Appointing a director is a two-line form. The consequences of appointing the wrong one, or of being one, are considerably longer.
There are two separate questions: who is qualified, and who is disqualified. The second list is the one that matters, because most of it operates automatically, and because acting while disqualified is an offence in its own right.
The qualifications
Under section 145 of the Companies Act:
- Every company must have at least one director ordinarily resident in Singapore. Where the company has one member, that sole director may also be the sole member.
- A director must be a natural person, aged 18 or over, and otherwise of full legal capacity. A company cannot be a director.
There is no cap on the number of directors, no requirement that a director hold shares, and no nationality requirement beyond the resident director.
The resignation bar
Section 145(5) deserves separate billing, because it is the provision that traps people.
A director must not resign or vacate office unless there remains at least one director ordinarily resident in Singapore, and any purported resignation or vacation of office in breach of that is invalid.
You cannot resign your way out of a company that has no other resident director. You stay in office, with the duties and the exposure, until somebody qualifying replaces you. Anyone accepting a sole resident directorship should understand this before signing, and anyone relying on one should plan a successor at the outset. See nominee directors and shareholders.
The duties
Section 157(1): a director must at all times act honestly and use reasonable diligence in discharging the duties of the office.
Section 157(2): an officer or agent must not make improper use of their position, or of information acquired by virtue of it, to gain an advantage for themselves or anyone else, or to cause detriment to the company.
Breach carries consequences on two tracks at once. The director is liable to the company for any profit made or damage suffered, and is guilty of an offence, punishable by a fine of up to $20,000 or imprisonment of up to 12 months, or both.
These duties are owed to the company. They are not diluted by the fact that someone else appointed you, controls the shares, or tells you what to do.
The disqualifications
Undischarged bankrupts
Under section 148, an undischarged bankrupt, whether adjudged bankrupt in Singapore or by a foreign court, who acts as a director or takes part directly or indirectly in the management of any corporation, commits an offence unless they have the permission of the Court or the written permission of the Official Assignee.
Penalty: a fine of up to $10,000, or up to 2 years’ imprisonment, or both.
Note the breadth. It is not only “acting as director”; it extends to being concerned in management. See bankruptcy.
Conviction of certain offences
Under section 154(1), disqualification follows conviction of:
- any offence, in Singapore or elsewhere, involving fraud or dishonesty punishable with imprisonment for 3 months or more
- certain offences under Part 12 of the Securities and Futures Act
- certain offences under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act
A civil penalty under section 232 of the Securities and Futures Act also triggers it.
Under section 154(2), a court may additionally make a disqualification order on conviction of an offence connected with the formation or management of a corporation, an offence under section 157, or certain offences under the Insolvency, Restructuring and Dissolution Act.
How long it lasts:
| Situation | Disqualification |
|---|---|
| Convicted, not sentenced to imprisonment | From conviction, for 5 years (or shorter, if the court orders) |
| Convicted and sentenced to imprisonment | From conviction, and for 5 years after release |
| Civil penalty under s 232 SFA | From imposition, for 5 years |
Two features worth noting. Foreign convictions count. And the three-month threshold is about the maximum punishment available for the offence, not the sentence actually imposed.
Persistent default in filing
This is the one that catches ordinary directors of ordinary small companies.
Under section 155, a person who has been persistently in default in relation to filing requirements, and who within 5 years of last being adjudged guilty acts as a director or promoter, or takes part in the management of a company, commits an offence carrying a fine of up to $10,000 or up to 2 years’ imprisonment.
Persistent default is conclusively proved by showing that, within a period of 5 years, the person has been adjudged guilty of 3 or more offences in relation to those requirements, or has had 3 or more orders made against them under section 13 or 399.
Read that again, because it is the point of this section. Three late filings in five years is the statutory threshold, and it does not require dishonesty, loss to anyone, or an insolvent company. It requires nothing more than not getting around to it, three times. See ACRA’s annual filing deadlines.
Three companies struck off
Under section 155A, a person who was a director of 3 or more companies struck off the register within a period of 5 years, and was a director at the time each was struck off, must not act as a director or be concerned in the management of any company for:
- 3 years from the last striking off; or
- 5 years, where they have previously been disqualified under this section.
Contravening it is an offence carrying up to $10,000 or 2 years’.
This one reaches people who never did anything wrong in the ordinary sense. Directors who let dormant companies lapse rather than winding them up properly, and directors who lent their name to several ventures that quietly died, can both arrive at three.
Directors of insolvent companies, and debarment
Sections 149 and 149A deal with disqualification arising from insolvent companies. Section 155B provides for debarment orders, which is the mechanism that also prevents a debarred person acting as a company secretary.
Getting permission
Most of these disqualifications can be relieved. A person disqualified under section 154 may apply to the Court for permission to act, on not less than 14 days’ notice to the Minister. An undischarged bankrupt may apply to the Court or to the Official Assignee. Section 155A has its own permission route.
Permission is an application with an outcome, not a formality.
What this means in practice
Check before you appoint. A director’s disqualification is not always visible, and the company carries the consequence of an invalid appointment. Ask, and ask in writing.
Check before you accept. If you are being offered a directorship in a company you will not really control, you are accepting section 157 duties and personal exposure for the company’s filing defaults, and you may not be able to resign. That is the whole of the nominee director question in two sentences.
File on time. The threshold for persistent default is three, and the penalty reaches your ability to be a director of anything. It is a startling amount of consequence for an administrative failure.
Wind up properly. Letting a company be struck off is not a tidy ending. Three of them inside five years is a disqualification.
If you have been disqualified, or think you might be, take advice before acting rather than after. Acting while disqualified is a separate offence, and it is not cured by nobody having noticed.
Where this sits
We advise on appointments and on directors’ duties through company registration and corporate secretarial services. Where a director is facing proceedings, criminal defence and civil litigation take that on.