Directors and Shareholders – What Is the Difference?

Directors and Shareholders – What Is the Difference

Directors and Shareholders – What Is the Difference?

Directors and Shareholders – What Is the DifferenceWhat is the difference between the role of a Director and the role of a Shareholder in Singapore? Singapore, just like many jurisdictions like it, have differences between these two roles, and one of the major differences are that while Shareholders own part of the company, they will not be actively involved in the daily operations and running of the company itself.

Directors however, take a more active approach in the daily management of the company as long as those duties fall within the provisions of the Constitution of the company and the Singapore Companies Act.

Let’s explore more differences between the what a Director and a Shareholder in Singapore does:

 

The Role of a Director

In Singapore, if you want to register a Private Limited Company, one of the key requirements that you would need to meet is to have at least one Director appointed. At least one of the Directors must be a Singapore citizen, Entrepreneur Pass or Permanent Resident holder.

A Director of a company in Singapore would hold the following responsibilities:

  • Statutory duties, which are administrative duties that are enforceable through the Accounting and Corporate Regulatory Authority (ACRA) in Singapore.
  • Performing general duties of disclosure.
  • Maintaining and regularly updating the company’s accounting records.
  • Preparing the financial statements of the company to be used during the Annual General Meeting.
  • Ensure that the first AGM must be help within 18 months after incorporation of the company in Singapore.
  • Make sure that the recurring AGM following the initial one is held every calendar year, and the intervals between meetings must not exceed 15 months.
  • Ensure regular meetings between Directors and Shareholders to review the company’s trading and financial position.
  • Appoint a qualified auditor within 3 months after the company’s incorporation in Singapore.
  • Maintain and keep the members register.
  • Keep other statutory books at the registered offices of the organization.
  • Always act in good faith and in the interest of their employees, creditors, suppliers, customers and community, and this should govern every decision they make.
  • Act wisely on behalf of the company and not put themselves in any position that will result in conflict.
  • Must not engage in activities that conflict the interests of the company.
  • Must not incur debts when there is reasonable ground to believe that the company will be unable to offset that debt. This is stipulated in the Companies Act.

 

The Role of a Shareholder

All companies that are registered in Singapore will be required to have at least one Shareholder in place. Shareholders are individuals who have invested money in the company with an understanding that they are expecting some reasonable returns on their investment.

The roles and responsibilities of a Shareholder in a company are more straightforward. Here are what a Shareholder’s duties encompass:

  • Ensure the appointed Directors are carrying out their duties as required by the Singaporean law.
  • Hold the power to modify, repeal or adopt provisions listed on the company’s Constitution.
  • Approve or remove appointed Directors from office if and when it is needed. This is applicable for Public Companies.
  • Have reserve powers to act in the instances where the company’s board is unable to do so.
  • Can refuse to or ratify the actions of the Director.
  • Commence and subsequently prosecute legal proceedings when needed, if the suspects involved in the legal proceedings control the company.