A Singapore chartered accountant who turned “being a director” into a business model has just reshaped how the courts sentence negligent nominee directors. In Public Prosecutor v Zheng Jia [2025] SGHC 76, the High Court, in a three judge coram led by Chief Justice Sundaresh Menon, substituted a fine with an aggregate ten months’ imprisonment and set out a revised sentencing framework that makes a custodial sentence the presumptive outcome for this kind of offending. For any Singapore director, and particularly anyone who has agreed to “just sign some papers” for a fee, this case is worth understanding properly.
What the case is about
Zheng Jia ran a corporate secretarial services business that helped foreign clients incorporate Singapore companies. Because Singapore law requires every company to have at least one director who is ordinarily resident here, Zheng offered himself, and later an associate he recruited, as that locally resident director. Reports of the judgment indicate he was registered as director and company secretary of a very large number of Singapore companies (reportedly 384) through this arrangement, without ever exercising any real oversight of what those companies actually did.
Two of those companies were used as conduits for scam proceeds. In the first, a Singapore bank account opened for a company Zheng had incorporated received more than S$64,000 stolen from an American scam victim, later moved on to accounts in China. In the second, an associate whom Zheng had recruited and instructed to take a “hands off” approach was registered as director of a company whose bank accounts received and transmitted proceeds reportedly exceeding US$2.1 million and S$230,000 from scams against three foreign companies. Zheng was charged with failing to exercise reasonable diligence as a director in the first instance, and with abetting his associate’s identical failure in the second.
The lower court had imposed only fines. The Prosecution appealed, and the High Court used the case to overhaul how such offences are sentenced going forward, resetting the default expectation for every director not genuinely involved in running the company on whose board they sit.
Legal basis: the duty to act honestly and use reasonable diligence
The offence at the centre of this case is a breach of section 157(1) of the Companies Act 1967, which provides that a director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office. This is a statutory duty owed to the company, sitting alongside (not replacing) the older common law and equitable duties directors have long owed. We have written previously about what section 157 requires of directors in Singapore in more general terms.
Breach of section 157(1) is both a civil wrong, exposing the director to a claim by the company for loss caused, and a criminal offence carrying a fine or imprisonment on conviction. What Zheng Jia changes is not the wording of the section, but the courts’ approach to sentencing where that duty is breached through wilful, business model level detachment rather than an isolated lapse of judgement.
Who this affects
The most obvious group affected are professional or nominee directors: individuals who agree to be listed as director of a company, often for a fee, without any intention of being involved in running it. Our guide to nominee directorship in Singapore sets out the legal requirements and risks in more detail, and this case is now the clearest illustration of why those risks are real rather than theoretical.
The judgment’s reach is broader, though. It affects corporate secretarial and company formation firms that market “director for hire” services to overseas clients as a matter of course, and individuals who sit on the boards of many unrelated companies without meaningful involvement in any of them, a pattern that can shade into the same detachment the court criticised even where no fee changes hands. It also touches arrangements involving nominee shareholders, since nominee shareholding and directorship structures often travel together. Finally, it affects the shareholders and investors who rely on a company having a genuinely functioning director, since a rubber stamp director provides none of the oversight the corporate structure is meant to guarantee.
Ordinary, hands on directors of small and medium Singapore companies should not read this case as directly targeting them: the High Court distinguished a director who is actively involved but makes a negligent mistake from one who takes office intending never to exercise oversight. Even so, the case is a useful prompt to check that a director’s actual conduct would hold up to scrutiny.
What the court actually decided: the new sentencing approach
The High Court found that the earlier sentencing approach, drawn from Abdul Ghani bin Tahir v Public Prosecutor [2017] 4 SLR 1153, was not fit for purpose for this category of offence. That earlier approach treated a fine as the default for “purely negligent” breaches of section 157(1), reserving imprisonment for directors who acted intentionally, knowingly or recklessly. The High Court in Zheng Jia disagreed, holding that a director who takes up office intending from the outset to abdicate any real oversight presents serious risks to the company and to Singapore’s broader corporate and financial integrity, whether or not that director could technically be labelled “reckless” in the traditional sense. A summary of the decision is available on the Singapore Courts website via its published case brief.
