Punishment and protection - The disqualification of directors in Singapore

• Main Author: KOH, Pearlie M. C.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2013
• Subjects: Commercial Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/1916; https://ink.library.smu.edu.sg/context/sol_research/article/3868/viewcontent/SSRN_id2414233.pdf
• Institution: Singapore Management University

The ability to operate behind the shield of the corporate form, thereby benefiting from limited liability, is thought to be a privilege conferred by statute. This privilege is however, curtailed for certain individuals who are “proven misfits”. The removal, by disqualification, of these individuals from corporate management is intended to protect the shareholders and creditors of the companies concerned from the possibility of future instances of undesirable conduct by these same individuals. Thus, the Companies Act of Singapore provides for disqualification from holding directorships or from management of a company on a number of grounds. Disqualification may be automatic or dependent on a court making a disqualification order. There is also recognition that disqualification is punitive. Indeed, the effect of a disqualification, given its “substantial interference with the freedom of the individual”, is at least quasi-penal.