Management and Agency of Singapore Companies

Power and Agency of Officers of the Company under Singapore Company Act

· English,SMU MPA Notes - Accounting

Relevant laws are mainly the Singapore Companies Act 1967 as shown in the Singapore Statutes Online. This article is primarily for roles and responsibilities of Directors and Officers of Companies as well as their agency. Partnerships such as Limited Liability Partnerships are governed under Partnership Act and Limited Liability Partnership Act which are not covered here. Primarily based on common law. I have paraphrased some parts of the act for easier reading, but they are mostly intact.

For brief overview of Intention, Consideration, Offer and Acceptance in common law of contracts (Singapore Contract Law): Click here.

Personal Data Protection Act: Click here.

Directors and Other officers of the company

Power of Directors

s157A. CA:

• (1) The business of a company shall be managed by, or under the direction or supervision of, the directors.

• (2) The directors may exercise all of a company's functions except those required under this Act or the company's constitution to be exercised at a public meeting.

• Management does the work under direction or supervision of directors.

s.4(1) CA: “director” includes any person

• occupying the position of director of a corporation by whatever name called and includes

• a person in accordance with whose directions or instructions the directors or the majority of the directors of a corporation are accustomed to act

• an alternate or substitute director;

Who can be a Director

s 145. CA—(1) Every company shall have at least one director who is a Singapore resident ... (no max stated in CA)

• (2) ...a natural person who is above 18 and has full legal capacity... (now, no max age)

• No special credentials needed

• Not a CA requirement to hold shares, but might be in Constitution.

Disqualified as Directors

• Undischarged bankrupts s148 CA

• Unfit directors of Insolvent companies s149 CA

• Convicted of Fraud etc s154 CA

• ACRA Debarment (New Appointments) s155B

Appointment, Resignation, and Removal of Director

s149B. CA: Unless the constitution otherwise provides, a company may appoint a director by ordinary resolution passed at a general meeting.

s150(1) CA: no package deal for public company director appointments. So, Constitution can always provide otherwise....e.g., by director/s or specific person.

Subject to Constitution, directors may resign by giving written notice to company.

• But last resident director cannot resign: s145(5) CA.

• S152(9) CA: Subject to any provision to the contrary in the constitution, a private company may by ordinary resolution remove a director.... expiration...notwithstanding anything in any agreement between the private company and the director.

• S152(1) CA: A public company may by ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its constitution or in any agreement between it and him.............

CEO and Other Officers

S4(1) CA: “chief executive officer”, in relation to a company, means any one or more persons, by whatever name described, who —

(a) is in direct employment of, or acting for or by arrangement with, the company; and

(b) is principally responsible for the management and conduct of the business of the company, or part of the business of the company, as the case may be;

S4(1) CA “officer”, in relation to a corporation, includes —

• (a) any director or secretary of the corporation or a person employed in an executive capacity by the corporation;

• (b) a receiver and manager............ and

• (c) any liquidator.............,

• but does not include —

• (d) any receiver who is not also a manager;

• (e) any receiver and manager appointed by the Court;

• (f) any liquidator appointed by the Court or by the creditors; or

• (g) a judicial manager appointed under Part 7 of the Insolvency, Restructuring and Dissolution Act 2018

Company Secretary

Each company must have at least one Company Secretary

• Natural person, residing in Singapore. S171(1) CA.

• Credentials:

• All Companies: s171(1A) It shall be the duty of the directors...to take all reasonable steps to secure that each secretary.... is a person who appears to them to have the requisite knowledge and experience to discharge functions of secretary of the company.

• Public Companies: S171(1AA) imposes an extra requirement: ....satisfies such requirements relating to experience, professional and academic requirements and membership of professional associations, as may be prescribed.

(Qualified persons....like lawyers, accountants, chartered secretaries...)

• Can a Director also be the Company Secretary? Yes, but:

• S171(5) CA: A provision requiring or authorising a thing to be done by or in relation to a director and the secretary shall not be satisfied by its being done by or in relation to the same person acting both as director and as, or in place of, the secretary.

• s171)(1E): Where a director is the sole director of a company, he shall not act or be appointed as the secretary of the company.

Duties

Chief Administrative Officer: in charge of Regulatory Compliance.

Purview includes:

• Maintain Company registers

• Arrange directors’ and shareholders’ meetings

• Lodge/File ACRA documents

• Act as advisor to directors, officers and members.

• Meet Registered office obligations.

• Appointed by Directors. S171(3) CA.

• Removal. Usually provided in Constitution to allow Directors to remove Company Secretary. E.g., Regulation 100 (2) MC: Any secretary appointed under paragraph (1) may be removed by the directors.

 

 

Contracting by Company

1. Company has capacity

S23(1) CA: Subject to the provisions of this Act and any other written law and its constitution, a company has —

(a) full capacity to carry on or undertake any business or activity, do any act or enter into any transaction.

• This means that nowadays, a company generally has full capacity.

• However, a company may have an objects clause in its constitution to limit its capacity. S23(1A + 1B) CA.

• Directors’ or Director’s Authority is usually from the Constitution, directly or indirectly. And can never be more than Company’s Capacity. (Naturally, this similarly applies to an officer’s or employee’s authority.)

 

 

2. Agency

a. Actual Authority – S41(5) CA (Common seal deeds) or Constitution or Members resolution

b. Ostensible Authority

c. Agency by Ratification

 

S25A CA

For apparent authority to arise (Freeman & Lockyer v Buckhurst Park Properties Ltd (1964)), there must be:

1. a representation to the effect that the agent is actually authorised to enter into the contract in question;

2. the representation is made by, or on behalf of, the principal/company;

3. it was relied on by the third party when entering the contract;

4. the third party had no actual notice of the agent’s lack of authority.

Restrictions on the concept of “Constructive Notice”. 3P is not deemed to know restrictions in constitution.

To determine step 4. Use s25A (If 3rd party does not know of Consitution) OR S25B (If 3rd party knows of Constitution).

 

s25A of CA: Notwithstanding anything in the constitution of a company, a person is not affected by, or deemed to have notice or knowledge of the contents of, the constitution of, or any other document relating to, the company merely because —

a) the constitution or document is registered by the Registrar; or

b) the constitution or document is available for inspection at the registered office of the company.

If 3P actually knows of such internal requirements, 3P can still assume authority given properly if:

• 3P actually knows of the Requirement, but

• 3P does not “actually know”/ “ought to suspect” that Requirement not met.

Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and another and another appeal [2011] – Fraudulent representations made by finance manager.

 

OR

 

S25B CA (Directors)

Royal British Bank v Turquand (1856) (Common law) – Mitigated harshness of constructive notice doctrine.

Even where a 3P actually knows of a relevant restriction, he might still be able to enforce the contract against the company by using the common law Indoor Management rule, or s25B of CA.

3P can assume that all internal procedures of the company relating to the grant of authority complied with. (Presumption of Regularity.)

• s25B (1) CA: In favour of a person dealing with a company in good faith, the power of the directors to bind the company, or authorise others to do so, shall be deemed to be free of any limitation under the company’s constitution (or Company Resolution)

Exception: 3P knows or ought to know, due to contact with company, that Internal Procedure (or Requirement) not complied with.