In its place, the court set out a three step revised framework.
Step 1: Identify offence specific factors
The court listed a non-exhaustive set of factors, including the extent of due diligence the director actually undertook, any efforts made to monitor the company’s bank account transactions, whether the director knew or should have known that failing to exercise diligence could enable abuse of the corporate structure, the duration and pattern of the offending conduct, whether the conduct was part of a profit driven business model, any efforts to conceal wrongdoing, whether there was a transnational or cross-border element, and the nature and extent of harm caused.
Step 2: Situate the offence within a sentencing band
Based on the number and gravity of those factors, the offence is placed within one of three indicative bands: Band 1 (one to three factors) points to a starting sentence of up to four months’ imprisonment; Band 2 (four to five factors) points to five to eight months; and Band 3 (more than six factors) points to nine to twelve months. Critically, the court held that the custodial threshold is presumptively crossed for offences of this kind, meaning imprisonment, not a fine, is now the expected starting point, and it falls to the director to show why that should not apply to them.
Step 3: Calibrate for offender specific factors
The indicative sentence is then adjusted for matters personal to the offender, such as a timeous guilty plea, genuine remorse, voluntary restitution, cooperation with investigators, relevant antecedents, and any other charges taken into consideration.
Applying this framework, the court found that Zheng’s conduct in relation to the first company sat within Band 2 (an indicative five months) and his conduct in relation to the second, more serious matter sat within Band 3 (an indicative ten months, reduced to seven months for his guilty plea). Run consecutively, this produced the reported aggregate of ten months’ imprisonment. The District Court’s earlier disqualification order against Zheng under section 154 of the Companies Act was also upheld.
Practical implications: what a genuine director should actually do
The clearest lesson from Zheng Jia is that “I was told I would not need to do anything” is not a defence, and may in fact be treated as evidence of the very detachment the court now punishes with imprisonment. Every director, nominee or otherwise, should be able to demonstrate active, ongoing engagement with the company.
In practical terms: attend board meetings, whether in person or virtually, and read the papers circulated beforehand rather than signing on the day. Review the company’s financial statements at reasonable intervals, asking questions where figures do not add up. Take time to understand what the company actually does, including its counterparties and, where relevant, the source and destination of significant payments through its bank accounts. Never sign statutory forms, resolutions, or bank documents without first understanding what they authorise. If a corporate secretarial provider or fellow director tells you your role is purely nominal, treat that as a warning sign rather than a convenience. Directors unsure whether an existing directorship exposes them this way should speak to a Singapore Advocate and Solicitor, for example via a lawyer directory such as JustFollowLaw, particularly once matters move towards anything resembling a court application; our note on the handoff between a corporate secretary and litigation counsel explains where that line typically falls.
Documents and records a prudent director should keep
Good record keeping is the clearest evidence a director can later produce that reasonable diligence was in fact exercised. The list below is not exhaustive, but reflects the categories that would have mattered most in a case like Zheng Jia.
| Document or record | Why it matters |
|---|---|
| Board meeting minutes, including attendance and matters discussed | Shows the director was actually present and engaged, not merely appointed on paper |
| Board papers and financial statements, with evidence they were read (notes, queries raised, follow-up emails) | Demonstrates the director reviewed the company’s financial position rather than rubber stamping it |
| Correspondence with management, co-directors, or the corporate secretary about the company’s operations | Shows ongoing engagement with how the business actually runs, not a one-off appointment |
| Records of due diligence performed on major clients, transactions, or counterparties | Evidences that risk of misuse of the company was actively considered, not ignored |
| Bank account statements and evidence of periodic review of transactions | Was central to the finding against Zheng, who admitted never monitoring the company’s bank accounts |
| Copies of, and any professional advice obtained on, statutory forms and resolutions before signing | Shows documents were understood before being signed, not signed blindly on instruction |
| Annual return and financial statement filing history with ACRA | A basic but telling indicator of whether statutory compliance was being actively managed |
Timeline and potential exposure
The table below sets out, in general terms, how a section 157(1) matter typically progresses and the exposure at each stage. This is for general orientation only; actual timelines and outcomes vary, and only a court can determine an outcome in any individual case.
