FreshBooks Review 2020: Online Accounting for Small Business

freshbooks review

FreshBooks Review: Online Accounting for Small Business

FreshBooks has become known as the web-based accounting choice for freelancers, sole proprietorships, and small startups. Its popularity has also attracted a rapidly growing base of small-medium enterprises (SMEs). FreshBooks is the best choice for sole proprietors, freelancers, and small businesses with <$1 million in annual revenue. FreshBooks boasts an incredibly intuitive interface and its intelligent host of features that easily meets the needs of the smallest businesses.

Here’s a summary of the different plans FreshBook offers:

FreshBooks Pricing Overview
Plan Number of Billable Customers Price
Lite 5 USD 7.50/month
Plus 50 USD 12.50/month
Premium 500 USD 25.00/month
Select >500 Custom Pricing


FreshBook’s software is clearly priced to move. You enjoy a 10% discount if you sign up for an annual subscription, and you can enjoy a 30-day free trial at any tier, too. FreshBooks costs more than free accounting alternatives like Wave, buts its sheer ease of use and rich-functions make it worthwhile for business owners.

FreshBooks’ UI: Intuitive and Simple

Setting up FreshBooks is easy. It’s a quick 3-step process: you enter details about your business, select your invoice style (logo, background colour, fonts), and then you’ll send a test invoice to make sure everything’s working.

After set-up, you’ll see your Dashboard. This gives you an overview of your company’s finances. In Dashboard, you’ll see 5 items:

  • Outstanding Revenue: Which customers owe you payments
  • Total Profit: Real-time P&L
  • Spending: Total expenses, with breakdown by type of expenditure
  • Revenue Streams: Total revenue, with breakdown by type of revenue
  • Unbilled Time: Useful if you need to rebill a client or if you categorised a time entry incorrectly
freshbooks dashboard
FreshBooks Dashboard: Your Accounting Home Page

FreshBooks user interface features training videos so you can make full use of the platform, and access to customer support so you can quickly troubleshoot issues. The UI allows you to easily invite team members (like an accountant) so you can collaborate on projects together. You can set various permission levels so you don’t have to worry about unwanted changes being made by people who shouldn’t be making changes.

FreshBooks also has excellent importing functionality. You can provide your username and password for financial institutions like banks. You can then import all your transaction records from those accounts automatically. One of the most common pros that FreshBooks users cite is its sheer ease of use. All the different functions are clearly labelled, you don’t have to go through multiple menus to find what you need, and you certainly don’t need to be an accountant to understand hwo to use the sfotware. All these are great points for people running a business on the side, or small businesses owners who don’t have complex accounting needs and want to save time on accounting.

Compared to other tools like QuickBooks or Xero, FreshBooks has the the most simple and easy-to-use UI.

FreshBooks Features

Double-Entry Accounting

In 2019, FreshBooks added bank reconciliation and double-entry accounting ( The lack of double-entry accounting was something that previously had kept businesses that weren’t micro enterprises away from FreshBooks. With this recent and much-welcomed addition, FreshBooks now supports industry-standard accounting practices.

Adding double-entry accounting capabilities provides business owners with well-structured accounting records, and helps improve visibility into the financial performance of the company.

Chart of Accounts

The Chart of Accounts provides a quick overview of all the company’s major accounts:

  • Assets
  • Liabilities
  • Equity
  • Revenue
  • Expenses
freshbooks chart of accounts
See all important assets, liabilities, and more in one look

See all important assets, liabilities, and more in one look

Being able to view the status of all these major accounts in one quick glance helps business owners stay constantly updated on the financial health of the company.

General Ledger

This is a complete record of all your financial transactions so that you can prepare your financial statements. With it, you can thoroughly understand how each account has performed, and where they stand currently.

These accounts include:

  • Assets
  • Liabilities
  • Revenues
  • Expenses
  • Gains and Losses

freshbooks general ledger

Trial Balances

As part of its double-entry accounting update, FreshBooks allows you to create trial balances to ensure that all your accounts are properly balanced. You can use this to easily check if all your debits and credits are properly matched.

