Introduction

Among a director’s many duties under Singapore company law, the duty of skill, care and diligence is one of the most fundamental — and one of the most frequently litigated. It governs the standard of competence and attention that directors must bring to their role, and failure to meet this standard can result in personal liability for losses suffered by the company.

This article examines the legal basis for the duty, the objective and subjective standards applied by Singapore courts, key case law from Singapore and English courts (which Singapore courts regularly refer to), and practical implications for directors of Singapore companies.

For related guidance, see our article on directors’ duties in Singapore.

The Statutory Foundation

The duty of skill, care and diligence for Singapore directors is codified in Section 157(1) of the Companies Act 1967, which provides:

“A director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office.”

The phrase “reasonable diligence” in Section 157(1) encapsulates the duty of care and skill. It is supplemented by the common law duty of care, which Singapore courts have developed through a rich body of case law drawing on both local decisions and English authorities.

Section 157(3) provides that a director in breach of Section 157(1) shall be liable to the company for any profit made by him or for any damage suffered by the company as a result of the breach.

The Legal Standard: Objective and Subjective Elements

Singapore courts apply a combined objective and subjective standard for the duty of skill, care and diligence. This dual standard was articulated in the landmark English decision of Re D’Jan of London Ltd [1994] 1 BCLC 561 (Hoffmann LJ), which Singapore courts have adopted and applied.

The Objective Standard

Every director, regardless of their personal experience or expertise, must meet the standard of a reasonably diligent person with the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as that director in relation to the company. This is a floor — no director can fall below this minimum standard.

The objective standard means that a director cannot escape liability by claiming ignorance or inexperience. If a reasonably competent director in the same role would have known of a risk or taken certain action, the defendant director is expected to have done so as well.

The Subjective Standard

In addition to the objective floor, the standard is also lifted by the director’s own actual knowledge, skill and experience. If a director has greater expertise than the reasonably competent standard would require — for example, a director who is also a qualified accountant or lawyer — that director is held to the higher standard their actual expertise commands.

In practice, this means that specialist directors (e.g., a CFO who is a director, or a lawyer who serves on a board) cannot shelter behind the general director standard when exercising their specialist skills in their directorial capacity.

Key Singapore Case Law

Lim Weng Kee v Public Prosecutor [2002] 2 SLR(R) 848

The Court of Appeal comprehensively reviewed the duty of care and skill in Singapore company law. The court confirmed that Singapore follows the combined objective/subjective standard. Yong Pung How CJ held that the standard is a “minimum objective standard of care” supplemented by the director’s particular qualifications and experience.

The court emphasised that the standard is not merely that of a “reasonable man” in general — it must be calibrated to the specific functions performed by the director in question. A non-executive director who takes no role in the day-to-day management is assessed differently from a managing director who runs the company.

Vita Health Laboratories Pte Ltd v Pang Seng Meng [2004] 4 SLR(R) 162

The High Court examined whether a director had met the standard of care in the context of a company that sustained losses. V K Rajah JC (as he then was) held that directors must exercise an independent judgment and cannot blindly follow the instructions of a dominant shareholder or co-director. Directors must personally evaluate significant business decisions and satisfy themselves that proposed transactions are in the company’s interest.

Federal Express Pacific Inc v Chartered Electronics Industries Pte Ltd [1999] SGHC 162

The High Court considered the standard expected of directors in monitoring a company’s operations and financial position. The court held that directors are not expected to micromanage every aspect of company affairs, but they must have in place adequate systems of supervision and must intervene when red flags arise. Wilful blindness to obvious warning signs can constitute a breach of the duty of care.

W&P Piling Pte Ltd v Chew Yin What [2007] 4 SLR(R) 218

The High Court applied the duty of care in the context of a director who had delegated his responsibilities to another director. The court held that while directors may delegate functions, they cannot divest themselves of their obligation to exercise oversight. A director who entirely abdicates responsibility for areas within his remit will be in breach of the duty of care even if he was not personally involved in the acts causing the loss.

Attendance at Board Meetings

Singapore courts, following English authority (including Re Cardiff Savings Bank (1892) 2 Ch 100 and Re City Equitable Fire Insurance Co [1925] Ch 407), have held that:

  • Directors are not required to give continuous attention to the affairs of the company. Their duties are intermittent and typically exercised at board meetings.
  • However, a director who is absent from all board meetings over a prolonged period, without good reason, may be in breach of the duty of care.
  • Where a director knows or ought to know that a matter requiring his attention is before the board, he must attend or make his views known.

