Every person who accepts an appointment as a director of a Singapore company takes on a comprehensive set of legal duties. These duties are derived from multiple sources: the Companies Act 1967, the common law, equity, and — increasingly — specific statutory regimes such as the Insolvency, Restructuring and Dissolution Act 2018 and the Corporate and Accounting Laws Amendment Act 2025 (CALA 2025). Understanding these duties is not merely a matter of academic interest — the consequences of breaching them range from civil liability to disqualification and criminal prosecution.

This article provides a comprehensive overview of director duties under Singapore law, covering the statutory and common law framework, the specific duties owed to the company and to creditors, the protections available to directors, and the 2025–2026 legislative updates that have significantly raised the stakes for non-compliance.

The Sources of Director Duties in Singapore

Singapore director duties come from four overlapping sources:

  • The Companies Act 1967: The primary statute governing companies, directors, and corporate governance. Key sections relevant to director duties include ss. 156 (conflicts of interest), 157 (duty of care and skill, and duty to act honestly), 162–163 (loans to directors), and 199 (penalties for breaches).
  • Common law and equity: Singapore courts apply English common law and equitable principles developed over centuries. Director duties at common law include the duty to act in good faith in the company’s best interests, the duty to act within the scope of authority, the no-conflict rule, the no-profit rule, and fiduciary duties generally.
  • The IRDA 2018: Governs director conduct in the context of insolvency, restructuring, and winding up. Key provisions include the wrongful trading provisions (s. 239), fraudulent trading (s. 240), and the duty to co-operate with liquidators (ss. 381–383).
  • CALA 2025: The Corporate and Accounting Laws Amendment Act 2025, which commenced in full from 6 May 2026, has significantly increased penalties for core director duty breaches, introduced new offences for serious non-compliance, and extended liability for continuing breaches.

The Duty to Act Honestly (Section 157(1))

Section 157(1) of the Companies Act requires every director and officer to “act honestly and use reasonable diligence in the discharge of the duties of his office.” This is the foundational duty — the bedrock of director responsibility in Singapore.

What “act honestly” means

Singapore courts have held that the duty to act honestly in s. 157(1) is a subjective test — the director must act bona fide in what they consider to be the best interests of the company. A director does not breach this duty merely by making a bad commercial decision; the question is whether they acted in good faith (even if wrongly) in the company’s interests.

However, a purely subjective good faith standard has limits. In Ho Kang Peng v Scintronix Corp Ltd [2014] 3 SLR 329, the Singapore Court of Appeal held that directors who acted in their own interests at the expense of the company breached s. 157(1) even if they subjectively believed their actions would benefit the company in the long run.

Acting in the interests of the company

The duty to act in the company’s best interests is primarily owed to the company as a whole — meaning the body of shareholders as a collective, not any individual shareholder. Directors should not favour the interests of a majority shareholder, a parent company, or their own interests over those of the company.

As a company approaches insolvency, the duty expands to encompass the interests of creditors. Singapore courts have endorsed the principle (originating in English law) that once a company is insolvent or near-insolvent, directors must have regard to creditor interests — and this principle has now been codified in the IRDA 2018’s wrongful trading provisions.

The Duty of Care and Diligence (Section 157(1))

The second limb of s. 157(1) — “use reasonable diligence” — imposes an objective standard of care on directors. The relevant test was authoritatively stated by the Singapore Court of Appeal in Lim Weng Kee v PP [2002] 2 SLR(R) 848: a director must exercise the care and diligence of a reasonable person who has the knowledge, skill and experience which that director actually has, and also the care and diligence that could be expected of a reasonable person in the director’s position.

The practical implications include:

  • A director cannot use ignorance of the company’s affairs as a defence if they had a reasonable opportunity to inform themselves.
  • Directors with specific professional expertise (e.g., a finance director who is a qualified accountant) are held to the higher standard of that expertise.
  • Non-executive directors are held to a lower standard than executive directors, but are not immune — they must exercise independent judgment at board meetings and cannot simply rubber-stamp executive decisions.

Conflicts of Interest (Section 156)

Section 156 of the Companies Act requires a director who has a material personal interest in a matter being considered by the board to declare that interest at a board meeting. A director with a conflict of interest should generally not vote on the relevant resolution.

Key rules under s. 156:

  • The declaration must be made at the earliest practicable opportunity.
  • The declaration must describe the nature and extent of the conflict.
  • A director who fails to declare a material conflict commits a criminal offence — the maximum fine under the pre-CALA 2025 regime was S$5,000. Under CALA 2025, this has been increased to S$20,000, with custodial penalties for aggravated cases.

The common law no-profit rule goes further than s. 156 — it prevents a director from making any secret profit from their position, even where there is no formal conflict declared. Profits made in breach of the no-profit rule belong to the company and must be disgorged.

Duty to Act Within the Scope of Authority

Directors must act within the powers granted to them by the company’s constitution (formerly the Memorandum and Articles of Association). A director who acts beyond the scope of their authority may expose the company to liability for unauthorised transactions and may personally be liable to the company for any resulting loss.

Under the Companies Act (as amended), third parties who deal with a company in good faith and without notice of any constitutional limitation are generally protected — the company cannot rely on internal limitations to avoid liability to a bona fide third party. However, the director who acted beyond authority may face liability to the company internally.