Creating Invoices

FreshBooks allows you to easily create professional-looking invoices easily. The software has templates with designs customised for multiple industries like construction, web design, attorneys, and more. (URL) You can see invoice amounts that are overdue, unpaid, and currently being drafted. see dollar totals for invoices that are overdue, outstanding, and in the draft stage. Templates are also available in Word, Excel, PDF, Google Docs, and Google Sheets.

FreshBooks’ invoice function has additional features that are unique to it: the ability to request a deposit, and setup a payment schedule.

freshbooks invoice template
Create professional-looking invoices like this with a simple click

Besides invoices, FreshBooks features two more types of transactions: estimates and proposals. Both of these can be converted into invoices, which is very helpful.

Estimates: Send estimated prices to your clients easily. You can duplicate estimates and view their statuses (sent, viewed, accepted, declined).

Proposals: This is one of FreshBooks’ coolest features that distinguish it from other competitors. You can create detailed client proposals that are many pages long, complete with text, graphics, images, and attachments. Proposals come with default sections that help you clearly outline what you’re offering: Scope of Work, Timeline, Pricing, Notes, and Terms. FreshBooks supports electronic signatures, so your clients can sign your proposals. There aren’t any other accounting platforms on the market that offer such detailed transaction features.

freshbooks proposal
Send detailed, customisable proposals to win your clients over


Another useful feature is the ability to create retainers. With this function, you and your clients can set up budgets and work-hours to be performed. All the hours that you log via the “time-tracker” tool is automatically debited from the client’s available time balance, and invoices are even automatically generated which makes billing very easy. If you log more hours than the client has agreed to pay you for, those extra hours are automatically categorised as excess work-hours, which you can then send the client an invoice for.

This is helpful for handling continuous businesses transactions with clients, and takes the repetition out of creating invoice after invoice to the same customer.

freshbooks retainers


Payments and Sales Taxes

FreshBooks allows you to accept payments from your customers. For US and Canada customers, this is powered by either WePay or Stripe, and for international customers, payments are processed by Stripe. If your business is in Singapore, domestic transaction fees are 3.4% + SGD 0.50 for every payment. International transaction fees are an additional 1%.

FreshBooks allows users to add sales taxes directly to your invoices. So if you need to add GST charges to any invoices, you don’t need to go hunting around in another panel. Unfortunately, handling sales taxes aren’t the most convenient with FreshBooks, because you do have to add sales taxes manually to each invoice that you create. FreshBooks can save the sales taxes you key in (e.g. 7% GST, 20% VAT, etc.), but you’ll still need to select them each time you want to apply the tax.

Add taxes to any invoice line item directly

Specify in detail what kind of tax you’re paying

FreshBooks has a Sales Tax Summary function that will generate sales tax reports. Business owners will find this helpful to consolidate all necessary information to file their annual tax forms.

Project Tracking

FreshBooks allows you to create projects, which are a useful way to collaborate with clients, employees, and external contractors in a single place. Project management features here tend to be more extensive than its competitors.

There are a variety of useful functions that projects feature:

  • Assign employees, clients, and contractors (you can set individual access restrictions for each member)
  • Specify budgets for projects
  • Set project type:
    • Hourly rate project (allows you to set a single hourly rate, or rates by team member/service provided)
    • Fixed rate project

FreshBooks’ hourly rate function is particularly useful as it allows you to customise rates by employee. So if you run a construction company, and you charge clients different rates for say, your engineers vs architects, you can make this clear in your projects. This not only helps you track your own revenues, but also provides transparency and accountability to your clients, which reduces the chances of billing disputes.

When managing a project, you can specify the services that will be provided to your client. You can create a service type (e.g. graphic design, consulting, etc.), save it, and then reuse it for all future projects which eliminates the need for you to enter the same thing repeatedly. This also helps clients understand exactly what services were provided.

