The High Court has enacted a stricter sentencing system for” silent” managers who are paid to not have control over the businesses they incorporate in Singapore.
Prison will now be the presumed sentence for crimes of this nature, and the director will now be required to justify why this shouldn’t be the case.
In a written decision dated April 24, Chief Justice Sundaresh Menon, Justice Tay Yong Kwang, and Justice Vincent Hoong laid out the new punishment model.
The judges were hearing on Zheng Jia, a director of a company ,’s appeal against an S$ 8,500 ( US$ 6,600 ) fine.
Instead of imposing a 10-month sentence in prison, they accepted the charm and sentenced the applicant to a stronger penalty.
According to the view, Zheng was a” motionless” producer who had incorporated or been registered as a producer of 384 businesses.
He launched a company in Shenzhen in 2019 for Chinese clients looking to use businesses in Singapore, charging between S$ 1, 000 and S$ 1, 400 per year.
Zheng had set up bank accounts in the companies ‘ titles and become the company’s native director there. He had no control over the affairs of the firms and was ignorant of their interests.
The company was so profitable that Er Beng Hwa, a different person, was hired to assist him with the volume of work. Er assisted in the opening of bank accounts for 186 businesses as a candidate producer.
More than US$ 2.4 million in con revenues from four international victims were routed through the banks records of two Zheng and Er companies in 2020.
Zheng admitted guilt last year and was fined for assisting Er in carrying out his duties as a producer and using fair dedication to do so.
Additionally, he was prohibited from serving as a producer or participating in any business management for five years.
The High Court courts noted that the commitment to exercise fair devotion as a producer is large and can be violated in “any number of ways.”
They noted that in Zheng’s case,” the offender is a professional certified accountant whose business model was predicated on his being a geographically native nominee director of many companies designed for overseas clients, but who would then have no control over the affairs of those companies either.”
There is “precisely no similarity between like a director and another who is involved in a company’s or group’s interests but makes a careless problem in the release of his responsibilities,” they said.
In fact, Zheng’s “high volume, lower energy sector and fuelled its growth” was the” concerted failure of his primary duty” as a director, according to the judges.
Zheng “every intention to abuse” his work right away, and this is what made his solutions “attractive” to the customers whose criminal activities he enabled, they add.
In this context, the judges disagreed with the current sentencing system, which states that protecting Singapore’s business environment may weigh against imposing imprisonment where a director acts “intentionally, deliberately or dangerously.”
This is a far too large of a speech, and it ignores the fundamental distinctions between a director who offers a special type of director that requires a focus on the company’s affairs and one who is committed to the company’s best interests but makes a error in the course of carrying out his duties.
The judges remarked that directors who take on their positions with the sole intention of abdicating their duties “present serious risks to their businesses in particular and Singapore’s corporate and financial ecosystem in general, and they are acting intentionally, if not intentionally.”
A non-exhaustive list of factors that the court may take into account when determining sentencing a violation of Section 157 ( 1 ) of the Companies Act is provided.
- The director’s level of due diligence in relation to the company’s actions and/or clients
- the producer made efforts to keep track of the bank’s activities.
- The chairman was aware or ought to have known that failing to manage the company affairs could or would lead to abuse.
- Duration of the insulting offense
- whether the offense was committed as a result of a business venture or other profit-driven system
- whether the chairman attempted to conceal misconduct
- whether the crime had a multinational component.
- Harm brought on by the crime
Therefore, based on the number of factors present, they issued three updated bands as punishment guidelines:
- For one to three elements, up to four months in jail.
- For four to five elements, five to eight weeks, and probation
- For six or more components, nine to twelve months, and jail time.
According to the judges, this would give the jury an suggestive sentence that could be changed based on offender-specific factors like remorse and assistance with authorities.