Who are disqualified directors and what should be done?

In short, disqualified directors cannot hold director positions in local or foreign companies.

Bankruptcy

Disqualification under Section 148 of the Singapore Companies Act (CAP. 50)

An individual who is declared bankrupt by a Singapore or foreign court cannot remain as or be appointed as a director of any company unless a Court Order or written permission of the Official Assignee has been obtained. The individual can be reappointed or appointed to the director post once he or she has been discharged as a bankrupt.

Disqualification under Section 149 of the Singapore Companies Act (CAP. 50)

A director of an insolvent company that is liquidated may be disqualified from acting as a director and taking part in company management by a Court Order. The Court may issue the order under the following circumstances:

The person was the director at the time of the liquidation of the company or had ceased to be a director of that company within three years from the date of liquidation; and
His conduct as a director of the insolvent company makes him unfit to continue to be a director or take part in company management in another company.

The disqualification period is 5 years. After this period, the person can be appointed as a director in his previous companies. He can also incorporate a new company with him or her as the director.

Conduct

Disqualification under Section 154 of the Singapore Companies Act (CAP. 50)

A person who has been convicted of certain offences may be subject to automatic disqualification or a disqualification order by the court. Conviction for offences involving fraud or dishonesty (e.g. criminal breach of trust, theft, cheating) (be it within Singapore or not) punishable with imprisonment of 3 months or more will result in automatic disqualification. The period of this automatic disqualification is 5 years.

Upon conviction, a disqualification order can be made for the following offences:

offences relating to the failure to carry out the responsibilities of a director honestly and diligently and failing to keep proper accounts when the company is slovent
offences relating to the formation and management of the company

Disqualification under Section 155 of the Singapore Companies Act (CAP. 50)

A person will be disqualified if he is convicted of at least 3 offences related to the mandatory filings with the Registrar of Companies within a period of 5 years. The disqualification period will start from the date of his last conviction in Court. He or she can apply to the High Court for permission to act as a director during the disqualification period.

Disqualification under Section 149A of the Singapore Companies Act (CAP. 50)

A person will be disqualified by the Court if he was a director of a company that was wound up on the grounds that the company was against national security or interest. The disqualification period is 3 years from the date of issue of the the winding up order to the company.

Disqualification under Section 13 or 399 of the Singapore Companies Act (CAP. 50)

A person may be disqualified if he had been convicted of 3 or more offences under the Act related to filing of returns, accounts or other documents with the registrar and have not had 3 or more orders of the High Court made against the said director under section 13 or 399 of the Act in relation to such requirements.

Once a director is disqualified, the company has to remove that individual from the company. If that individual is the only local director on the company board, the company needs to find a replacement.

When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.

Yours Sincerely,
The editorial team at Singapore Secretary Services

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