On 6 May 2026, the Corporate and Accounting Laws (Amendment) Act 2025 (CALA 2025) commenced in Singapore. Among its most significant changes: the maximum fine for breaching a director’s duties under Section 157 of the Companies Act (Cap. 50) quadrupled from S$5,000 to S$20,000, with imprisonment of up to 12 months added as a potential sanction for serious cases. For Singapore company directors — especially founders running their own businesses — this is a material shift that demands attention.

This guide explains what director duties are under Singapore law, what personal liability you face if you breach them, and what practical steps every founder-director should take in 2026. If you need legal advice on your specific obligations as a director, this article sets out the landscape you should understand before that conversation.

What Are a Director’s Duties Under Singapore Law?

Director duties in Singapore are found primarily in Section 157 of the Companies Act (Cap. 50), which imposes two core statutory obligations on every director:

  • Act honestly: A director must act honestly in the discharge of their duties. This encompasses the fiduciary duty to act in good faith and in the best interests of the company — not in the director’s own interest, not in the interests of a shareholder group, and not at the direction of an external party.
  • Exercise reasonable diligence: A director must use reasonable diligence in carrying out their duties. This is an objective standard — not what the director happened to know, but what a reasonably competent director in their position ought to have known and done.

Beyond the statutory provisions, Singapore company law recognises a range of common law fiduciary duties applicable to directors, including: the duty not to place themselves in a position of conflict of interest; the duty not to make secret profits from their position; and the duty not to fetter their discretion. A director who violates these duties can face both personal liability to the company and regulatory sanction.

The CALA 2025 Changes: What Is Different From 6 May 2026?

The Corporate and Accounting Laws (Amendment) Act 2025, which commenced on 6 May 2026, introduced several changes affecting directors:

  • Higher penalties for Section 157 breaches: The maximum fine increased from S$5,000 to S$20,000. In more serious cases, imprisonment of up to 12 months is now possible. These penalties are personal — they cannot be indemnified by the company.
  • Named auditor requirement: Companies that require a statutory audit must now name the specific audit partner in their audit report, not just the firm. This increases individual accountability at the auditor level and has knock-on implications for how boards oversee the audit process.
  • Three registers of beneficial ownership: Companies must now maintain registers of registrable controllers (RRC), registrable nominators (RRN), and nominee directors (RRND). Directors are responsible for ensuring these registers are accurate and up to date.

The message from regulators is clear: passive directorship is no longer viable. A director who lends their name to a board without genuine oversight now faces real financial and personal consequences.

The Business Judgment Rule: When Are Directors Protected?

Singapore courts do not second-guess business decisions made in good faith. The business judgment rule, recognised in Singapore case law, protects directors from liability for decisions that turn out to be wrong, provided:

  • The director made the decision in good faith and for a proper purpose;
  • The director did not have a material personal interest in the matter;
  • The director was reasonably informed before making the decision; and
  • The director rationally believed the decision was in the company’s best interests.

The protection falls away the moment any of these conditions fails. A director who votes on a matter in which they have an undisclosed personal interest, or who approves a major transaction without reviewing any supporting information, cannot rely on the business judgment rule. This is where many founders get into trouble — not through deliberate dishonesty, but through inattention.

Common Founder Mistakes That Create Director Liability

The following are the most common ways founder-directors in Singapore create personal liability for themselves:

1. Commingling Personal and Company Funds

Using the company bank account to pay personal expenses, or using personal funds interchangeably with company funds, is one of the most common mistakes. It creates accounting chaos, potential tax liability, and — in the event of insolvency — grounds for a liquidator to pursue the director personally for misappropriation.

2. Failing to Maintain Proper Records

The Companies Act requires companies to maintain proper accounting records, statutory registers, and minutes. Directors are responsible for ensuring this happens. Under CALA 2025, the obligation to keep beneficial ownership registers accurate is now more onerous. A director who cannot produce accurate records when required faces fines and, in serious cases, prosecution. Your company secretary is your first line of defence here — but the ultimate responsibility rests with the board.

3. Ignoring Conflict of Interest Disclosures

Every time a director has a personal interest in a matter being considered by the board — a related-party transaction, a contract with a company the director has a stake in, a loan from the company to the director — that interest must be disclosed to the board. Section 156 of the Companies Act requires directors to disclose their interests in transactions. Failure to do so is an offence under the Act and exposes the director to personal liability. Approving a transaction undisclosed conflict is a textbook way to lose the protection of the business judgment rule. Always ensure your board resolutions properly record any declarations of interest.

4. Continuing to Trade While Insolvent

Singapore law imposes a duty on directors to consider the interests of creditors once a company is insolvent or nearing insolvency. Continuing to take on liabilities when the company cannot pay them — ordering stock on credit, taking deposits for services you cannot deliver — can constitute insolvent trading and expose directors to personal liability. If your company is in financial difficulty, seek professional advice immediately. This is one situation where getting legal advice on your personal liability exposure before the situation worsens is critical.

5. Acting on Instructions Without Exercising Independent Judgment

Many nominee directors — and some executives who sit on boards as representative directors — believe they can simply follow instructions from the person or entity who appointed them. This is wrong. Under Singapore law, every director owes their duties to the company, not to the person who appointed them. A director who blindly follows instructions, without independently assessing whether the action is in the company’s best interests, is in breach of their duty. Post-CALA 2025, this behaviour can result in a fine of up to S$20,000.

Relief from Liability: Section 391 of the Companies Act

Singapore courts have the power to relieve a director from liability under Section 391 of the Companies Act if the director acted honestly, reasonably, and ought fairly to be excused. However, this is a discretionary remedy — it is not a guarantee. A director seeking relief must apply to the court and persuade it that, despite the breach, they deserve to be excused.

The practical lesson: do not rely on Section 391 as a safety net. Build good governance habits into your daily operations so that the question of relief never arises.

A Practical Checklist: What a Director Should Do in 2026

Given the increased penalties under CALA 2025 and the ongoing regulatory focus on director accountability, here is a practical checklist for founder-directors:

  • Ensure a proper shareholder agreement is in place. A well-drafted shareholder agreement defines the governance framework within which the board operates and reduces the risk of deadlock disputes that can create director liability.
  • Attend and contribute to board meetings. Review board papers before meetings, ask questions, and ensure your questions and dissents are recorded in the minutes. A director who attends but rubber-stamps every decision cannot claim they were diligent.
  • Declare interests at every relevant meeting. Keep a standing register of your interests and update it whenever something changes. Declare at the start of any board discussion where you have an interest.
  • Monitor the company’s financial position monthly. Know your cash flow, your creditor position, and whether the company is meeting its statutory filing obligations. Check the Singapore company compliance calendar to track key deadlines.
  • Keep company and personal finances strictly separate. Use only the company account for company expenses. Document any director loans properly with a formal loan agreement.
  • Ensure the beneficial ownership registers are accurate. Under CALA 2025, ensure your company’s RRC, RRN, and RRND registers are maintained and up to date. Your company secretary should be managing this — but verify it.
  • Seek advice early when problems arise. Director liability rarely materialises overnight. When you see early warning signs — creditor pressure, cash shortfalls, shareholder disputes, regulatory enquiries — get advice before the situation escalates.

Conclusion

The quadrupling of maximum penalties under CALA 2025 is a signal that Singapore regulators expect a higher standard of director conduct. For founders running private limited companies, this is not merely a compliance issue — it is a personal financial risk. The good news is that for directors who act honestly, stay informed, maintain proper records, and declare conflicts of interest, the risk is manageable.

Good governance does not happen by accident. It requires the right processes, the right advisers, and the right mindset. For sound financial planning and business investment decisions, having strong governance foundations in place is as important as any growth strategy. For the latest Singapore business news and regulatory updates, there are useful resources for directors navigating these requirements.

To speak with the team at Raffles Corporate Services, you can email [email protected] or call, SMS, or WhatsApp +65 8501 7133. We are happy to assist with any queries.

— The Editorial Team, Raffles Corporate Services