singapore-resident director. If you cannot provide this yourself, a professional nominee director service (through a licensed provider) is the compliant solution. Director duties are significant – Singapore law does not distinguish between nominee and active directors in terms of obligations and liability.

For peace of mind, work with experts: Vero offers comprehensive [incorporation services] tailored to foreign entrepreneurs, including nominee director solutions and corporate secretarial support. Our team ensures your company meets all ACRA, IRAS, and (if applicable) MAS requirements. From appointing a local director and secretary to filing annual returns and tax forms, Vero’s trusted advisors handle the details so you can focus on your business strategy.

Ready to launch your Singapore venture? Contact Vero today to find out how our packages – featuring incorporation for foreigners, nominee director services, and company secretarial support – can help you comply with Singapore’s regulations and set up for success. Our dedicated team of corporate law and compliance professionals is ready to assist you every step of the way.