Singapore Director Duties:
“Ignorantia juris non excusat; Ignorance of the law excuses not.”
Being a director is a serious duty for any company, below are the eight duties of being director.
Contrary to popular belief, the management of a company is not entirely vested in the Chief Executive Officer. Under section 157A of the Companies Act (CA), the management of a company is vested in the board of directors.
1 Duty to act honestly and use reasonable diligence
Under section 157 of the CA, directors have the “duty to act honestly and use reasonable diligence in the discharge of the duties of his office”.
If found guilty of breaching the provisions, a director is liable to the company for any profits made by him and any damages suffered and potential criminal punishment. Do take note for compliance with Singapore Director Duties.
2 Duty to disclose interests in transactions
Under section 156 of the CA, a director is generally required to make a disclosure at a directors’ meeting if he is interested in a transaction or proposed transaction with the company.
3 Duty to exercise power in good faith for the company’s interests
Directors owe a fiduciary duty towards the company, and so they must act in the interests of the company.
4 Duty to avoid conflicts of interest
A director must make reasonable efforts to avoid conflicts of interests. For example, He or she can not be involved in a business opportunity that he comes across through his role as director without the approval of the company.
5 Duties of skill, care and diligence
Failure in these duties can result in directors being sued for negligence.
The above are some of the main duties associated with directors. Further analysis will involve examining cases to determine what exactly can constitute the company’s interests etc.
6 Loans of directors
For example, section 162 of the CA deals with loans to directors. The default stand, subject to exceptions, is that a company cannot make a loan to a director. If a loan is made in contravention of the provisions, then the directors authorising the transaction will be liable to indemnify the company against any loss. They will also be liable for criminal sanction.
7 compliance of rules and regulations
It is the directors’ duty to make the company comply with all the rules and regulations from the government, such as filing of annual returns, GST and tax returns.
8 fiduciary duties on all the relevant matters
Directors are often expected to exercise fiduciary duties on all material matters of the companies and they must take extra care to discharge this duties or hire relevant professionals to assist them.
Despite of the seemingly heavy responsibilities, being a director can be one of the most fulfilling journey if the company grows and thrives after incorporation.
“We need a mutual fund industry with both vision and values; a vision of fiduciary duty and shareholder service, and values rooted in the proven principles of long-term investing and of trusteeship that demands integrity in serving our clients” – John C. Bogle
About Raffles CPA
Raffles CPA is a niche professional firm headquartered in Singapore with a relentless dedication to help global and local clients in solving their complex business problems in areas of corporate services, accounting, capital market, legal and compliance.
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