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Can Directors be Personally Liable for their Acts?

Under section 157A of the Companies Act (CA), the board of directors is to be deemed responsible for the management of a company and is to act in accordance with the duties assigned to a director as per the law. Failure to comply may result in a lawsuit, criminal penalties and/or be subject to removal from the company.

Statutory Duties
Statutory duties may be found in legislation, particularly the CA. Two of the main statutory duties of directors are found below:

(1) Duty to disclose interests in transactions

Under section 156 of the CA, it is required for a director to make disclosure at a director’s meeting if he has interest in a transaction or proposed transaction with the company. The disclosure is not required where “the interest of the director consists only of being a member or creditor of a corporation which is interested in a transaction” and “if the interest of the director may properly be regarded as not being a material interest”.

In accordance with section 156(3), there are exceptions as to when a director may be found to be interested.

Apart from the duty of a director to disclose the nature and extent of his interest in an entity that engages in a transaction with the company, the director must disclose the nature, character and extent of any conflicts with his directors’ duties that could arise due to them holding any office or possessing any property.

Failure to disclose may result in a fine not exceeding $5000 or imprisonment of a term not exceeding 12 months.

(2) 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”.

In particular, a director “shall not make improper use of any information acquired by virtue of his position as officer or agent of the company to gain…an advantage for himself or for any other person or to cause detriment to the company”.

If found guilty of breaching the aforementioned provisions, a director will be liable to the company for any profits they have made and any damages the company may suffer from as a result of the breach. A possibility of criminal sanctions may also exist.

Please note that this article does not constitute express or implied legal advice, whether in whole or in part. For your Free First Consultation or if you simply require more information, email us at



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