The Section 157 Penalty Hike: What the New $20,000 Fine (and Jail) Means for Singapore Directors from 6 May 2026

For years, the maximum penalty for a director who breached the core duties in section 157 of the Companies Act 1967 was, in practical terms, a rounding error: a fine capped at $5,000, or up to 12 months’ imprisonment, but not both. From 6 May 2026, that changes. Under the Corporate and Accounting Laws (Amendment) Act 2025 (CALA 2025), the maximum fine for these offences has been raised fourfold to $20,000, and a director convicted of a serious breach can now be fined and imprisoned at the same time. For the thousands of individuals who hold nominee, family-business or “silent” directorships across Singapore’s private company landscape, this is a materially different risk calculation.

Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.

This article sets out exactly what changed, which section of the Companies Act is affected, what conduct triggers the higher penalty, and what directors should be doing differently now that the increase is in force.

What actually changed on 6 May 2026

On 16 April 2026, the Accounting and Corporate Regulatory Authority (ACRA) confirmed that selected provisions of CALA 2025 would commence on 6 May 2026. Among the changes ACRA highlighted as “heavier penalties for directors” was a direct amendment to the punishment provision attached to section 157 of the Companies Act 1967, the general duty provision that requires a director to act honestly and to use reasonable diligence in the discharge of his or her duties, and which also prohibits a director from misusing company information for personal gain or to the company’s detriment.

Before 6 May 2026, a breach of section 157(1) or 157(2), punishable under section 157(3)(b), carried a maximum fine of $5,000 or imprisonment for a term not exceeding 12 months, applied as alternatives. From 6 May 2026, the same offence carries a maximum fine of $20,000, or imprisonment for a term not exceeding 12 months, or both. The imprisonment term is unchanged; what has changed is the size of the fine and, critically, the court’s ability to impose both a fine and a jail term for the same offence rather than being confined to one or the other.

Old penalty vs new penalty at a glance

What triggers the higher penalty

The higher penalty attaches to breaches of the same conduct that section 157 has always regulated. In substance, a director is caught where he or she:

• fails to act honestly in the discharge of the duties of a director;
• fails to use reasonable diligence in the discharge of those duties, for example by rubber-stamping board decisions without informing himself of the underlying facts, or by taking no active steps to understand the company’s financial position; or
• misuses information acquired through the office of director, whether to gain an advantage for himself or another person, or to cause detriment to the company.

None of this is new law. What ACRA has changed is the consequence of getting it wrong. A director who signs off on transactions without reading them, who allows a company to be used as a vehicle for undisclosed related-party dealing, or who simply treats a directorship as a paper appointment with no active oversight, is exposed to a fine four times larger than before, and now risks a fine and a custodial sentence in the same proceeding.

It is worth being precise about scope: the increase is confined to the penalty provision tied to section 157. It does not itself create new duties. Directors who want the fuller picture of what section 157 requires, including the fiduciary duties that sit alongside the statutory ones, should also read our companion piece on shadow director liability in Singapore, since the same reasonable-diligence standard is increasingly being applied to people who never held a formal directorship but who directed the company’s affairs in substance.

Why this matters as part of a wider package

The section 157 penalty increase did not arrive alone. It commenced on 6 May 2026 as part of a broader tranche of CALA 2025 changes that also expanded the list of offences that disqualify a person from acting as a director, most notably adding convictions for money laundering offences under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 to the disqualification triggers. Read together, the message from ACRA is consistent: Singapore is raising the personal cost of being a passive or complicit director, whether the underlying conduct is a straightforward breach of duty or something that shades into facilitating illicit activity through the corporate form.

This sits alongside other recent tightening of the corporate governance perimeter that we have covered separately, including the requirement for companies to make anti-money laundering declarations at the point directors and other controllers are appointed (see our article on ACRA’s Form 45 money laundering declaration requirements) and the strengthened penalties attached to the registers of nominee directors, nominee shareholders and controllers, which we set out in this review of ACRA’s tougher penalties for nominee arrangements. Directors who hold multiple appointments, particularly nominee or family-group arrangements, should treat the section 157 change as one part of a coordinated regulatory tightening rather than an isolated fine adjustment.

What it means practically for directors

A fourfold increase in the maximum fine, combined with the removal of the “either/or” limitation between fine and imprisonment, changes the calculus in a few concrete ways.

1. “I didn’t know” is a weaker defence than ever

Reasonable diligence under section 157(1) has always required directors to take an active interest in the company’s affairs, not merely to attend meetings. With the financial and liberty consequences of a finding of breach now materially higher, directors who have historically treated a directorship as a formality, particularly in group structures with multiple related entities, should reassess how much genuine oversight they are exercising over each company on whose board they sit.

2. Nominee and passive directors carry more exposure

Individuals who accept directorships as a favour or for a fee, without intending to be involved in management, are precisely the population most exposed by this change. If you are asked to add or remove a director for administrative convenience, it is worth understanding the statutory process properly rather than treating it as paperwork; our guide on how to add or remove a director in Singapore through ACRA’s statutory process sets out what is actually required, and what residual obligations a departing or incoming director takes on.

3. Documentation of decisions matters more

Boards should be able to show, after the fact, that a decision was taken with reasonable diligence: that relevant information was reviewed, that conflicts were disclosed, and that the director applied his or her mind to the transaction rather than deferring automatically to a controlling shareholder or fellow director. Board minutes, circular resolutions and email records that evidence genuine deliberation are now a more valuable form of protection than they were under the old, lower-stakes penalty regime.

4. Group structures need a coordinated review

Where the same individual sits on the boards of several related companies, a single lapse in diligence at one entity can now carry meaningfully higher personal consequences, and enforcement action against one company in a group can prompt scrutiny of the director’s conduct across all of them. A periodic review of who holds which directorships, and whether each appointment is still active and properly informed, is a sensible governance exercise for any group with multiple related Singapore entities.

The section 157 duty in brief

For directors who want the underlying legal text rather than a summary, the Companies Act 1967 in full can be read on Singapore Statutes Online, maintained by the Attorney-General’s Chambers. The commencement of the CALA 2025 penalty changes, including the increase discussed in this article, is confirmed in ACRA’s news announcement on the commencement of key CALA 2025 changes, and the broader legislative package can be reviewed on ACRA’s dedicated Corporate and Accounting Laws (Amendment) Act page. Directors and company secretaries who want to satisfy themselves of the precise wording, rather than relying on secondary commentary, should go directly to those sources.

Getting ahead of the change

The increase in the section 157 penalty is a signal, not just a number. ACRA has made clear that passive or careless directorship is now a materially riskier position to hold in Singapore, and that the courts have more room to impose a combined fine and custodial sentence where the conduct warrants it. For directors, particularly those holding multiple appointments or nominee roles, the practical response is the same regardless of how the number is framed: understand what section 157 actually requires, keep a genuine record of board-level diligence, and review whether every directorship you hold is one you are actively discharging.

Raffles Corporate Services works with directors and boards across Singapore to review governance practices, appointment structures and statutory filings in light of changes like this one. If you hold a directorship and are unsure whether your current practices would withstand scrutiny under the new penalty regime, get in touch with our team for a practical review.

The Editorial Team, Raffles Corporate Services