As the title suggests, if you’re the director of a company, your job is to direct and manage the affairs of the company.
So, at the very least, you should know what’s going on with its finances.
Because if your firm is involved in something shady, you will be the one who has to pay the price.
Man Assumes Directorship So Company Complies With Legal Requirement, Ends Up in Trouble After Firm Receives $1 Million From Overseas Scammer
On 18 June 2018, Wimpy Electronics, a company that specialises in wholesale trade, was incorporated.
When it was preparing for its incorporation, it engaged 72-year-old Gurdev Singh as a director.
According to the police, it did this in order 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.”
Wimpy Electronics may not have been the only company Singh helmed, as he had an 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 foreigners.
As part of this agreement, he would be compensated for every nominee directorship appointment he held.
Once Wimpy Electronics was incorporated, however, Singh relinquished full control of the company to the foreign person, including its bank account.
Huge mistake.
Unbeknownst to him, the company’s bank account was later used to receive and transfer money derived from a scam.
A foreign victim of an email scam had transferred US$1 million into Wimpy Electronics’ bank account, a transaction that was investigated by the Commerical Affairs Department after they received a tip-off.
While Singh wasn’t behind the scam himself, he failed to prevent such fraudulent transactions from taking place, and was punished for it.
Fined $4,000, Disqualified From Being Company Director for 3 Years
On 23 Sep, the 72-year-old was convicted of an offence under the Companies Act.
For failing to exercise reasonable diligence in the discharge of his duties, Singh was fined $4,000 and disqualified from being a company director for three years.
The police warned that individuals should not be a director of a company if they’re going to have limited or no control or oversight of the company.
When this happens, the company could be used to facilitate illicit activities.
“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,” it added.
Those convicted of the offence can not only be fined up to $5,000, but be imprisoned for up to 12 months.
Just like how Martin Scorsese wouldn’t hand the reins over to an assistant for his film, if you’re going to be a director of a company, you should probably know what’s going on there.
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Featured Image: Donal Keane / Shutterstock.com
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