On 23 September 2021, a 72-year-old male Singaporean, Gurdev Singh S/O Gurumak Singh (“Gurdev”) was convicted of an offence under 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 $4,000 (in default 25 days’ imprisonment) and disqualified from being a company director for three years. Two other similar charges were taken into consideration for sentencing.
In November 2018, the Commercial Affairs Department received information that Wimpy Electronics Pte. Ltd.’s (“Wimpy Electronics”) bank account received a sum of USD1,000,000 from a foreign victim of a Business Email Compromise scam. A sum of USD515,021.06 was successfully recovered and returned to the foreign victim.
Investigations showed that Gurdev had a standing arrangement with a corporate services provider in Singapore to provide nominee directorship services by becoming the “local resident director” of companies incorporated in Singapore by any foreign person. The purpose of this arrangement was to comply with the requirement under Section 145(1) of the Companies Act, which states that every company should have at least one director who is ordinarily a resident in Singapore, to facilitate the company’s incorporation.
Gurdev would receive an annual remuneration for every nominee directorship appointment he accepted and held. After assisting with the incorporation of Wimpy Electronics, Gurdev ceded full control of the company to the foreign person, including its bank account. In doing so, he failed to exercise reasonable diligence in the discharge of his duties as a director. This resulted in Wimpy Electronics’ bank account being used to receive and transfer monies 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.
The Police take a serious view of the offence and will continue to adopt 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 benefits of criminal conduct. 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