Ho Kang Peng v Scintronix Corp Ltd

Ho Kang Peng v Scintronix Corp Ltd (2014) concerns the scope of a director's statutory duty under s 157 of the Companies Act to act bona fide in the interests of the company. The Court of Appeal considered whether unauthorised payments made by directors constituted a breach of this fiduciary duty, clarifying the test for good faith and the consequences of such breaches.

The appellant director made certain payments on behalf of the company without proper authorisation. The company subsequently sought to recover these sums, alleging breach of fiduciary duty under s 157 of the Companies Act.

Whether the director breached his statutory duty under s 157 to act honestly and use reasonable diligence in the discharge of his duties by making unauthorised payments.

The Court of Appeal held that the director breached his duty under s 157 by making unauthorised payments that were not in the company's interests. Directors must act bona fide in what they consider to be the company's interests, not their own or a third party's.

A director acts in breach of the s 157 duty to act bona fide in the company's interests when making payments without proper authorisation and without genuine belief that such payments serve the company's benefit. The test is subjective (what the director honestly believed) but subject to objective review where the court finds the belief was not genuinely held.

The court examined the nature of the payments and the circumstances in which they were made. It applied established principles that directors must act honestly in what they consider to be the company's interests, not their own interests or those of third parties. The court found that the unauthorised nature of the payments and lack of corporate justification demonstrated breach of fiduciary duty.

This case is a leading Singapore authority on directors' duties under s 157 of the Companies Act, particularly regarding unauthorised payments. It demonstrates how courts scrutinise whether directors genuinely acted in the company's interests and reinforces that unauthorised disbursements typically constitute breach of fiduciary duty.

Ho Kang Peng v Scintronix Corp Ltd [2014] 3 SLR 329 (CA)