172B. Third party indemnity

Question 1

172B. Third party indemnity

Answer 1

Third-party liability
[172B.04] The term “in relation to the company” in s 172(2) has been interpreted in practice to also prohibit indemnities by companies against actions by third parties against directors. This has been changed by the new s 172B where a company can indemnify the officer for any liability incurred by him to a third party other than the company. This is necessary because in view of Singapore’s position as a global financial centre, directors may, in exceptional circumstances, be sued by shareholders, as is seen in the frequent class actions by groups of shareholders in the US: see the Report of the Steering Committee for Review of the Companies Act, April 2011, Chapter 1, paras 156–165. Note: a former president of the Singapore Swimming Club, an unincorporated association, who was found liable for making two defamatory statements against four other members of the club out of malice, was not able to claim against an indemnity passed in a resolution by the club’s management committee stating that “the Club would assume liability arising from any legal action brought against members of the management committee as a result of their discharge of duties and responsibilities to the Club”: Singapore Swimming Club v Koh Sin Chong Freddie [2016] 3 SLR 845; [2016] SGCA 28, CA.