Fiduciary Duties in Singapore & When to Consider Litigation

It is not uncommon to hear of company directors, or others placed in a position of power, who breach fiduciary duties by abusing their authority for personal gain. When that happens, the company can suffer real losses, and shareholders can watch their investments shrink as a result.

Breach of fiduciary duties can cause the company to suffer losses, and in these circumstances, legal action may be considered to seek remedies or damages from the fiduciary. This guide sets out who owes fiduciary duties in Singapore, how a breach is proven, and what a claim can recover.

Who is a fiduciary?

In essence, a fiduciary is an individual who has discretionary power to act on behalf of other persons or entities, referred to as the principal. It is important to note that a fiduciary is legally and ethically bound to act in the principal’s interest.

Fiduciaries are commonly associated with company directors, investment fund managers, trustees, estate administrators, doctors and lawyers. Any individual placed in a position of trust and authority over someone else’s affairs could be a fiduciary.

Core Fiduciary Duties in Singapore

Fiduciary duties mainly include acting in good faith, avoiding conflicts of interest, not profiting from the fiduciary position, and executing the role with utmost skill and care.

Acting in Good Faith

The fiduciary must always act honestly and with fidelity to the principal. All information relevant to the relationship must be disclosed truthfully and clearly, and the fiduciary must be fair, reasonable and objective when making decisions in the principal’s interest.

Avoiding Conflicts of Interest

As a relationship built on trust and empowerment, a fiduciary must actively avoid conflicts of interest. For example, a director should not be working for a direct competitor of the company while still serving on its board.

Not Profiting From the Fiduciary Position

Fiduciaries have access to the principal’s assets and can exercise freedom to make decisions on the principal’s behalf, but they must never abuse that authority for personal benefit. A fiduciary must not, for instance, favour a supplier or business partner in which they hold a personal stake.

Executing With Utmost Skill and Care

A fiduciary must discharge their duties with due diligence and effort. As part of protecting the principal’s interest, the fiduciary must also ensure their actions comply with regulatory requirements, including the statutory duties laid down in the Companies Act.

Fiduciary Duties of Company Directors in Singapore

Company directors carry a heavier load than most fiduciaries because they owe two families of duty at once: fiduciary duties rooted in case law, and statutory duties set out directly in the Companies Act. A director who satisfies one set but breaches the other is still in breach.

Statutory Duties Under Section 157

Section 157 of the Companies Act requires every director to act honestly and use reasonable diligence in the discharge of their duties. This sits alongside, not instead of, the fiduciary duties owed under common law.

Under the Companies (Amendment) Act 2025, which took effect on 6 May 2026, the maximum fine for breaching Section 157 quadrupled from S$5,000 to S$20,000, with an imprisonment term of up to 12 months also available. The clear signal from ACRA is that passive directorship is no longer treated as a defence.

The Creditor Duty When a Company Is Insolvent

Where a company becomes insolvent or financially parlous, a director’s fiduciary duty does not disappear, but its weighting shifts. Critically, the court confirmed that even the shareholders of the company cannot authorise or ratify a breach of this creditor-facing duty, since it exists to protect a class of stakeholders the shareholders do not represent.

Breach of Fiduciary Duty vs Negligence

Claimants sometimes struggle to work out whether their situation is really a breach of fiduciary duty or a negligence claim, because the underlying facts can look similar on the surface. The two causes of action are judged differently and open up different remedies, so it helps to compare them side by side.

Common Ways Fiduciary Duties Are Breached in Singapore

Breach of fiduciary duty can happen in several ways, and this list is not exhaustive:

• Choosing a third-party vendor based on personal preference rather than objective grounds
• Misusing assets belonging to the principal to generate personal profit
• Taking away a business opportunity that was intended for the principal
• Engaging in insider trading
• Misrepresenting or withholding essential information, such as a potential conflict of interest
• Disclosing the principal’s confidential information without authorisation

When Should You Consider Litigation

Litigation should be considered when the principal can prove that their interests have been compromised due to the negligence or disloyalty of the fiduciary. Suspecting a breach is not enough on its own, which is why the elements below need to be established before a claim is worth pursuing.

