Singapore laws recognise that an individual who is not formally appointed as a director of a company owes fiduciary duties to the company if he/she is considered a de facto director. This happens when that person undertakes the functions in relation to a company which can only be properly discharged by a director of the company. It is ultimately a question of fact whether a person is a de facto director of a company.
In the recent English High Court decision of Aston Risk Management v Jones and others [2023] EWHC 603 (Ch) (“Aston“), a director of a holding company was found to be a de facto director of its subsidiary and have the legal duties and liabilities of a director. In this instance, the de facto director held himself out as a director and was heavily involved in the day-to-day running of the subsidiary.
The Singapore courts have yet to have the opportunity to consider the circumstances where a director of a holding company may be a de facto director of its subsidiary. As the definition of “director” in the Singapore Companies Act 1967 is similar to the UK Companies Act 2006 in this regard, Aston provides useful guidance on this topic.
In this Update, taking reference from the principles expounded in Aston, we highlight the pitfalls that a director of a holding company should avoid so as not to be regarded as a de facto director of a subsidiary.
For more information, click here to read the full Legal Update.
