Guide to Directors’ Remuneration in Singapore

Last updated on March 19, 2020

men having a meeting at a table

As the director of a company, you may wish to know more about how company directors can be remunerated. The Companies Act (CA) sheds some light on this matter. The Model Constitution will likely also be relevant if your company is using it as the company constitution without any modification.

What Constitutes Remuneration and Who Decides?

Remuneration can come in 2 forms, namely director’s fees and salary. The type of remuneration received will affect the need for disclosure of the remuneration, the making of CPF contributions and also whether such payment will be subject to tax.

Director’s Fees

Director’s fees are fees to be paid to a director in their capacity as company director, for the directorial services they perform for the company.

Generally, directors do not have any right to be remunerated for the directorial services they perform for the company. However if a company wishes to pay director’s fees to its directors, section 169 of the Companies Act states that this payment has to first be approved in a general meeting by a resolution unrelated to other matters. Any resolutions for the approval of director’s fees which breach this section will be void (i.e. have no legal effect).

Director’s fees will include:

  • Allowances for expenses as far as such allowances are charged to income tax in Singapore
  • Any benefits that the director has received in a form other than cash in respect of his directorial services (e.g. company cars)

If a company has adopted regulation 74 of the Model Constitution without modification, the director’s fees payable to the company’s directors will include all “travelling, hotel and other expenses properly incurred” as a result of attending meetings related to the company’s business (e.g. directors’ meetings and general meetings).


Apart from director’s fees, a director can also obtain a salary as per their contract of service with the company, in their capacity as company employee.

Since this payment is made in respect of the director’s capacity as company employee instead of their capacity as director, director’s salaries need not be approved in a general meeting as per section 169 of the Companies Act. However, the amount of salary must still be approved by the board of directors beforehand.

Disclosure of Director’s Remuneration in Company Reports

As salaries are considered company expenses, directors’ salaries (if any) should be disclosed as part of the company’s expenses in its annual report.

As for directors’ fees, while there is no law stating that directors’ fees must be disclosed, companies are nonetheless encouraged to disclose the amount of director’s fees paid to each director in their annual reports as well.

CPF Contributions by the Company

Companies have to make CPF contributions only in respect of the salaries paid to directors who are considered employees engaged under a contract of service. Companies need not make CPF contributions on directors’ fees.

Tax on Director’s Remuneration

Director’s salaries are taxable since such salaries are considered income derived from the director’s employment.

Directors’ fees are generally taxable as well, but this applies only if the director has rendered the requisite services for the accounting year concerned. Thus, if director’s fees were decided in advance for the next upcoming year, such fee will not be taxable for the current particular accounting year but only in the next upcoming year.

However, director’s fees will not be taxable in Singapore if the company does not have a presence in Singapore. This is even if the director had to attend board meetings or similar company-related meetings in Singapore. Rather, the fees will generally be taxable in the country where the company is resident instead.

Payment to Director Upon Leaving Office

Under section 168 of the Companies Act, companies are prohibited from making any payment of compensation to a director for their loss of office, unless the particulars of such proposed compensation (including the amount of such proposed compensation) have been disclosed and approved by the company members in general meeting.

However, approval by the company to compensate a director for their loss of office is not required if the following requirements in section 168(1A) of the Companies Act are both satisfied:

  1. The amount of compensation is less than the director’s fees for the year preceding the termination of the director’s employment; and
  2. Particulars of the proposed compensation (including the amount of the proposed compensation) had been disclosed upon or prior to the payment.

Unfair or Unjust Remuneration of Director Prior to Company’s Winding Up

If a company is being wound up and its liquidators or creditors suspect that a director has been unfairly or unjustly remunerated (whether in director’s fees or salary) during the 2 years before the start of winding up proceedings, the company’s liquidators or creditors can apply to the court under section 341 of the Companies Act to compel the director to repay the money to the company (with or without interest).

Unfair or unjust remuneration may arise if it can be established that the director had, during their directorship, committed breaches of their director’s duties or failed to account for any company monies or property.

The issue of director’s remuneration can be a potentially sensitive one. If you need legal advice, feel free to get in touch with one of our corporate and commercial lawyers.

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