Singapore raises penalties for directors who fail to act in companies’ best interests

Parliament passed amendments to the Companies Act on Nov 5, 2025, raising penalties on directors who fail to manage companies in the best interests of the firm or who do not exercise reasonable diligence. The maximum fine will increase fourfold to S$20,000 (from S$5,000), and serious offenders may face both a fine and up to 12 months’ imprisonment—previously, courts could impose one or the other, but not both.

The move tightens Singapore’s corporate-governance regime and follows a broader push to deter misconduct and strengthen board accountability. Media summaries of the debate emphasised that the changes aim to align penalties with the gravity of duty breaches and with comparable offences in other regimes.

What changes

• Higher monetary penalties: maximum fine rises to S$20,000.

• Cumulative sanctions possible: courts may impose both a fine and jail (up to 12 months) for serious cases.

• Core duties reaffirmed: directors must act honestly, with reasonable diligence, and in the best interests of the company—standards long recognised in statute and case law. 

Why it matters for boards and owners

• Greater personal exposure: Higher fines and potential custodial sentences raise the stakes for weak oversight, conflicts of interest, and rubber-stamping decisions.

• Signal to stakeholders: Tighter penalties support confidence among investors, lenders, and counterparties that Singapore will enforce director standards. The Straits Times

Immediate takeaways for SMEs

1. Refresh board processes: schedule regular meetings with substantive agendas; ensure minutes reflect real deliberation and decisions.

2. Conflict management: keep disclosures current; step out where conflicted.

3. Training & induction: brief new directors on fiduciary duties and the amended penalty framework.

4. Documentation discipline: maintain clean board packs, approvals, and follow-ups that evidence diligence—vital if decisions are later challenged.

Bottom line: with higher fines and the ability to combine penalties, Singapore is putting more teeth behind long-standing director duties. Boards that invest in process, documentation, and conflicts management will be best placed under the new regime.