Active vs Nominee Directors - Rubberstamping versus Fiduciary Duty of Care

When you appoint a director, the real question is not just who sits in the chair, it is how they make decisions and the accountability they are willing to take.

Under Singapore’s Corporate Service Providers Bill, a nominee director is defined as someone who is “accustomed or under an obligation… to act in accordance with the directions, instructions or wishes of any other person.” In practice, this means a nominee’s decisions are heavily influenced — directly or indirectly — by the client.

Nominee arrangements must be made through a corporate service provider, and while the exact terms vary, one thing is consistent: the provider’s goal is to limit the nominee’s exposure. This is often done by requiring you to:

• Appoint your own director to handle operational matters,

• Review and sign all contracts yourself, or

• Be the sole signatory to the company bank account.

While these measures protect the nominee, they also place effective control back with you. Weakening any claim that central management and control is truly exercised outside your home jurisdiction.

By contrast, an active director makes and documents decisions in real time, is bound by fiduciary duty to the shareholders, and takes personal responsibility for their actions. A full-time recruited director clearly demonstrates that management and control are exercised at the company level, but for many businesses this is not operationally or financially practical.

That is where fractional directorship comes in. You gain an experienced, accountable, decision-making director who carries the same fiduciary obligations as a full-time appointment, but works only the hours your business needs. It is the right level of leadership, governance, and risk management, without the cost or complexity of a permanent hire.

Rubberstamping Vs Fiduciary Duty of Care