SINGAPORE’S State Court has fined the director of a corporate service provider (CSP) S$6,500 for misuse of identity in the appointment of a director for three companies.
Li Baozhu, Corp Nergy’s sole director, failed to exercise reasonable diligence in the discharge of her duties under the Companies Act, said the Accounting and Corporate Regulatory Authority (Acra) on Friday (Apr 5).
She did not take steps to confirm that consent had been sought prior to the incorporation of the companies, which resulted in a wrong declaration to Acra. She had instead relied on a third party to obtain consent from a certain local resident individual to become the director in the companies.
CSPs are able to form corporations on behalf of other persons and act or arrange for persons to act as directors. Under the Companies Act, all Singapore-registered companies must have at least one local resident director.
The fine imposed on Li comes half a year after Acra cancelled her registration as a registered qualified individual, and Corp Nergy’s registration as a registered fling agent. This means she can no longer operate as a CSP.
The regulator said: “Acra takes a serious view on the misuse of identities for the appointment of directors. CSPs which breach their obligations, whether negligently or otherwise, may face regulatory sanctions, which include having their registrations cancelled.”
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It added that directors of CSPs may also be prosecuted for not exercising reasonable diligence. The offence could result in a maximum fine of S$5,000, or a prison term of up to 12 months.
Stricter regulations for CSPs are in the pipeline. In March, the Ministry of Finance and Acra launched a public consultation on a proposed new Bill aimed at enhancing the industry’s regulatory framework.
Key proposals include requiring all business entities providing corporate services in and from Singapore to register with Acra, and combating the misuse of nominee directorship arrangements by barring individuals from acting as nominee directors unless their appointments have been arranged by registered CSPs.
CSPs could also face up to S$100,000 in fines for each instance they fail to meet their anti-money laundering obligations.
