Duty for directors to avoid insolvent trading in Singapore : a proposition

Current statutory duties in Singapore are inadequate when it comes to managing corporate risk, in particular company directors' practice of avoiding insolvent trading. At present, directors are only obliged to cease incurring debts when they expect that the company will become insolvent as a result of the debt being incurred. Moreover, criminal conviction against directors trading whilst insolvent is a prerequisite for civil action by creditors to recover debt owing. This article proposes that by adapting Australia's statutory provisions in the Singapore setting will promote better risk management and enhance accountability, thereby creating a more sustainable entrepreneurialism in Singapore. According to media reports a new insolvency Bill is expected, therefore a shift in policy thinking should be considered.