Singapore is known for its transparent, business-friendly environment but with that comes a strict legal framework to protect the integrity of the system. In recent years, there has been a rise in individuals and businesses misusing Work Passes or offering Nominee Director services with no intention to carry out legitimate responsibilities. This is not only illegal, but it could destroy your business, reputation, and future in the country.
Selling Work Passes with No Real Job Available and No Intention to Work in the Company
There have been recent cases of Work Passes being sold via shell companies, where no real jobs are available and no intention to work in the company on the Work Pass holders’ part. Foreigners who use this method to enter Singapore may be doing illegal activities that may be difficult for authorities to track.
Being a Local Nominee Director for Foreign-Owned Singapore Companies without Delivering Responsibilities
Appointing Local Nominee Directors for companies who do not genuinely oversee or manage the business, just to satisfy regulatory requirements, is illegal and nominee directors who fail to deliver their responsibilities will be punished by law. The local nominee director needs to fulfill legal requirements and compliance when the company’s beneficial owners or directors are not Singapore citizens or permanent residents.
Key Responsibilities of a Local Nominee Director in Singapore:
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Ensuring Legal Compliance
Nominee directors ensure the company adheres to Singapore’s legal and regulatory obligations, including filing annual returns with ACRA, maintaining proper accounting records, holding Annual General Meetings (AGMs), and ensuring the company’s business activities align with its registered business profile.
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Representing the Company
They act as the local representative, attending AGMs, and signing non-operational company documents. This is not a symbolic role — the nominee may be called upon by regulatory bodies, banks, or courts as the legal representative. Signing misleading documents or failing to act in good faith can result in personal liability.
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Liaison with ACRA
They serve as a point of contact between the company and the Accounting and Corporate Regulatory Authority (ACRA). ACRA holds directors accountable for timely and accurate reporting. Ignoring ACRA notices or submitting false information can trigger investigations or even prosecution.
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Fiduciary Duty
Nominee directors, like regular directors, have a responsibility to act in the best interests of the company. Fiduciary breaches such as acting on instructions that harm the company, can lead to civil lawsuits or criminal charges. Courts do not excuse nominees just because they were “not involved” — the duty applies equally to all directors.
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Monitoring Business Compliance
They need to ensure that tax filings with IRAS and other statutory obligations such as GST registration and compliance, CPF contributions and other employment-related obligations are met. Directors can be penalised for failures such as late tax filings, underreported income, or non-payment of statutory dues, even if they were not directly involved.
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Guarding Against Illegal Activity
Nominee directors must stay vigilant against any activities that could expose the company or themselves to legal risks. These include but not limited to:
- Fraudulent business setups
- Money laundering or shell company operations
- Employment pass scams (e.g., hiring “phantom” workers)
- Using the company as a front for illicit activities
All of these are punishable under various laws, including:
- Employment of Foreign Manpower Act
- Immigration Act
- Companies Act
- Penal Code (for cheating and forgery)
MOM and ACRA Are Cracking Down
Singapore’s authorities actively monitor and investigate such abuses. The Ministry of Manpower (MOM) regularly revokes passes, fines companies, and blacklists individuals. ACRA also conducts audits and imposes heavy penalties on directors who breach their fiduciary duties.
If found guilty, perpetrators may be subjected to:
- Hefty fines
- Imprisonment for directors, agents, and accomplices
- Deportation and blacklisting of foreign individuals
- Bans from holding directorships or applying for passes
Prevent Misusing Work Passes and Nominee Director Services:
The Right Way to Operate Businesses in Singapore
Singapore is world famous for its strict legal framework and procedures, where punishments are heavy and swiftly meted out to the guilty. The only way to do business in Singapore and be able to take advantage of its abundance and opportunities is the right way:
- Only employ foreigners with real job roles and responsibilities. False declarations in Work Pass applications are illegal and perpetrators can be charged.
- Nominee directors should be actively involved in overseeing the company as expected.
- Always disclose true ownership and control of companies to ACRA.
- Work with licensed corporate secretaries and employment agents.
Protect Yourself, Protect Your Business
Singapore’s zero-tolerance approach to corporate and immigration fraud means you will not get a second chance if caught. Don’t risk your freedom and future over shortcuts and shady schemes. The long-term damage far outweighs any short-term gain.
If you’re unsure whether a business setup or employment arrangement is compliant, email to info@iasg.com.sg for enquiries and/or to book a consultation.
