From 6 May 2026, the maximum fine for breaching director duties under Singapore's Companies Act quadrupled, from S$5,000 to S$20,000. For serious offences, imprisonment of up to 12 months may also apply. These are personal penalties. They sit on the individual director, not the company.
For most founders running a Singapore SME, the line between being a director, a shareholder and the day-to-day manager is often invisible. You make the decisions, you sign the documents, you handle the operations. That overlap is exactly what the new framework is designed to reach.
The Corporate and Accounting Laws (Amendment) Act 2025, passed by Parliament on 5 November 2025, commenced its first tranche of provisions on 6 May 2026. The headline shift for founder-directors is straightforward: heavier personal penalties for breach of director duties.
For a founder or board member, the only practical question is whether the cover you hold actually responds, and from what point.
What do the new penalties look like?
The maximum fine for breaches of fundamental director duties has risen from S$5,000 to S$20,000. Serious offences may attract both a fine and imprisonment of up to 12 months, and for nominee director breaches and anti-money-laundering failings, fines can reach S$100,000.
The duties themselves have not changed in substance. Directors are still required to act in the company's best interests, exercise reasonable diligence, avoid conflicts of interest and ensure proper statutory filings. What has changed is the consequence of falling short.
Why does this matter more for SMEs than it appears?
In the SME setting, governance can quietly drift. A filing is made late because the director was travelling. A related-party transaction goes through without formal documentation because everyone already knew about it. A loan is taken from a friend without proper disclosure. Each of these looks small on its own. Under the new framework, each can become a personal liability for the director who signed off, or who should have asked the question.
ACRA's position is also clear that delegation does not shift the duty. If your corporate secretary, accountant or tax agent makes a filing mistake on your behalf, you as director remain accountable. Reasonable diligence includes reviewing what is being filed in your name.
Does a Directors and Officers (D&O) policy cover the new penalties?
Directors and Officers (D&O) Liability insurance is built precisely for this kind of personal exposure. A properly structured D&O policy responds to defence costs when a director is investigated, sued or charged. It covers personal liability arising from alleged breaches of duty where the company cannot or will not indemnify, regulatory enquiries from bodies such as ACRA, MAS, MOM or IRAS, and claims from shareholders, creditors or other stakeholders.
For SMEs, defence costs are often the most useful element. Even when a director is ultimately found to have acted correctly, the cost of reaching that conclusion can be substantial. D&O cover meets those costs from the moment a notice is received, not only after liability is established.
What should you review now?
Start with your filing calendar, and confirm it covers every ACRA, IRAS and MOM deadline with named responsibility for each. Then read through your existing D&O policy and check the limit, the definition of "insured persons," and whether regulatory enquiry costs are included. If you do not hold D&O cover at all, this is a reasonable moment to consider whether the exposure warrants it.
Where does this leave a well-run business?
The new penalties are not designed to catch out well-run businesses. They are designed to raise the floor of governance across Singapore companies. For founders who have been diligent, the practical change is small. For those who have treated compliance as a year-end administrative task, it is significant.
Against a personal exposure that now reaches a S$20,000 fine and, in serious cases, twelve months' imprisonment, the practical question is whether the cover you hold actually responds and from what point. Reading the policy against your real exposure and structuring it so defence costs are met from the first notice are the kinds of reviews we are glad to work through with you.
You may also find our guides to Association Liability Insurance in Singapore and Professional Indemnity Insurance in Singapore useful, since both deal with personal and professional exposure.
This article provides general information only. It is not insurance advice. 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.