Non-executive directors ought to exercise discretion

THE long-running battle between Sakae Sushi and its former director Andy Ong has ended with a final judgment that there was "systemic abuse" by Mr Ong to misappropriate funds.

Any systemic abuse requires accomplices. The Sakae case is illuminating not only for how it uncovered Mr Ong's systemic abuse (against the court's brilliant analysis of the technical aspects of the law), but also for how it scrutinised his accomplices. Particularly interesting is how the court admonished Ho Yew Kong, a non-executive director (NED), for "unthinkingly" acting in accordance with Mr Ong's directions in signing business contracts on behalf of the company.

The notion that a director may act in accordance with the directions of another person has also featured in recent changes to the law. In 2017, a new section (386AL) was introduced in the Companies Act, to refer to such a director as a nominee and to compel disclosure of the person for whom he/she is a nominee.