Directors' Fiduciary Duties (Singaporean Companies Act)

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director.”
This is the definition of the phrase “to act honestly” in the context of s. 157, established in the Victorian case of Marchesi v. Barnes & Keogh . The courts allow the director absolute discretion in determining what the best interests of the company are, interfering only if no reasonable director could have believed that the specific course of action in question was in the best interests of the company. This is because it is an elementary principle of law that the Court will not interfere with the internal management of com-panies acting within the director’s powers, and in fact has no jurisdiction to do so .
However, a director can act honestly but not in the best interests of the company. This situation arose in Re W & M Roith Ltd. . Roith was a director of a so-called “one-man-company”, owning the majority of the shares and being one of three directors. He set up a contract between himself and the company to ensure that the company would pay a pension to his wife if he died. Notwithstanding his praiseworthy motive, Roith was in breach of his duty to act in the best interest of the company.
One can infer from this, that a generally honest motive is not sufficient to fulfil this particular duty. Rather, the director has to act in what he honestly believes to be in the best interest of the company.

(2) Duty to exercise powers for a proper purpose
As a general doctrine, it was established by Lord Northington in Aleyn v Belchier : “No point is better established that, a person having a power must execute it bona fide for the end designed, otherwise it is corrupt and void.”
This means, therefore, that a director must employ the powers and assets that he is entrusted with for the proper purpose and not for any collateral purpose. Therefore, the powers conferred on him by the Arti-cles of Association cannot be exercised in order to obtain some private advantage, or for any purpose not within the scope o...