By Boo Kok Chuon
If a person is disqualified to hold the office of a director, participation in the management of any company is prohibited unless consent is obtained from the Court or the Official Assignee (if applicable). A person could be deemed disqualified under the following circumstances:
- Bankruptcy;
- Directorship in an insolvent company;
- Conviction of crime related to fraud or dishonesty;
- Disqualification by Court;
- Convictions for 3 or more filing related offences under the Companies Act within five years;
- The person has 3 or more companies that were struck off by ACRA within five years[1].
- 3 or more High Court Orders made against the director compelling compliance with the relevant requirements of the Act, within five years;
- Company being wound up for reasons of national security or interest.
Under exceptional cases, the Court or the Official Assignee may grant leave to the disqualified person to resume the directorship. Notification to ACRA by the person is required.
Duties to declare and report changes
The director is required to notify all the companies where directorships are held, in writings, in the event of disqualification[2].
The companies are required to report to Accounting and Corporate Regulatory Authority (ACRA) on the disqualification within one month from the date of the disqualification of the director[3]. Failure of which by the director, could constitute a criminal offence with a fine not exceeding $15,000 or an imprisonment term not exceeding 3 years. Offenders will also be liable to a default penalty of $1,000 per day if the offence continues after conviction[4]; noncompliance by the company or her officers could constitute a criminal offence with a fine not exceeding $5,000 and a default penalty of up to $200 per day if the offence continues after conviction[5].
It is also an offence for a person to continue acting as a director during the period of disqualification. The director can be charged with a fine not exceeding S$10,000 or imprisonment term not exceeding 2 years, or both[6].
This article is adapted from the book “Corporate Directions: A Comprehensive Guide for Directors of SMEs in Singapore” published by Iconomy Holdings Pte Ltd. ISBN: 978-981-1461-14-9 (E-Book); ISBN: 978-981-1461-13-2 (Paperback)
[1] Section 155A of the Companies Act
[2] Section 165(1)(c) and Section 173 of the Companies Act
[3] Section 173(6)(a)(ii) of the Companies Act
[4] Section 165(9) of the Companies Act
[5] Section 173(7B) read with Section 408(1) of the Companies Act
[6] Section 148(1) of the Companies Act
