Why Your Friend Cannot Be Your Nominee Director (The 2026 Legal Risk)
It starts as a simple favor.
You are a foreign entrepreneur setting up a company in Singapore, or perhaps a local business owner trying to keep your name off the public records. You need a resident director to meet ACRA’s requirements. To save the S$2,000+ annual fee for a professional nominee, you ask your former colleague, college friend, or relative:
“Can you just sign this form? I’ll run the business. You won’t have to do anything.”
In 2026, this request is no longer just a favor. It is a legal trap.
Under the newly enforced Corporate Service Providers (CSP) Act, the era of the “informal” nominee is over. If you appoint a friend who is not part of a registered CSP, you are exposing them to criminal liability, bankruptcy, and disqualification.
Here is why the “Friendship Strategy” is the most expensive mistake you can make.
1. It is Now Illegal (The CSP Act 2026)
This is the biggest update. As of 2026, it is illegal for any individual to act as a Nominee Director “by way of business” unless their appointment is arranged by a registered Corporate Service Provider (like Excellence Singapore).
ACRA has closed the loophole. If your friend receives any benefit (even a small “allowance” or “token fee”) for holding the position, they are breaking the law if they are not vetted by a CSP.
The Penalty: Fines of up to S$100,000 for individuals and CSPs who facilitate unregistered nominee arrangements.
2. The “Sleeping Director” Jail Sentence
Most owners tell their friends: “Don’t worry, you are just a sleeping director.”
There is no such thing as a “Sleeping Director” in Singapore law.
Under Section 157 of the Companies Act, every director—whether executive, non-executive, or nominee—has a fiduciary duty to exercise “reasonable diligence.”
The Precedent: In late 2025, the Singapore High Court sentenced a nominee director to 10 months in jail because he failed to supervise a company that was used for money laundering. His defense—“I didn’t know what the company was doing”—was rejected.
If your company fails to file taxes or gets flagged for suspicious transactions, your friend goes to jail, not you.
3. Your Friend is Personally Liable for YOUR Debts
Does your business pay GST? Or Corporate Tax?
If your company goes bust and owes money to IRAS, the local director is the first target.
- Foreign Owner: Can leave the country.
- Local Owner (Hidden/Bankrupt): If they are hiding because they are bankrupt, they have no assets to seize.
- Your Nominee Friend: They cannot leave. Their passport can be impounded, and they can be made personally bankrupt to pay your company’s tax debts.
By asking a friend to take this role, you are putting their house and savings on the line.
4. The “Shadow Director” Trap
You might think, “I’ll protect my friend by making all the decisions.”
This creates a new crime: Shadow Directorship. If you (the foreigner or the hidden local owner) are pulling the strings while the local director blindly signs cheques, the law treats you as a de facto director.
The Hidden Danger for Locals: If you are asking a friend to be a nominee because you are an undischarged bankrupt or a disqualified director, you are committing a serious offense. Your friend, by acting as your front, is aiding and abetting a crime. Both of you will face immediate prosecution.
The Solution: Pay for “Insurance,” Not a Name
A professional Nominee Director service is not just a fee; it is an insurance policy for both parties.
At Excellence Singapore, our Nominee Service is structured to protect everyone:
- Vetting: We ensure the company is compliant before we step in.
- Nominee Director Agreement: We sign a robust Nominee Director Agreement that clearly outlines the terms and conditions.
- Independence: We act as a compliance checkpoint, ensuring you don’t accidentally break the law.
Don’t burn a friendship over S$2,000. Protect your business and your personal relationships by doing it the legal way.
Contact us today to engage a professional, ACRA-compliant Nominee Director.
