On 1 March 2022, a 30-year-old Singaporean, Han Jie (“Han”) was convicted of an offence under the Section 157(1) of the Companies Act (Chapter 50, 2006 Revised Edition), for failing to exercise reasonable diligence in the discharge of his duties as a company director. He was sentenced to a fine of $2,000 (in default five days’ imprisonment) and disqualified from being a company director for one year.
Between October 2020 and March 2021, the Commercial Affairs Department received information that the bank account of Geh International Pte. Ltd. (“Geh International”) received a total sum of USD 364,980.10 from fraud perpetrated against multiple overseas-based victims. In addition, Geh International’s bank account was also named as the intended beneficiary of an attempted fraud involving a sum of USD 9,934.50.
Investigations showed that Han is a director of Leftright Corporate Pte. Ltd., which provides corporate secretarial services. Han assisted in the incorporation of Geh International and was appointed as the company’s resident director.
After opening Geh International’s bank account, Han ceded control of the bank account to an unverified person based overseas and failed to exercise reasonable diligence over the affairs of the company during the term of his directorship. This resulted in Geh International’s bank account being used to receive and transfer proceeds derived from fraud.
Any person who commits a breach of Section 157(1) of the Companies Act shall be guilty of an offence punishable under Section 157(3)(b) of the same Act and shall be liable on conviction to a fine of up to $5,000 or to imprisonment for a term of up to 12 months. Upon conviction, the offender may also be disqualified from being a director under Section 154 of the Companies Act.
The Police takes a serious view of the offence and will not relent in taking tough enforcement action against offenders. Individuals should not be a director of a company when they have limited or no control or oversight of the company, as the company may be used to facilitate illicit activities such as the laundering of criminal proceeds. Company directors who fail to exercise reasonable diligence in the discharge of their duties as directors run the risk of allowing their companies to facilitate the retention of benefits derived from criminal conduct.
Source: Singapore Police Force