On 3 June 2022, 38-year-old Eng Cheng Song (“Eng”) was convicted of an offence under Section 157(1) of the Companies Act (Chapter 50, 2006 Revised Edition) read with Section 157(3)(b) of the same Act for failing to exercise reasonable diligence in the discharge of his duties as a director of a company. He was sentenced to four weeks’ imprisonment and disqualified from being a company director for five years.
Investigations by the Commercial Affairs Department revealed that Eng was one of the directors of Enston Corporate Services Pte. Ltd. (“Enston”), a corporate secretarial services firm in Singapore. Eng had a standing arrangement with his business partner in Enston, for Eng to be appointed as the resident director for companies that foreign clients wanted to incorporate in Singapore.
In April 2019, Eng was appointed as the resident director of Phima Pte Ltd (“Phima”), a company which Enston assisted to incorporate on behalf of a foreign client. Eng gave up control of Phima, including its bank accounts, to the foreign director and was not involved in any aspect of the company’s management and affairs, or monitoring the transactions in Phima’s bank accounts. In consequence of Eng’s failure to exercise reasonable diligence in the discharge of his duties as a director of Phima, Phima received approximately USD 33.5 million of fraud proceeds, from a foreign company between November and December 2019.
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 not exceeding SGD 5,000 or to imprisonment for a term not exceeding 12 months.
Company directors who fail to exercise reasonable diligence in the discharge of their directors’ duties run the risk of allowing their companies to facilitate the retention or control of benefits derived from criminal conduct. 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.
SINGAPORE POLICE FORCE
03 June 2022 @ 11:45 AM