What is the Difference Between a Director and a Shareholder in a Private Limited Company?

Thinking about a Singapore private limited company registration? You will need to know about the roles that the directors and shareholders pay.

In Singapore, directors and shareholders in a company play different roles. The shareholders own shares in the company. In short, collectively they own their company. On the other hand, a director is the employee of the company.

Shareholders, in general, do not run the company on a day-to-day basis. The company directors are hired to play active role in the running of the company. Their powers come from Company Constitution or M&AA and the Singapore Company Act.

Singapore Company Director

If you opt for a private limited company registration, you need to provide a director who is ordinarily resident of Singapore. You can hire a Singaporean, Permanent Resident, or an EntrePass holder. In addition, you can hire as many resident or foreign directors as per your need.

The directors in a Singapore company have statutory and fiduciary duties.

Statutory Duties of Directors

These are administrative duties and the directors have to see to their execution to the satisfaction of ACRA, the Company Registrar of Singapore. They are responsible for the:

• Duties of disclosure

• Maintenance of statutory books of company

• Regular updating of the accounting records

• Preparing the financial statements

• Tabling company accounts to the Annual General Meeting (AGM)

• Holding first AGM within the 18 months after date of company incorporation.

• Holding subsequent AGMs in every calendar year at intervals not exceeding 15 months

• Holding shareholders' and board's meetings to review the trading and financial status of company

• Appoint an auditor within the first 3 months after the date of the company’s registration

• Ensure proper maintenance of shareholders' register and other statutory books at the company's registered office

Fiduciary Duties of Directors

• They must act in good faith and protect the interests of company's employees, shareholders

• They should not engage in activities that are in conflict with the interests of their company

• They must not use company information for their benefit or to the detriment of the company.

• They should not incur debts if company cannot offset the said debt.

Shareholders of a Singapore Company

Singapore companies need at least one shareholder at the time of registration. They invest money to buy shares in the company and expect a return on the investment. Their liability is limited to this amount.

• The shareholders pass resolutions to appoint directors.

• They are more concerned about directors performing their duties as per the company constitution and law

• Singapore law gives them the power to modify, repeal or adopt provisions of company constitution

• They can pass a resolution to remove a director, if and when required They can veto certain capital reductions

• Shareholders can refuse to ratify actions taken by a director

• They can initiate legal proceedings