Qn: How many different types of directors are there?
A: The law only recognizes one species of directorship, though in practice, there are several sub-species. A director’s particular designation is not determinative or conclusive of the role that he plays in the company. Rather, the content of a director’s duty is determined by the involvement, responsibilities or functions he undertakes. Put simply, the focus is on substance rather than form.
Qn: What role does a director play in relation to his/her company?
A: The board of directors is charged with the function of managing the company’s business. Section 157A of the Companies Act (Cap. 50) expressly stipulates that the business of a company is to be managed by or under the direction of the directors.
Qn: What duties do directors owe to his/her company? (Part 1 of 2)
A: Fiduciary duties – The company is entitled to the single-minded loyalty of its director.
- Duty to act honestly and in good faith in the best interests of the company;
- Duty not to exercise his powers for an improper purpose such as to profit personally from his office; and
- Duty not to place himself in a position of a conflict of interest between his duties to the company and his personal interests.
Qn: What duties do directors owe to his/her company? (Part 2 of 2)
A: Duties of care, skill and diligence – “a related but distinct duty owed by directors”, not imposed to “exact loyalty”.
- Relates to the standard of care and diligence “expected on a director that is assessed objectively”;
- The standard of care owed by a director, however, was not fixed and was a continuum depending on various factors such as the individual’s role in the company, the type of decision being made, and the size and the business of the company; and
- “a director must meet the minimum objective standard of care which entails the obligation to take reasonable steps to place oneself in a position to guide and monitor the management of the company…”.
- A director may be a sentinel, but he is not a forensics investigator or a sleuth, unless there are signs that would put him on inquiry.
Qn: What other forms of exposure directors may be exposed to?
A: Directors may, in the course of their duties, be potentially exposed to various criminal / regulatory exposure, including but not limited to:-
- Disclosure-related offences – Securities and Futures Act
- Non-compliance with accounting standards – Companies Act
- Disqualification to act as director of company due to bankruptcy (Companies Act)
- Section 157(1) – Companies Act (PP v Zheng Jia [2025] SGHC 76)
Qn: Is it permissible for a director to delegate some of his management functions and would such delegation amount to a breach of his duties?
A: Delegation is permissible but a director “must reasonably believe that his subordinates will competently discharge their duties in the company’s interests.” A director, however, cannot abdicate his/her supervisory role.
About
“Snapshots” by Mark Lee Chambers Law Corporation (“ML Chambers”) is a series of executive summaries curated to provide readers with quick, easy-to-read (Q&A format) snapshots of legal developments of the day and topics of interest.
Mark Lee Chambers Law Corporation is a boutique litigation and arbitration firm specialized in high stakes complex litigation with a particular focus in corporate law, joint ventures, shareholder and boardroom related matters.
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