Running a Singapore private limited company as a founder-director has always carried legal responsibilities. But since 6 May 2026 — when the Corporate and Accounting Laws (Amendment) Act 2025 (CALA 2025) commenced — those responsibilities come with meaningfully sharper teeth. The maximum fine for breaching director duties has quadrupled from S$5,000 to S$20,000, and imprisonment of up to 12 months has been added as a sanction in serious cases. If you are a founder-director of a Singapore company, this is the moment to understand exactly what your duties are and where the liability risks lie.

This guide covers the core director duties under Singapore law, the new penalties that apply from 6 May 2026, the common mistakes that expose founder-directors to personal liability, and the practical steps every director should take. For the technical compliance detail on CALA 2025, see our earlier article on what directors must know about CALA 2025.

The Core Director Duties Under Singapore Law

Section 157 of the Companies Act 1967 (Cap. 50) imposes three core duties on every director of a Singapore company:

1. Act honestly. A director must act honestly in the exercise of their powers and the discharge of their duties. This is sometimes called the fiduciary duty of loyalty — you must act in the best interests of the company, not in your own personal interests or those of a third party. Importantly, these duties are owed to the company as a legal entity, not to individual shareholders (though shareholders can enforce these duties indirectly through derivative actions).

2. Exercise reasonable diligence. A director must use reasonable diligence in the discharge of their duties. This is an objective standard — you are judged against a reasonably diligent director with the same general knowledge, skill, and experience. A founder with a finance background will be held to a higher standard in financial matters than one with purely technical skills, but no director can plead ignorance as a blanket defence.

3. Not to make improper use of information or position. Section 157(2) prohibits directors from using information obtained in their capacity as a director, or their position as a director, to gain an advantage for themselves or any other person, or to cause detriment to the company.

Beyond Section 157, directors in Singapore also owe common law fiduciary duties: the duty to act within powers, the duty to avoid conflicts of interest, and the duty not to accept benefits from third parties.

New Penalties from 6 May 2026: What CALA 2025 Changed

Prior to CALA 2025, a director found guilty of breaching Section 157 faced a maximum fine of S$5,000. From 6 May 2026, that fine has increased fourfold to S$20,000. In addition, for the first time, the offence now carries a potential custodial sentence of up to 12 months’ imprisonment in serious cases.

This is not a minor technical update. The previous S$5,000 cap was widely regarded as insufficient deterrence. The new penalties bring Singapore director liability sanctions closer in line with comparable jurisdictions. For founder-directors who have been treating their duties informally — signing whatever documents are put in front of them, ignoring board processes, or treating company funds as personal — this is a wake-up call.

CALA 2025 also introduced three beneficial ownership registers that companies must now maintain, and a named auditor requirement for public interest entities. These changes increase the transparency and accountability obligations on directors. For the full detail, see our guide on CALA 2025 compliance for directors.

The Business Judgment Rule: When Directors Are Protected

Singapore law — like many common law jurisdictions — recognises a business judgment rule. Courts will generally not second-guess a business decision made by a director who acted in good faith, on an informed basis, and rationally believed the decision was in the best interests of the company. A director who makes a bad commercial call is not automatically liable; commercial failure alone does not constitute a breach of duty.

However, the business judgment rule has clear limits. It does not protect directors who:

Made decisions while conflicted (e.g., approving a contract with a company in which they have an undisclosed interest); failed to inform themselves adequately before deciding; acted in bad faith or for an improper purpose; or continued to trade when the company was insolvent with no reasonable prospect of recovery.

For high-stakes decisions, founder-directors should consider documenting the decision-making process — recording the information reviewed, the options considered, and the rationale for the decision. Proper board resolutions serve exactly this purpose.

Common Founder Mistakes That Create Director Liability

1. Commingling Personal and Company Funds

Using the company bank account as a personal account — paying personal expenses directly from company funds, transferring company money to personal accounts without proper documentation — is one of the most common founder mistakes. This can constitute a breach of fiduciary duty and, in serious cases, criminal misappropriation. Keep company and personal finances strictly separate at all times.

2. Failing to Maintain Proper Records

Directors are responsible for ensuring the company keeps proper accounting records and statutory registers. Under the Companies Act, every company must maintain accounts sufficient to explain transactions and financial position, and preserve them for at least five years. Neglecting this — for example, by failing to appoint a bookkeeper or letting the accounting fall months behind — exposes the director to personal liability, particularly if the company later becomes insolvent.

