Singapore: Disqualification of an independent director on the ground of failure to exercise reasonable diligence in the discharge of his duties

Last Updated: 8 February 2012
Article by Jose Tejada, Soo Ling See Tow and Lisa Theng
Most Read Contributor in Singapore, September 2019

Ong Chow Hong (alias Ong Chaw Ping) v Public Prosecutor and another appeal [2011] SGHC 93


The appellant Ong Chow Hong ("the Appellant"), a non-executive Chairman and an independent director of a listed company Airocean, was charged and convicted under section 157(1) of the Companies Act ("the Act") of failing to exercise reasonable diligence in the discharge of the duties of his office. The District Court in PP v Ong Chow Hong [2009] SGDC 387 imposed a fine of $4,000 (in default 4 weeks imprisonment) and disqualified under section 154(2) of the Act from acting as a director of a company or of a foreign company and from taking part, whether directly or indirectly, in the management of such a company or foreign company for a period of 1 year.

On appeal to the High Court, in Ong Chow Hong (alias Ong Chaw Ping) v Public Prosecutor and another appeal [2011] SGHC 93, per VK Rajah JA, the disqualification penalty was increased to 2 years upon a finding that the Appellant committed a serious lapse in the discharge of his responsibilities as such director.

Background Facts

On 6 September 2005, Airocean's CEO Thomas Tay ("Tay") was picked up by officers from the Corrupt Practices Investigation Bureau ("CPIB") for questioning upon allegations of corruption involving Airocean and 2 other companies in the air cargo industry. Upon CPIB's instructions, Tay gave instructions to his office staff to prepare certain documents concerning the corruption allegations. Tay was detained for 36 hours and while he was released on 7 September 2005, and his passport was impounded.

The other directors of Airocean convened an urgent board meeting to discuss the company's course of action given the CPIB matter. Peter Madhavan, a lawyer, was an independent director of Airocean and was present during the board meeting on 8 September 2005.

The High Court noted that the minutes of the meeting showed that the board of Airocean was informed of the following:

  1. on 6 September 2005 at about 7.00am, CPIB officers had called upon Thomas Tay to assist the CPIB in an ongoing invesgation;
  2. CPIB had requested for and obtained from Airocean all e-mails of Thomas Tay from 1 January 2005 to 6 September 2005;
  3. Thomas Tay had asked for certain documents relating to the corruption allegations;
  4. Thomas Tay's passport was impounded by CPIB;
  5. Thomas Tay was questioned for 36 hours by CPIB;
  6. Thomas Tay was questioned on whether he had offered any gratification to the staff of some companies in the airline industry;
  7. Thomas Tay had sought his own legal advice on the CPIB investigation; and
  8. Thomas Tay's counsel was of the opinion that the worst-case scenario was that Thomas Tay might be exposed to a criminal charge of offering gratification.

While it was not recorded in the minutes, the High Court further found that Tay informed the board that he was released on bail.

The board resolved that for the time being, nothing further needed to be done.

Subsequently, on 25 November 2005, the Strait Times published the article entitled "Airocean's chief executive Thomas Tay under CPIB probe" ("the Article"). Notably, Tay was quoted in the Article as saying that he was not the subject of a CPIB investigation. On the same day, the Singapore Exchange Limited ("SGX") required Airocean to explain why CPIB probe of Tay was not disclosed to the public and to further confirm whether or not Tay was indeed the subject of said investigation. Upon suggestion of SGX, a trading halt was imposed upon Airocean shares and in the meantime, company secretary Ms Ang Lay Hua ("Ang"), the board of Airocean was informed of the SGX's request to make a clarificatory statement in response to the Article.

Ang informed the Appellant via a telephone call of these developments and upon such information, the Appellant informed Ms Ang Ong Chow Hong (alias Ong Chaw Ping) v Public Prosecutor and another appeal [2011] SGHC 93 ISSUE 11/03 Page 2 that "he would agree to any announcement issued by [Airocean] if [Madhavan] approved of it. [The Appellant] said that that was because he was going to play golf that day". During trial, the Appellant also tried to explain that the "golfing event he attended was not a mere social affair." The golf tournament was organized by the Aljunied Town Council of which the Appellant was Chairman of the Audit Committee and the Appellant played a prominent role in the said golfing event. The announcement was released without any comments or input from the Appellant.1


The 3 principal issues on appeal were the following: (a) whether Chow Hong's lapse of judgement was serious enough to warrant disqualification; (b) the length of the disqualification to be imposed on Chow Hong; and, (c) whether the objective of the law is to protect the public, to punish the offender, or a combination of both.


