Out-Law Legal Update

Planning required for external directorships under new Singapore rules, says expert


Singapore companies that want to appoint foreigners as directors on their board will need to think further ahead, due to a change in the rules around Employment Pass holders.

Legal update

Foreigner professionals working in Singapore must currently have an employment pass (EP) from the Ministry of Manpower (MOM), subject to a minimum salary and qualification threshold.

Previously, EP holders were then able to hold directorships on the boards of other companies, but this changed in November 2016 when MOM introduced new rules requiring them to apply for a letter of consent (LOC) before they could do so.

In general, MOM will only grant an LOC if the company is related by shareholding to the EP holder's employer, such as a subsidiary, or if the EP holder can show that he or she is taking up the directorship for reasons that relate to their main role. Applications take five weeks.

Any company taking on external directors needs to be aware of this time frame and should take it into account in its planning. All companies with existing external directors also need to take note, as the rules are retrospective and LOCs are required.

Foreigners who do not live in Singapore, and are employed as directors under social visit passes, are exempt from this rule, Tan said.

Bryan Tan is a corporate governance law expert with Pinsent Masons MPillay, the Singapore joint venture partner of Pinsent Masons, the law firm behind Out-Law.com

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