| Stage | What typically happens | Potential exposure |
|---|---|---|
| Investigation | Referral (often after a bank flags suspicious transactions, or a victim lodges a police report) followed by investigation into the company’s affairs and its officers | No sentence at this stage; director may be asked to provide statements or documents |
| Charge | Prosecution decides whether to charge the director under section 157(1), or, for an associate recruited by another, potentially as an abettor | Formal charge filed; director should engage a Singapore Advocate and Solicitor at this point |
| Plea or trial | Director pleads guilty or contests the charge at trial in the State Courts in the first instance | A guilty plea is treated as a mitigating factor under the revised framework’s third step |
| Sentencing | Court applies the revised three step framework: offence specific factors, sentencing band, then offender specific calibration | Indicative range of up to four months (Band 1), five to eight months (Band 2), or nine to twelve months (Band 3), before adjustment; imprisonment is now the presumptive starting point |
| Appeal | Either the Prosecution or the defence may appeal sentence (as the Prosecution did in Zheng Jia) to the General Division of the High Court | Sentence may be increased, reduced, or upheld; disqualification orders may also be reviewed |
What happens after sentencing: disqualification consequences
A custodial sentence is often not the end of the story. Section 154 of the Companies Act empowers the court to disqualify a person from acting as a director, or taking part, directly or indirectly, in the management of any company, on conviction of certain offences, typically for a period of five years. In Zheng Jia, the High Court upheld the District Court’s earlier disqualification order made against him under this section, on top of substituting the fines with imprisonment: a section 157(1) conviction can therefore carry both a custodial sentence and a multi-year bar from holding any directorship at all, a combination that should concentrate the mind of anyone treating a directorship as a low effort source of fee income.
A disqualified person can, in limited circumstances, apply to the court for leave to continue acting as director of a specific company during the disqualification period, but this requires a fresh application and is not granted as a matter of course.
Frequently asked questions
Can I be a nominee director safely in Singapore?
Being registered as a nominee or locally resident director is not itself illegal, and many legitimate arrangements exist, typically with contractual protections and genuine, if limited, oversight built in. What Zheng Jia condemns is the model where the director exercises no oversight whatsoever and treats the role as a pure formality. Anyone considering such an arrangement should insist on real information rights and some mechanism for monitoring the company’s affairs, not simply a fee and a set of forms to sign.
What if I am asked to be a director but told I will not need to do anything?
Treat that statement as a serious warning sign rather than reassurance. Following Zheng Jia, being told, and accepting, that no real involvement is expected is itself evidence that can be used against a director at sentencing. If you are in this position already, take immediate steps to become genuinely informed about the company’s affairs, or take advice on resigning properly.
Does RCS provide nominee directors?
Raffles Corporate Services can assist clients with locally resident director arrangements as part of a properly governed corporate secretarial relationship, with the documentation, filings, and oversight structures this case shows are now essential. We do not offer, and would not recommend, a purely nominal “sign only” arrangement of the kind criticised in this judgment.
Does this new sentencing framework apply only to professional nominee directors?
The framework was developed for professional nominee directors operating a business model built on detachment, and the High Court distinguished this from an ordinary director who is genuinely involved but makes an isolated mistake. That said, any director whose conduct resembles the pattern criticised here, regardless of job title or whether a fee changes hands, could potentially fall within its scope.
Need Help With This Matter?
If your company is facing this situation, Raffles Corporate Services can assist with the groundwork, ACRA filings, compliance documentation, and coordinating with experienced Singapore law firms. For matters requiring court proceedings, we work with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice.
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This article is for general information only and does not constitute legal advice. For advice specific to your situation, please consult a qualified Singapore Advocate and Solicitor.
The Editorial Team, Raffles Corporate Services