Directors’ Duties in Singapore

>> Liabilities and Penalties in Singapore

Exercise your responsibilities carefully as the penalties for failure to do so can be severe.

The following are examples of offences where directors may be subject to criminal punishment and liable to fines:

  • breach of duty to act honestly and use reasonable diligence in the discharge of their duties
  • breach of duty not to make improper use of information to gain a personal advantage or to cause detriment to the company
  • duty to disclose potential conflicts of Interest in transactions or from holding of office or possession of property

Data Privacy Legislation

Singapore’s Personal Data Protection Act (“PDPA”) broadly governs:

  • an organisation’s collection, use and disclosure of personal data
  • sending of marketing messages to Singapore telephone numbers

In the event that a company commits an offence under the PDPA with the consent or connivance of a director, or attributable to the negligence of a director, the director shall be guilty of an offence together with the company. Directors should therefore make sure they act carefully and with proper advice where necessary.

The PDPA places an obligation on organisations to implement policies and practices that are necessary for the organisation to meet its obligations under the PDPA, as well as to  develop a process to receive and respond to complaints that may arise with respect to the application of the Act. Directors should ensure that their organisations take the necessary actions in this respect.

In relation to other offences, the sanctions and fines will depend on the offence committed. By way of example, the maximum punishment for an offence committed, under the Prevention of Corruption Act, is a fine of S$100,000 (approx.

EUR65,500), imprisonment up to 7 years or both.

Directors are generally liable individually for their actions.

In certain circumstances, directors may be relieved from part or all of their liability. For example, under the CA, the court may relieve a director in any proceeding for negligence, default, breach of duty or breach of trust if he/she acted honestly and reasonably and taking into account all the circumstances of the case.

Either the breach of duty itself, or the imposition of one of the sanctions described above, may lead to disciplinary action being taken against you and/ or limitations upon you being able to continue in your role.

A shareholder or a “proper person” in the court’s discretion can apply to the court to conduct a statutory derivative civil action against a director, if the shareholder/“proper person” is acting in good faith and it appears to be prima facie in the interests of the company that the action  be brought.

Indemnity

A company cannot, by any provision, exempt or indemnify a director from liability arising from the director’s negligence, default, breach of duty or breach of trust in relation to the company. The company may however purchase and maintain

insurance against such liability for a director. The company may also provide an indemnity to a director against liability incurred by the director to a person other than the company, other than in certain specified exceptions.

Delegation of Authorities

Directors may delegate certain functions, but this does not absolve the directors from supervising the delegates or making inquiries where the circumstances require. Under the CA, directors can rely on information provided by an employee whom the directors believe on reasonable grounds to be reliable and competent in relation to the matters concerned.

Directors and Officers Insurance

D&O insurance is available against certain civil (but not criminal) liabilities, and is the responsibility of the officer or company to obtain.


Latest version updated 9th April 2018

Country Breakdown

5.607

Million

Population

S$

Singapore Dollar

Currency

$ 297

Billion

GDP

719.1

km2