Protective or punitive

In first assessing issue in (c) above, VK Rajah, after reviewing local jurisprudence (Quek Leng Chye and another v Attorney-General [1985– 1986] SLR(R) 282, Huang Sheng Chang and others v Attorney-General [1983–1984] SLR(R) 182, Lim Teck Cheng v Attorney-General [1995] 3 SLR(R) 223 and Lee Huay Kok v AttorneyGeneral [2001] 3 SLR(R) 287) and the statutory structure of the disqualification under the Act, held that such disqualification regime is predominantly protective in nature, rather than punitive. This means that a court, as a rule, disqualifies a convicted person from sitting as a director in a company, more to protect the public and not so much to punish the offender.

The "shield of protection" according to VK Rajah has 2 sides to it: (1) specific protection: the right of the public to be protected from an individual who has failed to discharge his obligations qua director; and, (2) general protection: "the need to generally protect the public from all errant directors by an uncompromising reaffirmation of the expected exemplary standards of corporate governance."

While existing case law on the matter of disqualification remained largely focused on the first side or aspect of the "shield of protection", VK Rajah noted that the second side or aspect of protection is even more significant as there is a need for the courts "to ensure the accuracy of market disclosures" (see Singapore Parliamentary Debates, Official Report (5 October 2001) vol 73 at col 2135 (BG Lee Hsien Loong, Deputy Prime Minister and Public Prosecutor v Wang Ziyi Able [2008] 2 SLR(R) 1082). VK Rajah stated that in resolving disqualification issues, these 2 aspects of protection must be considered closely.

Failure to discharge responsibilities of a director

As for (a) and (b), the VK Rajah did not accept that the Appellant failed to fully comprehend the seriousness of the situation in Airocean relating to the CPIB investigation which involved Tay. More interestingly, the Court found that if indeed, the Appellant failed to recognize the gravity of the situation within Airocean despite having been informed of the facts, then the Court has all the reasons to bar him from directorships in companies "where perceptive judgments are fundamental."

VK Rajah further ruled that the Appellant failed to vet and approve the draft of a rather short announcement, despite opportunity to do so and more importantly, despite knowledge of the exigent circumstances then prevailing, i.e. that Tay was under CPIB investigation for corruption. VK Rajah further found that the Appellant failed in his obligation to comprehend the urgency of the SGX request for clarification of the Article and the need to accurately and promptly respond to such a query.

Finally, VK Rajah ruled that the Appellant was "either indifferent to his wider responsibilities or failed to appreciate them" and "had committed nothing short of a serious lapse in entirely abdicating his corporate responsibilities" when he delegated his responsibilities to Peter Madhavan. The High Court concluded that directors of listed companies in Singapore have to appreciate that our present disclosure based regime requires accurate and prompt disclosure to function effectively. It would never be sufficient or acceptable for a director to say that he expected his co-directors to do "right" by the company. Every director has to ensure that he discharges his responsibilities with due diligence in all pertinent matters. Therefore, any reliance on professionals or any reliance placed on "specialised" directors must be balanced against the responsibility that the law placed upon every individual director to bring to bear their own judgment in evaluating the advice received. Directors cannot adopt a silo approach and invariably seek shelter behind other "specialised" directors on the notion of reliance. How this responsibility ought to be discharged in any particular case would be a question of fact.

As a result of such findings of fact, VK Rajah found that the one-year disqualification imposed was inadequate and increased the same to 2 years while ruling that "the courts will not be slow to disqualify directors for substantial periods of time if and when it is established that there have been serious lapses in the discharge of their responsibilities."


There are 3 important lessons to be learned from this case:

First, a director cannot delegate his responsibilities to another director. In the case of the Appellant, the High Court disapproved of his statement that if Peter Madhavan approved of the course of action about to be taken by the listed company or approved of the announcement as drafted, he was likewise agreeable to such course of action or to such announcement as drafted. The High Court in effect found that such a statement or act amounted to an abdication of the Appellant's corporate responsibilities, which would amount to a criminal offence under the Act or a violation of a director's "solemn and non-delegable duty of due diligence to ensure compliance with market rules and practices."

Second, a director is required to have a clear and comprehensive understanding of the pressing matters or important issues confronting the company and to have the capacity to recognize and appreciate whether these matters should be disclosed. Once disclosure of such issues or matters is settled, a director is also required to have the capacity to make an accurate and prompt disclosure to the SGX.

Third, a director is mandated to consider closely the draft of the announcement before it is released. Put simply, a director is required to vet and approve every announcement before it is released to the SGX. That the Appellant had no time to review the announcement as he was at that time, engaged in some other activity, was not looked upon with much favor by the High Court. A director is required "to take a proactive involvement in the release of the announcement."


1In a separate case against the other directors Peter Madhavan, Johnson Chong and Ong Seow Yong, the District Court found that the announcement was misleading in a material particular: Public Prosecutor v Chong Keng Ban @ Johnson Chong (B1) and others [2011] SGDC 97.

This update is provided to you for general information and should not be relied upon as legal advice.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions