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Unit 10: Management of Company

Having an express provision in the Companies Act will simplify matters as a company will not Notes
have to provide for the appointment of directors in its articles or rely on Table A, unless the
company wishes to provide for a different mode of appointment. The Steering Committee
received industry feedback that in practice, Table A is often excluded by the companies’ articles
as it is not found to be useful.
The current Singapore approach of not prescribing in legislation how directors are appointed is
consistent with the position in the UK and Hong Kong. The Steering Committee considered
whether the Companies Act should expressly provide for the mode of appointing directors,
following the position in Australia and New Zealand.

For reasons of simplicity and greater clarity, the Steering Committee recommends that the
Companies Act should provide expressly that unless the articles provide otherwise, a company
may appoint a director by ordinary resolution passed at a general meeting. The mode of
appointment is subject to the company’s articles to give flexibility to companies.
This approach is consistent with that in Australia where the statutory provisions in the Australia
Corporations Act 20017 on the mode of appointing directors are replaceable rules. It is also
consistent with the approach in the New Zealand Companies Act 1993 where section 153(2)
provides for the appointment of subsequent directors by ordinary resolution, unless the
constitution of the company otherwise provides.

During the focus group consultation, the majority of the respondents expressed support for
having such an express provision on the appointment of directors in the Companies Act. It was
felt that notwithstanding that there is little dispute in practice on how directors are appointed,
it would be good to clearly provide that the general meeting has power to appoint directors,
subject to contrary provision in the articles.

10.6 Director Remuneration

Section 198 provides that the total managerial remuneration payable by a public company or a
private company which to its directors or manager in respect of any financial year must not
exceed 11 per cent of the net profit of that company for that financial year, in computing the
above ceiling of 11 per cent computed in the manner laid down in section 349 and 359. The fees
payable to directors for attending Board meetings is not included.

10.6.1 What is included in Remuneration?

Explanation to s.198 describes the term ‘remuneration’. According to it, for the purposes of
Ss. 309, 310, 311, 381 and 387, ‘remuneration’ includes the following:
1. Any expenditure incurred by the company in providing rent-free accommodation, or any
other benefit or amenity in respect of accommodation free of charge, to any of its directors
or manager;
2. Any expenditure incurred by the company in providing any other benefit or amenity free
of charge or at a concessional rate to any of the persons aforesaid;
3. Any expenditure incurred by the company in respect of any obligation or service, which,
but for such expenditure by the company, would have been incurred by any of the persons
aforesaid; and
4. Any expenditure incurred by the company to effect any insurance on the life of, or to
provide any pension, annuity or gratuity for, any of the persons aforesaid or his spouse or
child.

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