A recent Straits Times article described a situation that many Singapore directors would find uncomfortably familiar. A woman had lost her job and wished to move on. She had submitted her resignation from her director roles. But she could not actually leave. Because she was the only director ordinarily resident in Singapore across multiple companies, her resignations were legally invalid under the Companies Act. She remained a director in the eyes of the law, and with it, she retained the legal duties and personal liabilities that come with that role, even while drawing no income and having no control over the companies she was ostensibly still running.
This is not an unusual situation in Singapore's corporate landscape. It is a structural feature of how the Companies Act works, and it creates a specific and underappreciated exposure for anyone who holds multiple directorships, whether as an executive, a nominee, or a non-executive.
Why a director cannot always just resign
Under Section 145(1) of the Singapore Companies Act, every company must have at least one director who is ordinarily resident in Singapore. Ordinarily resident means a Singapore citizen, permanent resident, or holder of a valid pass with a local residential address.
Under Section 145(5), if a director's resignation would leave the company with no locally resident director, that resignation is deemed invalid. It does not matter that the director has submitted a written notice. It does not matter that the company has received it. The resignation has no legal effect until a replacement locally resident director is appointed and registered with ACRA.
For a director who holds just one directorship, this is manageable. The company needs to find a replacement before the director can leave, and the company has a direct commercial interest in doing so quickly.
For a director who holds multiple directorships, particularly across companies that are inactive, dormant, or whose shareholders are unresponsive, the problem compounds. Each company where the director is the sole locally resident director must separately appoint a replacement. If the companies are not cooperating, or if the shareholders cannot be reached, the director is trapped indefinitely.
What liability attaches while you are still a director
This is where the D&O insurance question becomes important. The director who is unable to resign is not simply holding a title with no consequence. They continue to carry the legal duties of a director under the Companies Act, and those duties do not pause because the director has lost their job, is no longer involved in operations, or has submitted a resignation letter that has not taken legal effect.
Under the Companies Act, directors owe a duty to act in good faith in the interests of the company, a duty to exercise reasonable care and diligence, a duty to avoid conflicts of interest, and a duty not to make improper use of their position or information. These are ongoing obligations. A director who has nominally resigned but remains legally in office can still be held liable for decisions made or actions taken by the company during the period before the resignation became legally effective.
From April 2026, the civil penalty for breaching director duties rose to S$20,000. The Companies Act also provides for criminal penalties for more serious breaches. A director who is stuck in a company they cannot exit, who has no visibility over what the company is doing, and who discovers months later that the company has been involved in regulatory breaches, fraudulent transactions, or has been struck off with unpaid liabilities, may face consequences they had no practical ability to prevent.
This is precisely the scenario that directors and officers (D&O) insurance is designed to address.
What D&O insurance covers in this situation
D&O insurance protects directors and officers from personal financial liability arising from claims made against them in their capacity as directors. The policy covers the legal costs of defending a claim and any damages or settlements awarded.
For a director who is unable to exit a company and then faces a claim, D&O cover responds in several ways.
Claims by regulators. ACRA, MAS, or MOM may investigate the company and find that duties were breached during a period when the director was technically still in office. D&O cover responds to the legal costs of engaging with regulatory investigations and defending the director's position.
Claims by creditors. If a company trades while insolvent during a period when the director had no practical ability to prevent it, a liquidator may pursue the director for wrongful trading. D&O cover provides a defence.
Claims by shareholders. A minority shareholder who alleges that a director's failure to act caused the company harm can bring a derivative action against the director personally. D&O cover responds to the costs of defending that action.
Claims arising from the company being struck off. ACRA struck off 6,143 companies in the February 2025 Final Gazette alone. Directors linked to three or more struck-off companies within five years face an automatic five-year ban from holding any directorship under Section 155A of the Companies Act. A director who cannot resign from multiple companies and finds those companies struck off may face disqualification despite having had no operational involvement.
The multiple directorship problem in Singapore
Singapore has a significant number of foreign-owned companies that are required to have a locally resident director to meet the Section 145(1) requirement. Many of these companies use nominee resident directors, which is a legitimate arrangement. Others have an employee, a founder's family member, or a trusted contact serving as the local director.
When the relationship between the company and the resident director breaks down, when the employment ends, when the personal relationship changes, or when the individual simply wishes to move on, the exit can become complicated. The company may be unresponsive. The shareholders may be overseas and difficult to reach. The corporate secretarial firm may have ceased acting. The director finds themselves in exactly the position the Straits Times article describes: legally on the hook for a company they have no connection to and no ability to control.
This is not a hypothetical risk. It is a structural risk that any Singapore-based professional who has held multiple directorships, particularly in foreign-owned companies, nominee arrangements, or startups with overseas founders, is exposed to.
What directors should do before the problem arises
The most effective protection against this scenario is structural, not just insurance. Before accepting any directorship, a director should confirm that the company has (or will have) at least one other locally resident director, so that any future resignation is not subject to the Section 145(5) trap. This is not always possible, but knowing the risk before accepting the role is better than discovering it on the way out.
For directors who already hold multiple directorships, a periodic review of which companies have succession in place for their local director obligation is worth conducting.
For companies that rely on a sole locally resident director, preparing for succession before the need arises, whether through an additional appointed director or a properly structured nominee arrangement, avoids the situation where a director's resignation is held invalid indefinitely.
D&O insurance does not prevent the directorship trap. What it does is ensure that if the trap springs, and a claim or regulatory action follows, the director has financial protection and the legal resources to respond. Without it, the director who cannot resign faces both the liability and the legal costs of defending it from their own pocket.
You can read more about our D&O cover on the products page and about the broader landscape of director duties and personal liability in Singapore in our post on Director Penalties in Singapore 2026.
This article provides general information only. It is not insurance advice or legal advice. Please verify current Companies Act requirements with a qualified legal adviser. Policy availability, terms, conditions, and exclusions vary by insurer and product, and cover is subject to the full policy wording. Please contact TZY CO for advice on your specific situation.