Elements to Prove a Breach of Fiduciary Duty

It is insufficient to merely suspect a breach. As the plaintiff, you also cannot succeed by claiming that your interests might be adversely affected in future. It is often difficult for a principal to gather this evidence alone, which is why hiring an experienced lawyer to piece together the missing information matters.

1. Duty

A lawyer must first demonstrate that a fiduciary duty existed. This can involve substantial investigation depending on the circumstances. If your fiduciary signed a written contract with you, for example, your lawyer must be able to show through that contract that the fiduciary was legally bound to you.

2. Breach

You must have actual evidence that a breach occurred, since suspicion alone is inadequate. If you are a shareholder whose investment was severely reduced, for instance, your lawyer must show that this was due to the director’s failure to disclose crucial information.

3. Damage

You must show proof of loss or damage in addition to the breach itself. No claim can succeed without actual damage having been incurred.

4. Causation

There must be a demonstrable link between the breach and the damage suffered. Whether the loss was caused directly or indirectly by the fiduciary, your lawyer must be able to attribute it to their actions or negligence.

Limitation Period for Suing

Most civil claims in Singapore, including many breach of fiduciary duty claims, must be brought within 6 years of when the cause of action accrued, under Section 6 of the Limitation Act 1959. Because a fiduciary is treated in law as analogous to a trustee, Section 22 of the same Act governs claims against a fiduciary more specifically.

Section 22(2) applies the same 6-year period to most breach of trust and breach of fiduciary duty claims. However, Section 22(1) removes the time limit entirely for two categories of claim: where the breach involved fraud or a fraudulent breach to which the fiduciary was party, or where the claim seeks to recover trust property still in the fiduciary’s possession or converted to their own use.

Weighing the Cost of Litigation

Litigation can be expensive and time-consuming. In some cases, your lawyer will advise against bringing a matter to court if the claim amount is smaller than the legal costs involved. It is also worth confirming whether the other party has sufficient assets to satisfy a judgment before you commit to proceedings.

Before pursuing litigation, it is typically worth exploring other options such as negotiation and mediation for a faster and more affordable resolution.

Director’s Indemnity and Insurance

Directors sometimes ask whether they can simply be indemnified against a fiduciary duty claim in advance. Under Section 172 of the Companies Act, any provision in a company’s constitution, a contract, or otherwise, that purports to indemnify a director against liability for their own negligence, default, breach of duty or breach of trust to the company is void. A company cannot contract its way out of a director’s accountability to it.

That said, the law does allow two practical forms of protection. Under Section 172A, a company may purchase and maintain directors’ and officers’ liability insurance to cover a director against such liability. Under Section 172B, a company may indemnify a director against liability incurred to third parties, and against defence costs where the director is acquitted or succeeds in the proceedings.

This is why most Singapore companies pair their constitutional indemnity provisions with a D&O insurance policy rather than relying on indemnity wording alone.

Remedies for Breach of Fiduciary Duty

If you are confident about proving your case, you could claim damages in the form of money, income, property or other loss, depending on the specifics of the case. Outside of damages, the following remedies are also available in Singapore:

• Rescission of a contract that involves a breach of fiduciary duty
• Equitable compensation payable by the fiduciary to the beneficiary
• An account of the ill-gotten profits payable by the fiduciary to the beneficiary
• Proprietary remedies, such as transferring the title of an ill-gotten property from the fiduciary to the beneficiary
• Injunctions or specific performance that stop the fiduciary from committing a breach

Get Legal Advice From RBN Chambers on a Fiduciary Duty Claim

Breach of fiduciary duty cases require substantial time and expertise to prove, from establishing that a duty existed through to tracing the loss it caused. Ramesh Bharani Nagaratnam and the RBN Chambers team regularly advise both principals pursuing a claim and directors defending one, and can help you assess whether litigation, mediation, or negotiation is the right path for your situation.

If your interests have been compromised and you are uncertain whether to proceed with litigation, contact RBN Chambers for a consultation with Ramesh Bharani Nagaratnam and the team.

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