When you’re tracking time in a project, you can either enter the amount of time manually, or use FreshBooks’ timer function. The Time Tracker tool will show you all the hours worked by each contributor, giving you a clear view of how much each person has worked. You can convert a project or time entries to an invoice.

freshbooks project tracking
Track project progress, assign project contributors, monitor employee productivity, and total billable hours

Time Tracking

FreshBooks allows you track the time spent on tasks by your team members. Time tracking can be done automatically (start/stop buttons), or can be keyed in manually. This helps you easily bill for every hour that your team and you have worked. You can view at a glance how much time each employee is spending on particular tasks, what work has been done (or not yet done), so you can intervene if certain tasks or employees are falling behind.

freshbooks time tracking
Never forget how much time you spent on a task again

Contacts, Expenses, and Payables

Contact Management: FreshBooks’ clients function contains all your clients’ information: it displays their contact information (in a nice graphic of a business cards). It shows you how much outstanding revenue is linked to the client, with a breakdown of this revenue into unbilled time, unbilled expenses, and invoices. You can send invoice statements directly to your clients from this panel, and can also set automatic late payment notices and invoice reminders to be sent to them.

Expense Tracking: If you connect your bank accounts to FreshBooks, you can view recent transactions you’ve made on the “Expenses” panel. FreshBooks will automatically categorise these transactions (e.g. Office Supplies, Transport, Advertising, etc.) when it imports them from your bank account (it doesn’t always get them right). Do note that these bank connections are not “live” feeds and are only updated once a day.

If you’re entering expenses manually, you can upload receipt images (accountants sing hallelujah), specify vendor names and expense descriptions, and allocate the expense to a category (e.g. advertising, rent, etc.). FreshBooks comes with a list of 45 default expense categories, which are set up to closely mirror IRS tax categories. US users will find this the most useful, but Singaporean users will benefit from this too . In any case, you can create your own expense categories to supplement the comprehensive default list. You can also designate expenses as Cost of Goods Sold (COGS) to easily track your margins. FreshBooks easily has one of the most comprehensive expense-management functionalities compared to other providers at a similar price point.

freshbooks expense tracking
Easily keep track of all expenses

Accounts Payable

FreshBooks doesn’t have an Accounts Payable (AP) function that allows you to key in bills that you owe. It does, however, allow you to view bills that other FreshBooks users send you. This is one area that the software falls short. If you need to manage high volumes of payables, then you should probably consider using either QuickBooks or Xero.

Currency Support

FreshBooks supports 170 currencies and 14 international languages. If you do business across multiple countries, you won’t have a problem using FreshBooks.

FreshBooks’ Mobile Apps

FreshBooks’ mobile apps are available on both Android and iOS, and are very well designed. The apps are just as easy to use and have the same features as the web-based version. In both cases, the FreshBooks app opens to a dashboard that contains three critical charts, Outstanding Revenue, Total Profit, and Total Spending. Icons at the bottom of the screen take you to the working areas of the tool, where you can view, add, and edit data contained in invoices, expenses, time tracking, estimates, and client records.

Customer Support

FreshBooks has a great customer support system to ensure that all clients are able to quickly get any issues solved. Phone calls are answered immediately. Email messages are replied to within a few hours (not days). The online documentation is expansive, so if you don’t want to bother with speaking to a representative, you can always tackle the issues yourself with large amount of self-help resources available.

Phone: Monday to Friday, 8AM to 8PM.

Email: Response time is usually within a few hours.

In-Platform Help Section: Search function for FAQs, or leave a message for the support team to get back to you on.

Documentation: Huge pool of written resources that will answer the majority of your common queries. Lots of how-to guides, articles explaining new features, and other documentation that will help both new and advanced users.

Video Tutorials: Webinars are available to help new users familiarise themselves with FreshBooks.

FreshBooks: The best choice for freelancers, sole proprietors, and (very) small businesses

New users will be wowed by FreshBooks’ outstanding design, sheer simplicity of use, and host of useful accounting functions.

