Resignation Mechanism for Sole Ordinarily-resident Directors of Companies Unable to Find Replacements
Ministry of FinanceSpeakers
Summary
This question concerns avenues and resignation mechanisms for sole ordinarily-resident directors unable to step down when other directors or shareholders are uncontactable. MP Ms Diana Pang Li Yen asked about recorded cases, existing options, and the possibility of introducing a safeguarded resignation mechanism. Minister Indranee Rajah noted that the resident director requirement ensures statutory accountability, advising individuals to consider these risks before accepting appointments. She stated that affected directors may apply to the Court to wind up the company under the Insolvency, Restructuring and Dissolution Act 2018, or ACRA may strike off inactive companies under the Companies Regulations. Minister Indranee Rajah added that ACRA is actively consulting business stakeholders on the matter to factor feedback into regular reviews.
Transcript
46 Ms Diana Pang Li Yen asked the Prime Minister and Minister for Finance (a) whether ACRA has recorded cases where a company's sole ordinarily-resident director is unable to resign because no replacement has been appointed and other directors or shareholders remain uncontactable; (b) if so, what avenues currently exist for such a director; and (c) whether ACRA will consider introducing a safeguarded resignation mechanism, subject to reasonable notice and compliance checks.
Ms Indranee Rajah: The Companies Act requires each company to have at least one director who is ordinarily resident in Singapore. This ensures that there is at least one person in Singapore whom regulators hold accountable for statutory obligations.
Individuals who intend to accept such directorship appointments should be mindful of the duties of a director, and the risks when taking on such appointments, and factor this into their considerations before accepting appointment as the sole director who is ordinarily resident in Singapore.
There are situations where a sole director who is ordinarily resident in Singapore is unable to resign because foreign directors and/or shareholders are unresponsive or uncontactable and hence no replacement can be appointed. In such a scenario, the sole director who is ordinarily resident in Singapore has the option to wind up the company under the Insolvency, Restructuring and Dissolution Act 2018 via application to the Court. The Accounting and Corporate Regulatory Authority (ACRA) may also strike off companies that are not carrying on business, based on prescribed circumstances under section 89B of the Companies Regulations.
ACRA has been consulting relevant stakeholders in the business community on the matter and will take the feedback into consideration as part of our regular reviews.