The CALA 2025 amendments (commenced 6 May 2026) have strengthened ACRA’s ability to take enforcement action against directors who persistently fail to exercise active oversight, through enhanced penalty frameworks for corporate governance failures.

Reliance on Others

A director may rely on the advice and work of professional advisers, management, and other directors — but only to a reasonable extent. Key principles from Singapore case law include:

  • A director who relies on professional advice acts reasonably, provided the reliance is itself reasonable in the circumstances
  • A director who suspects something is wrong cannot simply rely on an assurance from a co-director or employee; some independent inquiry is required
  • Where a transaction is unusual or carries significant risk, greater scrutiny is required and reliance on management’s say-so may not be sufficient

Non-Executive Directors

The duty of care applies to all directors — executive and non-executive. However, the content of the duty varies with the director’s role. Non-executive directors (NEDs) who do not participate in day-to-day management are held to a less demanding standard in relation to operational matters, but they must:

  • Attend board meetings regularly
  • Read board papers with reasonable attention
  • Ask critical questions about matters that appear unusual or concerning
  • Refuse to approve transactions they do not understand or that appear suspicious

In Singapore’s listed company context, the Singapore Exchange Listing Rules and the Singapore Code of Corporate Governance impose additional specific obligations on independent directors and audit committee members that overlay the general duty of care.

Consequences of Breach

A director who breaches the duty of skill, care and diligence faces the following consequences:

  • Civil liability: The director is liable to the company for loss caused by the breach. The company (acting through its board, liquidator, or judicial manager) may bring a claim against the director. Damages are assessed as the loss caused by the breach.
  • Criminal liability: Section 157(3) makes breach of Section 157(1) a criminal offence punishable by a fine or imprisonment. In practice, criminal prosecution tends to be reserved for egregious cases involving dishonesty.
  • Disqualification: Under Section 149 of the Companies Act, a court may disqualify a director from acting as a director or in the management of any company for up to five years following a conviction relating to the company’s affairs.
  • Liquidator claims in insolvency: In winding up proceedings, a liquidator has standing to bring misfeasance claims against directors under Section 212 of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) for breach of duty. This is a common route through which director liability for breach of the duty of care is pursued.

Relief from Liability

Even where a breach is established, directors may be relieved from liability in certain circumstances:

Section 391 Companies Act — Court’s Power to Grant Relief

Under Section 391, the court may relieve a director from liability if it appears that the director acted honestly and reasonably and, having regard to all the circumstances, ought fairly to be excused. The director bears the burden of establishing that they acted honestly, reasonably, and ought fairly to be excused.

Ratification by Shareholders

Shareholders may ratify a director’s breach of the duty of care by passing an ordinary resolution (or in some cases a special resolution), provided the breach does not amount to fraud on the minority or is otherwise incapable of ratification. Ratification provides a complete defence.

Directors’ and Officers’ (D&O) Insurance

Singapore companies commonly purchase D&O insurance to indemnify directors against claims arising from breaches of duty, subject to policy exclusions (typically fraud and deliberate wrongdoing). D&O insurance does not prevent a claim being brought but provides financial protection.

Practical Guidance for Singapore Directors

To meet the duty of skill, care and diligence, directors should:

  • Attend board meetings regularly and review board papers in advance
  • Ask questions and seek clarification on matters that are unclear or concerning
  • Ensure the company has adequate internal controls and reporting systems
  • Seek independent professional advice on transactions of significance or complexity
  • Maintain awareness of the company’s financial position — a director who is entirely ignorant of the company’s finances is exposed
  • Document their decision-making processes through proper board minutes
  • Promptly disclose and manage conflicts of interest
  • Ensure D&O insurance is in place and adequate

See also our guide on the role of the company secretary, who supports directors in meeting their governance obligations.

How Raffles Corporate Services Can Help

At Raffles Corporate Services, our corporate secretarial team supports directors in meeting their governance and compliance obligations, including:

  • Maintaining proper board minutes and resolutions
  • Tracking director-related statutory filings with ACRA
  • Organising board packs and AGM materials
  • Advising on corporate governance frameworks for Singapore companies

Contact Us

For guidance on director duties, corporate governance, or Singapore company secretarial services, contact our team today.

Raffles Corporate Services
Email: [email protected]
Phone / WhatsApp: +65 8501 7133

— The Editorial Team, Raffles Corporate Services