Appointment of the officers of the Company
Requirements for Director of a Company
As per act Section 145(1), every company must have a minimum one director who must be a Singaporean resident. If the company has a single member, that member can also be the sole owner of the company. If you are of 18 years and above, Section 145(2) of the Companies Act provides that you can be a full director of the company.
As an addition, the director will have to:
- Provide a declaration in a document of his/her proof of consent, to the appointment along with a statement that they are not barred or disqualified from being appointed as a director; and
- Within 2 months of appointment, the director can take up shares of the company as per the constitution. He/she has to provide the necessary documentation showing that he/she has been allocated shares or intends to do so.
The upper limit of age for directors has been repealed. These were as a result of the second phase of changes made to the 2014 Companies Act made on 3 January 2016.
Before this amendment, regarding public companies and their subsidiaries, directors of 70 years and above, were to vacate their positions as per the AGM when they attained that age. Any reappointment or appointment of directors above 70 years of age, has to be undertaken by an ordinary resolution at the AGM. The taking of this role will last until the next AGM.
These requirements have however been repealed. Any third party who deals with companies through the company’s directors enjoys a degree of protection against the possibility that the directors’ appointment might have been in some way defective.
In following Section 151 of the Companies Act, the acts of inter alio, you are only valid as a director, notwithstanding any defect, that may afterward be found out in your appointment or qualification.
In this effect, a third party is assured of being able to rely on the effectiveness and enforceability of his/her dealings with a director of a company, even if it is later discovered that the director was not properly appointed, and has no authority to conduct the dealings. A defect like this may occur if there was an absence of a quorum at the meeting to appoint the director.
Appointment of Directors
When registering a new company, whoever is to be a first director must be named in the application that they submit to ACRA.
The stipulation applies to both private and public companies. The appointment of directors for an incorporated company is largely covered by the organization’s constitution. However, regarding the Companies Act and the Listing Manual, particularly for listed companies, there may be an imposition of additional procedures and/or requirements. Should there be an alternative in the constitution, the director of the company may be appointed by an ordinary resolution as per the annual general meeting.
Directors are always appointed this way.
Members do not always appoint directors. A company’s constitution can allow existing directors to appoint others.
For example, reg 72 of the Model Constitution provides that the directors may appoint any person to be a director with such a person holding office until the next AGM at which time the director may be re-elected. A listed company must have a similar provision in its constitution, following Appendix 2.2 of the Listing Manual.
An individual vote has to take place when appointing directors of a public company. For 2 directors or more, a unanimous vote is to take place by members present, at the annual general meeting. Any resolution against this procedure will be considered null and void, regardless of when it was put forward.
Should a public company appear on the list at SGX, it must take into account Principle 4 of the Code. It states that the Board must appoint a Nominating Committee (NC). The code provides that when in appointing an NC, there have to be at least 3 directors present. Here the majority has to be present, including the chairman of the Nominating Committee.
The NC is there to support the Board on the following matters:
- Reviewing the succession plan of the directors;
- A performance evaluation process of the board, committee, and directors;
- Reviewing the training and professional development of the board;
- Reappointing and appointment of directors, and it should be without limitation, including the searching for candidates, and the recommendation of directors for appointment; and
- The determination of the independence of directors.
As per Principle 4 of the Code, a listed company should describe in their annual report, that there is a process that they use in selecting, appointing, and re-appointing directors to the Board. As a process, it should also include a clear and transparent method of the search and nomination process.
Appointment of Company Secretary
A constitution typically vests the power to appoint a secretary and determines the secretary’s terms of office in the Board. When appointing a secretary, it is the board’s legal obligation as per s 171 of the Companies Act. The specifics state that the board must take all reasonable steps to ensure that the secretary should be a person who appears and must have the requisite knowledge and experience to execute the functions of the secretary of the company.
Whenever appointing secretaries, boards look for people who hold the mandatory professional and/or academic qualifications (like those listed below for public companies). If a vacancy arises in the office of a company secretary the mandate is undertaken by a deputy secretary or an assistant. Should they be unavailable, an officer mandated by the directors takes over the duties. Never should a secretary’s office be left vacant for more than six months.
Requirements for Company Secretary of a Public Company
To be a secretary in any public company, you need to have fulfilled requirements that relate to your experience, professional and academic requirements, and membership of professional associations as may be prescribed in the Company Regulations. These may vary from a CPA membership or ACCA membership. Failure to meet these requirements will disqualify you from any position as a company secretary.
These requirements are as follows:
- You should have at least 3 years of working experience, in a period not less than five years, working as a secretary. The experience has to be within a public company, or it will lead to immediate disqualification.
- You should be qualified to work under the Legal Profession Act (Cap 161) of Singapore;
- Membership as a Certified Public Accountant is a must. The directors should be able to verify this whenever asked to do so.
- An active membership at the Institute of Singapore Chartered Accountants is necessary.
- You should be a registered and active member of the Singapore Association of the Institute of Chartered Secretaries and Administrators;
- Eligibility is also viable for those who have active memberships at the Association of International Accountants (Singapore Branch); or
- Finally, if you have an active membership at the Institute of Company Accountants, Singapore, you are also eligible.
Appointment of CEO
In Singapore, the appointment of a Chief Executive Officer by a company is usually optional. Most companies that appoint a can CEO or sometimes called a Managing Director usually give them the responsibility to oversee all or a section of their day-to-day operations or business dealings.
On accordance with the Companies Act, a CEO is defined as any individual, either employed by or acting for the company, who is principally responsible for the management and conduct of the whole or part of the company’s business.
According to ACRA, if your company is well-structured, the appointment of a CEO is not compulsory.
If you need guidance on matters concerning the appointment of directors, secretary and CEO, contact our experts at Tianlong Services. Contact us today for a free consultation and expert guidance to ensure your company remains in compliance with Singapore law as it grows and expands.