Every Singaporean company is required by the Companies Act to have a minimum of one director who is in charge of running the business and giving it direction. In the meantime, a company director’s dismissal or removal of directors in private company Singapore can also happen. This is as long as it also complies with the company’s memorandum and articles of association, under the Companies Act by an ordinary resolution of shareholders prior to the end of his or her term in office.
Common reasons for removal of directors in private company Singapore
The corporation must submit a removal of director notice to ACRA within 14 days of removing a director. Companies can submit a removal of director notification through BizFile, just like they can for the appointment or resignation of a director.
However, there are a number of reasons for someone to be ceased from being a director:
- Director is fired
- Director’s Disqualification
- Departure of the director
A director can be fired by whom?
Only shareholders have the authority to dismiss directors. Section 152(8) of the Corporations Act states that directors in public companies are not permitted to dismiss other directors (CA).
Removal procedures for directors in private limited companies
It is crucial to keep in mind that any director removal must follow the company’s constitution.
According to Section 152(9) of the CA, if there is no provision in the company’s charter to the contrary, the shareholders of the company may remove the director by ordinary resolution (i.e., more than 50% of votes in favour of removal).
The shareholders must provide 14 days’ written notice; however, if more than 95% of the votes are in favour, this condition may be waived.
A director may be dismissed by ordinary resolution with at least 14 days’ notice if your firm has fully embraced the Model Constitution.
Other qualifications or limitations may always be stipulated in the company’s constitution. For instance, requiring a special resolution (i.e., more than 75% of votes in favour of removal) to fire the director.
The shareholders of the corporation must arrange a general meeting to vote on whether or not to remove the director and adopt a resolution in order to start the removal procedure.
Alternatively, a provision governing the dismissal of directors in specific circumstances may be included in the company’s charter. For instance, in the case of unethical behaviour or a terminal sickness.
If this is the case, the shareholders will not need to vote to remove the director unless the company’s charter specifies otherwise.
A director who has been disqualified is not permitted to serve as a director or participate in the management of any domestic or international companies.
If he doesn’t ask the General Division of the High Court or the Official Assignee for authorization, that is.
When can a director be removed from office?
The following situations can result in a filmmaker being disqualified:
- When the director files for bankruptcy;
- when a judge issues an order of disqualification. When a company is dissolved for grounds of national security or interest, when a director of an insolvent company is found to be unsuitable, or when a director has been found guilty in Singapore of crimes involving the formation or management of corporations, for instance;
- when the director is found guilty of a crime involving fraud or dishonesty that carries a sentence of three months or more in jail;
- where the director has been found guilty of three or more CA-related offences involving document filing within the previous five years;
- When the director receives three or more orders from the General Division of the High Court within a five-year period requiring him to immediately inspect the company’s registers, minute books, or documents, or requiring him to file returns under Section 13 of the CA;
- or When three or more of the director’s companies are struck off the register by ACRA within a five-year period (beginning with the most recent year).
Notice of being disqualified in removal of directors in private company Singapore
The corporation must receive a written notice of the director’s disqualification from the board.
Within 14 days of the director’s disqualification, the company must notify ACRA of the director’s disqualification.
What happens if a director who is subject to disqualification keeps serving on a company’s board of directors?
ACRA can receive a complaint where there is cause to suspect that a director is continuing to act in that capacity despite meeting one of the criteria for disqualification listed above.
Anyone may file a complaint, so long as they have enough information about the organisation the director works for.
You can mail this complaint to ACRA together with any necessary proof, such as a court order or, if necessary, a bankruptcy statement.
The director will be removed if the complaint is successful after further routinization.
What options does a former director have once the time of disqualification is over?
A person may be appointed as a director of his former company after the expiration of his suspension period or even incorporate a new business.
Within 14 days of the appointment date, the business must inform ACRA via the BizFile+ website that the director has been re-appointed or incorporated.
Director’s resignation – Removal of directors in private company Singapore
Additionally, a director has the option to freely leave their position. Singapore recognises a director’s resignation as valid if:
The firm must have at least one remaining director who resides in Singapore, and the resignation process must be carried out in accordance with the company’s charter.
Notifying ACRA of the director’s termination of appointment
The corporation is obligated to submit a notification of cessation upon the resignation or disqualification of a director.
This must happen within 14 days of the alteration, i.e., the date of disqualification or, if applicable, the date of service of resignation.
Preparation to submit pertinent documentation while lodging the notification with ACRA, includes:
- When a director is disqualified, the bankruptcy declaration or, if applicable, a court order;
- when a director resigns, the resignation letter and the board of directors’ acknowledgement.
In some circumstances, the ex-director is required to inform ACRA of the resignation or disqualification themselves:
The director or chief executive officer may be penalised $1,000 for each day the offence continues after conviction if it is a continuing offence (i.e., ACRA has still not received notification of cessation).
What happens to any shares that the director may own?
When a director also owns stock in the company, there is a problem with what happens to the shares.
The director will be forced to sell his shares upon ceasing to serve as a director if the company’s charter contains a provision requiring that action.
A typical clause will demand that the director sell his shares to the company’s surviving stockholders.
The director is free to keep the shares if there is no provision requiring them to be sold if there isn’t one.
The director may also decide to transfer or sell his shares.
How directors’ and officers’ (D&O) insurance is beneficial for Directors in removal of directors in private company Singapore
In Singapore, directors’ and officers’ (D&O) insurance is quite widespread. Typically, it offers the company reimbursement when it has indemnified its directors (subject to an excess/retention) as well as coverage for individual directors against claims brought against them in their capacity as directors, including defence costs (which apply when indemnification by the company is not possible). Claims relating to a director’s fraud, dishonesty, willful default, or criminal behaviour are frequently excluded by policies.