On 5 July 2021, a 51-year-old male Singaporean, Mohamed Zaini Bin Abdul Latif (“Zaini”) was convicted of an offence under Section 157(1) of the Companies Act (Chapter 50, 2006 Revised Edition), for failing to exercise reasonable diligence in the discharge of his duties as a company director. He was sentenced to a fine of $3,000 (in default 15 days’ imprisonment) and disqualified from being a company director for three years.
In January 2019, the Commercial Affairs Department received information that the bank account of KNZ International Pte Ltd’s (“KNZ International”) had received a sum of USD140,000 from a foreign victim of wire transfer fraud.
Investigations showed that Zaini had a standing arrangement with a corporate services provider in Singapore to be the “resident director” if any foreign party wished to incorporate a company in Singapore. The sole purpose of this arrangement was 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.
Zaini would receive an annual remuneration for being a director of each company. After assisting with the incorporation of KNZ International and the opening of its bank account, Zaini ceded all control of the company, including its bank account, to the foreign parties and failed to discharge the duties of a Director of a company, or have any oversight of the company’s affairs. This resulted in the bank account of KNZ International being used to receive and transfer monies derived from fraud.
Any person who commits a breach of Section 157(1) of the Companies Act shall be guilty of an offence punishable under Section 157(3)(b) of the same Act and shall be liable on conviction to a fine of up to SGD 5,000 or to imprisonment for a term of up to 12 months.
The Police take a serious view of the offence and will not relent in taking offenders to task. Individuals should not be a director of a company when they have limited or no oversight or control, as the company may be used for illegal purposes such as the laundering of criminal proceeds. Company directors who fail to exercise reasonable diligence in the discharge of their fiduciary duties run the risk of allowing their companies to facilitate the retention of benefits derived from criminal conduct.
SINGAPORE POLICE FORCE
30 July 2021 @ 6:20 PM