Wrongful Trading and Insolvent Trading

Section 239 of the IRDA 2018 governs wrongful trading — the situation where a director allows the company to continue incurring debts when they knew or should have known there was no reasonable prospect of the company avoiding insolvent liquidation.

If a liquidator successfully establishes wrongful trading, the court may order the director to personally contribute to the company’s assets. The key question is: at what point should the director have taken steps to minimise the potential loss to creditors?

The defences available are:

  • The director took every step they ought to have taken to minimise potential losses to creditors.
  • The director did not know, and ought not to have known, that there was no reasonable prospect of avoiding insolvent liquidation.

CALA 2025 has strengthened the consequences of wrongful trading by increasing the maximum personal contribution order available and making it easier for liquidators to pursue directors where adequate records were not maintained.

CALA 2025: The New Penalty Regime for Director Duties

The Corporate and Accounting Laws Amendment Act 2025, which took effect on 6 May 2026, represents the most significant update to director duty enforcement in Singapore in a generation. Key changes include:

  • Increased maximum fines: For most core director duty offences under the Companies Act (including breaches of ss. 156 and 157), the maximum fine has been quadrupled from S$5,000 to S$20,000.
  • Custodial sentences for serious breaches: For aggravated cases — including deliberate concealment of conflicts of interest, systematic non-disclosure of material interests, or breaches that caused substantial harm — custodial sentences of up to 12 months are now available.
  • Continuing offence provisions: Where a director’s breach is ongoing (e.g., an undeclared conflict that persists over multiple board meetings), CALA 2025 now provides for additional penalties for each period during which the breach continues.
  • Enhanced ACRA investigation powers: ACRA has been granted extended powers to require documents and information from directors and former directors under investigation for duty breaches.

Protections Available to Directors

Business Judgment Rule

Singapore company law recognises a form of the business judgment rule: courts will not second-guess a director’s commercial decision if it was made honestly, on an informed basis, and the director did not have a material personal interest in the outcome. Directors should document their decision-making process — board minutes, papers circulated before meetings, and professional advice obtained — as evidence that decisions were properly considered.

Reliance on Professional Advice

Directors may rely in good faith on reports, statements, and financial data prepared by professional advisers (auditors, lawyers, financial advisers). This reliance is a partial — not complete — defence. The director must genuinely and reasonably rely on the advice, and cannot ignore red flags or delegate all judgment to the adviser.

D&O Insurance

Directors and Officers (D&O) liability insurance protects individual directors against personal liability for claims brought against them in their capacity as directors. D&O insurance does not cover criminal penalties, fraud, or intentional misconduct — but it does cover defence costs and civil judgments in many director duty claims. Singapore companies are not required by law to obtain D&O insurance but it is strongly recommended, particularly for companies with external investors or lenders.

Court Relief (Section 391)

Under s. 391 of the Companies Act, a court may relieve a director from liability if the director acted honestly and reasonably, and ought fairly to be excused having regard to all the circumstances of the case. This is a discretionary remedy — directors who seek to rely on it must demonstrate both honesty and reasonableness.

Nominee Directors: Special Considerations

Singapore companies frequently have nominee directors — directors appointed by a shareholder or investor to represent their interests on the board. Nominee directors face a particular tension: their duty under Singapore law is to the company as a whole, but their appointer expects them to advance the appointer’s interests.

Singapore courts have clearly held that a nominee director’s primary duty is to the company, not to the appointer. A nominee director who follows the appointer’s instructions to the detriment of the company’s other shareholders or creditors will not be shielded from liability by the fact that they were acting as instructed.

For companies using nominee director services, it is essential that the nominee director service agreement clearly delineates the boundaries of the nominee’s role and does not contractually commit the nominee to vote in a particular way on matters requiring independent judgment.

Conclusion: Practical Steps for Directors in 2026

Given the tightened penalty regime under CALA 2025 and the ongoing development of Singapore case law on director duties, directors of Singapore companies in 2026 should:

  • Attend all board meetings (or send written apologies with their views noted) and actively participate in board deliberations.
  • Declare all conflicts of interest proactively and in writing at the earliest opportunity.
  • Ensure the company maintains proper books and records at all times — a director cannot hide behind the company’s failure to keep records.
  • Obtain professional advice before making significant transactions, particularly where the director has any personal interest or connection to the other party.
  • Monitor the company’s financial position and take action at the first signs of financial difficulty — do not allow the company to continue trading on credit when there is no reasonable prospect of recovery.
  • Maintain D&O insurance at an appropriate level of cover.

For further information on director duties and personal liability in Singapore, see also our practical guide on director duties and personal liability for founders. For advice on corporate governance, company secretarial compliance, or nominee director services, Raffles Corporate Services provides a full suite of corporate secretarial services. Legal advice on specific director duty questions should be sought from a qualified Singapore lawyer — JustFollowLaw is a useful starting point for Singapore corporate law questions. For broader financial and governance commentary, see also Daryl Lum’s financial commentary.

To speak with the team at Raffles Corporate Services, email [email protected] or call, SMS, or WhatsApp +65 8501 7133.

— The Editorial Team, Raffles Corporate Services