Directors: Statutory requirements,ap

Directors: Statutory requirements,appointment,

?? ?à????  Loo Choon Chiaw??Section 145 of the Act (hereinafter referred to as "Section 145") provides that every company incorporated in Singapore shall have at least two directors, one of whom shall be ordinarily resident in Singapore (hereinafter referred to as the "resident director"). It further providesthat notwithstanding any other provision in the Act, the company's memorandum and articles of association or in any other agreement between the resident director and the company, the resident director shall not resign or vacate his office unless there are remaining in the company at least two directors, one of whom shall be a resident director. Any purported resignation or vacation of office contrary to Section 145 shall be deemed to be invalid.??As the phrase 'ordinarily resident in Singapore' has not been defined in the Act, guidance must be sought elsewhere. The phrase 'resident in Singapore' in relation to an individual in the context of tax law has been defined in Section 2(1) of the Income Tax Act (Cap 134) as a person residing in Singapore, except for temporary absences as may be reasonable, and includes a person physically present or employed in Singapore for at least 183 days during the preceding year of assessment. In the light of the definitioncontained in the Income Tax Act, it is suggested that a person ordinarily resident in Singapore within the meaning of Section 145 ought to be a person maintaining a regular presence in Singapore with some degree of continuity, although he need not be a citizen or a permanent resident inSingapore. In practice, a person possessing a valid employment pass will qualify as a person ordinarily residentin Singapore and be in a position to act as a resident director in a Singapore company for the purpose of Section 145.??In the light of Section 145, there have been many instances where a resident director, one of the two directors appointed, wishes to resign from the office of director (for instance, when he is uncomfortable with the financial position of the relevant company) is nevertheless unable to do so because no one is willing to accept the appointment as director in his stead. He is thus compelled against his personal wishes to remain as a resident directorof a company. Those cases typically involve companies comprising only foreign shareholders and when the resident director and the foreign controlling shareholder are appointed merely to satisfy the statutory requirements of Section 145. The 'reluctant' resident director is in a precarious position. By the time he decides to resign, the situation would have become rather unsatisfactory. Quite frequently, all the foreign shareholders wou