The criminalising of negligence by company directors has been a controversial part of Singapore company law since it was first introduced to the Companies Act (the "Act") in 1966.[1] This is compounded by the fact that a breach brings with it the threat of imprisonment. Since 2017, the position in Singapore has been, based on the authority of Abdul Ghani bin Tahir v Public Prosecutor ("Abdul Gani"),[2] that the starting point for purely negligent breaches was a fine, with a custodial sentence only appropriate where the breach by the director was intentional or reckless.[3] Part of the rationale for this was the desire not to hamper commerce.[4]
This approach was re-examined by a 3 judge coram of the Singapore High Court chaired by the Chief Justice in Public Prosecutor v Zheng Jia ("Zheng Jia"), in a decision of great consequence for those in the corporate secretarial business in Singapore, particularly those that provide nominee director services. They now face a real likelihood of imprisonment for breaches of section 157(1) of the Act.
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[1] Now found in s157(1) of the Companies Act; "A director must at all times act honestly and use reasonable diligence in the discharge of the duties of his or her office."
[2] [2017] 4 SLR 1153
[3] Ibid at [166]
[4] Ibid at [158]-[161]