COMPANY LAW
Personal Liability of Company Directors
A company is a separate legal entity, but that does not mean every breach is only the company’s problem.
JOO TOON LLC LITIGATION TEAM 3 MIN READ
A company is a separate legal entity, but that does not mean every breach is only the company’s problem. Directors may face personal civil or criminal liability depending on the law involved, their own conduct and the role they played.
There is no risk-free "sleeping director"
ACRA’s guidance is clear that a person does not escape responsibility by describing himself or herself as inactive, nominee or sleeping. All directors have legal duties. Work may be delegated, but a director should maintain adequate oversight, understand the company’s affairs and respond to warning signs (Public Prosecutor v Zheng Jia [2025] SGHC 76; [2025] 3 SLR 1290, where a nominee director model premised on exercising no oversight was found to breach section 157(1) and attracted a custodial sentence).
How can personal liability arise?
First, a director may breach his or her own duties. Section 157 of the Companies Act requires directors to act honestly and use reasonable diligence, and prohibits improper use of position or information (s 157(1) and s 157(2) Companies Act 1967). A breach may require the director to account for profits or compensate the company. Since 6 May 2026, a breach of section 157 may also attract a fine of up to S$20,000, imprisonment for up to 12 months, or both (s 157(3)(b) Companies Act 1967, as amended by the Corporate and Accounting Laws (Amendment) Act 2025).
This statutory increase should be read alongside the revised sentencing approach in Public Prosecutor v Zheng Jia [2025] SGHC 76; [2025] 3 SLR 1290, decided in 2025 under the then-prevailing (lower) fine cap, which departed from the fines-first approach in Abdul Ghani bin Tahir v Public Prosecutor [2017] 4 SLR 1153 by treating custodial sentences as the default for professional nominee directors who exercise no real oversight.
Second, a specific regulatory statute may make an officer personally liable when the company commits an offence. The wording differs between statutes. Some focus on consent, connivance or neglect; others require the officer to prove due diligence; and some impose liability on each “officer in default”.
Third, the company’s separate personality does not generally protect a director from liability for his or her own fraud, misrepresentation, tort or other personal wrongdoing.
Common risk areas
Corporate filing and record-keeping duties can expose both the company and officers in default. Repeated filing offences may lead to disqualification, while prolonged failure to lodge required documents may lead to debarment from taking new appointments.
Workplace safety is another important example. Under the Workplace Safety and Health Act, an officer may be liable for a company offence unless the statutory defence is made out (s 48 Workplace Safety and Health Act 2006, requiring the officer to prove absence of consent or connivance and the exercise of due diligence). Directors cannot simply leave safety compliance to operational staff and assume that they are protected.
Similar issues may arise in employment, environmental, data-protection and financial-reporting matters. The precise statutory provision must always be checked.
What can happen personally?
Consequences may include fines, imprisonment, an order to compensate the company or account for profits, disqualification or debarment, and regulatory investigation or prosecution.
What should directors do?
Directors should ensure that the company has reliable reporting lines, filing calendars, internal controls and proper records. They should ask questions when information is incomplete, document significant decisions and escalate red flags. A director who disagrees with a course of action should ensure that the concern and response are properly recorded.
Key takeaway
Personal liability is not automatic, but it is a real risk. The central questions are what the law requires, what the director knew or should have known, and whether reasonable steps were taken to prevent or respond to the breach.
Frequently asked questions
Generally no, because a company is a separate legal person. But there are exceptions, such as personal guarantees you have signed, breaches of director's duties, fraudulent or wrongful trading, and certain offences under the Companies Act or other laws.
Directors must act honestly and in the company's best interests, use reasonable care, skill and diligence, avoid conflicts of interest and not misuse company property or information. Breaching these duties can lead to personal liability to the company.
Do not delete anything. Preserve emails, minutes and accounts, and avoid discussing the allegations with the other side without advice. Early legal advice can help you respond and consider whether to resolve it by settlement.
Disclaimer: These articles are intended to provide general information only and do not constitute legal advice. Each article is prepared based on the law and information available as at its date of publication. While care is taken to ensure that the contents are accurate and informative, the law is subject to change, and subsequent legislative, regulatory or judicial developments may affect the interpretation or application of the matters discussed. These articles should not be used or relied upon as a substitute for professional legal consultation, and legal advice should be sought in relation to any specific legal matter.