How Companies Can Deal With Director Resignation Or Disqualification
The Accounting and Corporate Regulatory Authority of Singapore (ACRA) presents some frequently asked questions on what to do once a company director gets disqualified from the position or else decides to resign. As the primary business regulator of Singapore, ACRA is tasked to ensure that each company has at least one locally resident director and that any changes in the particulars of the director are recorded.
First, what are the possible circumstances that would lead to the cessation of a director’s tenure in a company?
A company director’s stint can cease either of two ways: resignation or disqualification. Resignation is possible only to directors of companies with multiple directors onboard. For companies with a single director, the Companies Act (section 145) does not allow such circumstances and renders any resignation attempt as invalid.
On the other hand, others can also face disqualification from a directorship. Directors who can experience this are those who suffer from bankruptcy, those who have committed persistent defaults in the requirements of the Companies Act, or those who were convicted of fraud and dishonesty, or those who received an Order of the Court.
In case a disqualified director continues to act as a company director, he or she is committing a crime punishable by a $10,000-fine, imprisonment of not more than two years, or both.
Likewise, a company is obliged to report the cessation of tenure of a director, either by resignation or by disqualification, at most a month following such resignation or disqualification. If a company fails to do so, the company, as well as each of its officers who are in default, will be considered guilty of an offence. They will also be fined not exceeding $5,000. Under official records too, since the cessation of tenure still hasn’t been made known to proper authorities, the disqualified or resigned director would still appear as the current director.