FreshBooks is perfectly designed for those running a solo company, or a very small business with less than 5-7 employees. This platform allows you to capably manage your finances, helps you track projects, and automates time-consuming tasks like sending repeat invoices. It does all of this with a really attractive and intuitive user interface.

Although FreshBooks is an outstanding accounting platform solo ventures or small companies, it doesn’t feature the sort of in-depth accounting functions that larger businesses will need. For companies that need web-based accounting for small businesses, Xero or QuickBooks (our choice) are better options.

Ready to get insured?

If you’re running a business, don’t forget to protect your company. Provide offers the best online business insurance. Get a quote within 60 seconds, and save up to 25% on your premiums. Have a look at our most common policies:

E&O vs D&O Insurance: What’s the Difference?

E&O vs D&O Insurance: What’s the Difference?

E&O vs D&O Difference Summary

  Errors & Omissions (E&O) Insurance (known in Singapore as Professional Indemnity Insurance) Directors and Officers (D&O) Insurance
Who it covers Company itself Directors and Officers
What it covers ·       Negligence

·       Errors and Omissions

·       Malpractice

·       Defamation

·       Government fines

·       Negligence

·       Errors and Omissions

·       Malpractice

·       Defamation

·       Government fines

·       Shareholder lawsuits

·       Employment liability lawsuits

·       Criminal trials

Who needs it All service businesses All businesses regardless of industry
Key feature Designed to protect the company from business-related lawsuits Designed to protect directors and officers from business-related lawsuits that target them personally


You might have heard of both Errors & Omissions (E&O) insurance and Directors & Officers (D&O) insurance. This article explains the major differences between both types of coverage, and why it’s important for businesses and business owners to have both types of coverage if they want to protect themselves from legal liabilities. (Side note: In Singapore, E&O insurance is called Professional Indemnity insurance. E&O is the term more commonly used in the US.)

It’s usually easier to understand how each type of insurance works, and the major differences between them, with an example. Here’s an illustrated situation of how professional indemnity and D&O insurance would each act differently to protect you if you find yourself in trouble.

E&O vs D&O – Sample Case Study: You run a construction company. One of your clients complains about shoddy work that was performed for his construction project, claiming your work caused structural issues with the building. Your client sues you for negligence.

The BCA (Building and Construction Authority) steps in to investigate, and finds that there are indeed structural issues. The BCA also initiates legal action against both you and your company. The BCA is seeking civil penalties against your company.

Your shareholders sue you for mismanaging the company, and causing financial losses to shareholders. As a company director, your shareholders are holding you responsible for not ensuring proper building requirements, which led to equity holders suffering financial damages.

Here’s how your E&O and D&O insurance would be activated to protect you:

  1. E&O insurance would pay for legal fees to defend your client’s negligence lawsuit, and the BCA lawsuit against your company
  2. D&O insurance would pay for legal fees to defend your shareholder lawsuit targeting company directors

Now that we’ve covered a broad overview of E&O vs D&O policies and the way each works, let’s get into the details of each type of insurance to further explain their differences.

E&O a.k.a. Professional Indemnity Insurance: The essence of E&O/Professional Indemnity Insurance is to pay for legal costs when the company itself is sued. E&O insurance protects the company against claims of negligence, errors & omissions, malpractice, defamation, and improper advice/practices which end up harming clients. This policy extends coverage to mistakes made by all the company’s employees. Beyond salaried and hourly employees, even subcontractors working for your company are also covered. You can thus see that E&O insurance is tailored to protect the corporate entity from a wide variety of legal liabilities!

Some additional examples of where E&O insurance would protect you:

  • Your business produces promotional materials for a client, and misspelled the client’s name on all the brochures/fliers/advertisements.
  • You provide advice that was incorrect. Even a seemingly simple mistake could lead to a legal claim for negligent or wrongful advice.

