High Court toughens penalties for negligent directors in landmark ruling

The judges also set out three sentencing frameworks.

The Singapore High Court has imposed a custodial sentence on a director who failed to exercise reasonable diligence, marking a departure from previous sentencing norms.

In the case of Public Prosecutor v Zheng Jia [2025] SGHC 76, the court allowed the prosecution's appeal against the initial sentence of fines totalling $8,500. Chief Justice Sundaresh Menon, along with Justices Tay Yong Kwang and Vincent Hoong, replaced the fines with an aggregate custodial sentence of ten months' imprisonment.

The respondent, Mr. Zheng Jia, a chartered accountant, operated a business that incorporated companies in Singapore for foreign clients, primarily from China. He appointed himself and others as resident directors but failed to oversee the companies' activities. This lack of oversight allowed the companies to be used for illicit activities, including the laundering of proceeds from overseas scams.

The High Court emphasised that such offences involve a uniform type of harm: providing a corporate structure susceptible to abuse. The court outlined a new three-step sentencing framework focusing on offence-specific factors, including the extent of due diligence, duration of offending, and whether the conduct was part of a profit-driven scheme.

The judges also set out a three-step sentencing framework. The first of which is to identify all the relevant offence-specific factors. The judges set out a non-exhaustive list of factors that the court may consider in relation to offences of the kind with which this appeal was concerned such as:

• the extent of due diligence undertaken by the director in relation to the activities of the company and/or the client;
• efforts made by the director to monitor or review transactions in the company’s bank account(s);
• the extent to the which the director knew – or should have known – that failing to exercise reasonable diligence in overseeing the affairs of the company could (or even would) enable abuse of the corporate structure by others;
• the duration of offending (and in particular, whether the offending conduct was a one-off breach or part of a wider pattern);
• whether the offending conduct was pursued as part of a business or other profit-driven scheme (and if so, the extent of the profits derived from or attributable to the offending conduct);
• whether the director made any efforts at concealing his wrongdoing;
• whether there was a transnational element to the offence (such as the involvement of cross-border criminal syndicates); and
• the nature and extent of the harm that resulted to the company and/or third parties.

The judges also set out three sentencing bands for offences:

• Four months imprisonment for 1-3 factors
• Five to eight months imprisonment for 5-8 factors
• Nine to twelve months imprisonment for 6 factors and up.

The third step will see the indicative sentence adjusted based on offender-specific factors relevant to the case. This could include matters such as:

• other offences taken in consideration for the purposes of sentencing;
• the offender’s relevant antecedents;
• remorse (or the lack thereof) on the offender’s part;
• whether the offender entered into a timeous plea of guilt;
• the extent of voluntary restitution made by the offender; and
• whether the offender voluntarily cooperated with the authorities in the course of investigations into the offence.