3. Ignoring Conflict of Interest Disclosures

Section 156 of the Companies Act requires a director to disclose any material personal interest in a transaction or proposed transaction to the board. This is not a formality — it is a legal obligation. A founder who steers a contract to a related company without disclosure, or who approves their own salary increase without disclosing their interest, is at risk. Disclosures should be documented in board minutes. Your company secretary should maintain a register of directors’ interests.

4. Continuing to Trade While Insolvent

If a company is unable to pay its debts as they fall due, and a director continues to incur debts on its behalf without a reasonable belief that the company can repay them, the director may be personally liable for those debts under Singapore’s insolvent trading provisions. This is one of the most serious personal liability risks a director faces. If your company is in financial distress, seek professional advice immediately — both from an accountant and, if necessary, from someone who can provide legal advice on insolvency obligations.

5. Acting as a Nominee Director Without Genuine Oversight

Some founders appoint “nominee directors” to satisfy the resident director requirement while the actual control remains with the foreign owner. Post-CALA 2025, the obligations of nominee directors have been tightened. A nominee director who simply lends their name to a board without genuine oversight faces meaningful personal liability. See our guide on nominee directors in Singapore for the full picture.

Fiduciary Duties: Owed to the Company, Not Shareholders

A common misunderstanding among founder-directors is that their duties run to the shareholders — particularly the majority shareholder. They do not. Director duties are owed to the company as a separate legal entity. This means that even where shareholders unanimously want a director to take a certain action, the director may still be in breach of duty if that action is not in the best interests of the company (for example, because it harms creditors when the company is in financial difficulty).

This distinction matters particularly in co-founder disputes. A director who takes unilateral action to favour one shareholder group over another — for example, by diverting contracts to a competing business owned by a majority shareholder — can face personal liability even where that majority shareholder has authorised the conduct. If your shareholder agreement conflicts with your director duties, your director duties take precedence.

Practical Checklist: What a New Director Should Do in the First 30 Days

If you have recently been appointed as a director of a Singapore company, here is a practical checklist to ensure you start on the right footing:

Week 1: Read the company’s Constitution and any existing shareholder agreement. Understand the company’s share structure, existing obligations, and any matters requiring board approval. Confirm your directorship has been registered with ACRA on BizFile+.

Week 2: Review the company’s most recent financial statements and management accounts. Understand the cash position, key liabilities, and any pending litigation or regulatory matters. Identify any potential conflicts of interest you may have and make the necessary disclosures to the board.

Week 3: Confirm that the company has a qualified company secretary and that statutory registers (register of members, register of directors, register of registrable controllers) are up to date. See our guide on AGM requirements to understand the annual statutory calendar you are now responsible for.

Week 4: Ensure the company’s accounting and bookkeeping is current. If there are backlogs, address them immediately. Confirm that all statutory filings with ACRA and IRAS are current. Review insurance coverage — directors and officers (D&O) liability insurance is strongly advisable.

The Role of the Company Secretary in Keeping Directors Compliant

A qualified company secretary is a director’s most valuable compliance resource. Your secretary maintains the statutory registers, prepares board resolutions, manages ACRA filings and annual return submissions, and keeps you informed of upcoming deadlines. They can flag when a proposed action requires shareholder approval, when conflict of interest disclosures are needed, and when changes to directors or shareholders must be filed.

Under Singapore law, every company must appoint a company secretary within six months of incorporation. That secretary must be a natural person ordinarily resident in Singapore. Their role is not merely administrative — they serve as a compliance anchor for the board. See our guide on company secretary statutory duties for more detail.

For the latest Singapore corporate governance updates and business compliance news, Singapore business news is a useful resource. Beyond corporate compliance, sound financial planning and investment decisions matter greatly for founder-directors building long-term value.

Conclusion

Being a director of a Singapore company is not a title — it is a legal role with duties and consequences. With the new penalties under CALA 2025 in force from 6 May 2026, the cost of non-compliance has risen substantially. The good news is that the path to compliance is straightforward: act honestly, exercise diligence, keep proper records, disclose conflicts, and surround yourself with competent professional support.

Raffles Corporate Services provides corporate secretarial services that support director compliance — from ACRA filings and statutory registers to conflict of interest documentation and annual return submissions. If you need legal advice on director duties or personal liability, we can point you in the right direction.

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