Why security deposit is required for nominee director service in Singapore?

Why should I place security deposit for ND in Singapore?

Why should I place security deposit for Singapore ND?

What is the requirement of collecting deposit for nominee director service?

Why security deposit is required for Singapore nominee director service?

What is the requirement of collecting deposit for Singapore nominee director service?

Why Nominee Director service requires a deposit in Singapore?

Necessity of deposit for Nominee Director service in Singapore?

Necessity of deposit for Singapore Nominee Director service?

Why deposit is collected for providing nominee director service in Singapore?

Director: Definition: A director is the person in charge of managing the affairs of the company. He must make decisions objectively and in the best interests of the company.

The responsibility for managing a company generally lies with the company’s Board of Directors (“the Board”). The members of the Board may also be members and / or employees of the company.

In larger companies, however, it is common for some of the Board members not to be employees of the company. Board members have onerous duties towards the company. These include the duty to act honestly, the duty to act with reasonable care, skill and diligence in the conduct of the company’s affairs, the duty to avoid conflicts of interest and the duty to act in the best interests of the company generally.

Justifications for holding refundable security deposit for providing nominee director service in Singapore:

• There is no difference between Director and Nominee Director as the duties and responsibilities are the same under Laws.
• Hence the ND does not mean to get exempted from discharging the duties and responsibilities.
• Only when we act as the Nominee Director, the refundable security deposit is to be placed.
• The nominee director is not drawing monthly director fee like other directors who are executive.
• Usually, the nominee director will be non-executive who will not involve with day-to-day operations.
• Generally, the nominee director will not be the banking signatory as once being mandate then the ND is no longer eligible to claim as “Non-Executive” director.
• The service fee is very nominal when we compare with the risks involved until the company is struck-off, wound-up or liquidated.
• The deposit is purely a REFUNDABLE one unless there is any breach of ND agreement.
• Generally, when the foreign directors are not contactable for a certain period then it may lead to breach of ND agreement. Here is the alarming point for the service provider to look into the matter deeply.
• Breach of ND agreement can be due to any thing such as for non-compliance eg. Preparation of Financial Statements, Tax Return, GST Return, Holding AGM, Filing of Annual Return, etc.
• Even when the payment is not made within the due date, the breach of ND agreement may occur.
• Then the deposit will be forfeited to meet out all the compliance with legal fees for striking-off the company.
• In most of such situations, the refundable deposit is not even enough to cover those final expenses however the service provider is balancing it from the provision of service fee to make it up.
• As long as the company is running the business smoothly in adherence to compliance the client does not need to worry about the refundable security deposit.
• Placing deposit in nature of refundability is quite common for all businesses around the world. Eg. Placing refundable deposit for utilities, telephone services, etc.
• Furthermore, when you qualify to act as the local resident director, then immediately the security deposit is refunded upon we step down as the (nominee) director. Eg: When you become a Singapore Permanent Resident.