This type of insurance is important for companies of all sizes, as long as they provide professional advice to clients. Even if you think the quality of your service is impeccable, and you have strong corporate governance to limit poor advice from being provided, not all of your customers will feel the same way as you. Clients can accuse businesses of providing them sub-standard work, or providing them advice that caused them financial harm. Such accusations could occur anytime, and could come from anyone.

The legal costs to settle these legal disputes are often tremendous, with costs easily totaling in the hundreds of thousands of dollars. This can severely disrupt business operations, particularly so for small businesses. If you run a sole proprietorship, the costs and disruptions are magnified even further. With E&O coverage, the company is safeguarded from such legal risks. You’ll see that this differs very much from D&O insurance, which as its name projects is designed solely to protect senior executives.

Directors and Officers (D&O) Insurance: Unlike E&O Insurance which covers the company, the essence of D&O Insurance is to protect the Directors & Officers of the company against legal liability.

This type of insurance pays for the defense costs for directors and senior executives who are sued personally because of a mistake they made while managing the company. Directors get sued for a wide variety of reasons: negligence, errors & omissions, defamation, mismanaging the company, misusing company funds, and much more.

These claims can be made by a very wide variety of sources: regulators, employees, competitors, shareholders, creditors, etc. D&O insurance is important for all companies, whether they’re small or big, because lawsuits filed against directors will go after the directors’ personal assets! So if you don’t have D&O insurance, your bank account, house, and other personal possessions are at risk. Because directors are exposed to lawsuits from so many directions,

Unlike E&O policies, D&O insurance will cover directors after they retire for several years (usually 5-7 years). This is called run-off coverage. Because your liability as a director doesn’t end after you resign (yes, you can get sued for what you did as a director even if you’re no longer one!), you’ll need D&O insurance to protect you. This is one of the most important parts of liability protection for directors, which is why D&O insurance is a necessary complement to E&O insurance.

D&O insurance will also cover criminal trials if the police charge you with crimes related to your management of your business. Usually, policies will compensate your defense costs only after the court finds you not guilty. This prevents insureds from committing crimes just because they have insurance. Such “alleged criminal acts” coverage is not available under E&O/professional indemnity insurance.

D&O insurance also protects directors from employee lawsuits, while professional indemnity insurance doesn’t. So if directors get sued by their employees for things like wrongful dismissal, harassment, or other reasons, they’ll be protected. The same goes for shareholders; if directors get sued by shareholders for mismanaging the company, causing them financial losses, etc. D&O insurance will be activated to pay for defense costs and damages. E&O/professional indemnity insurance won’t cover such events.

Does a business need both E&O and D&O Insurance? What happens if I only have one type of coverage?

You need both types of policies, because having only one type of coverage leaves you 50% exposed. You need both E&O and D&O insurance to provide you company-level protection and director-level protection. All businesses will need a D&O insurance policy to protect directors from lawsuits that target their personal assets. If you’re running a service business, then you’ll also need E&O coverage to protect you from lawsuits that are aimed at the company.

Many business owners with E&O insurance operate under the mistaken impression that a single policy is all they need. That’s dangerous. Many business-related lawsuits, whether one filed by unhappy customers or disgruntled business partners, will be aimed at both the corporate entity and the directors who oversee the company. If you only have either type of insurance, you’ll only be half-covered if you get sued!

Where can I get great E&O and D&O Insurance?

You can get it right here at Provide. We offer broad-coverage, high-indemnity E&O/professional indemnity insurance and D&O insurance. Our prices are up to 25% lower, thanks to our digital platform that creates lower overheads.

What is the Australian Securities and Investment Commission (ASIC)?

what is asic

What is the Australian Securities and Investment Commission (ASIC)?

Are you a financial services company based in Singapore, looking to do overseas business in Australia? If you want to expand your operations into Australia, you’re going to be regulated by the Australian Securities and Investment Commission (ASIC). Make sure you know ASIC regulations that you have to follow when you’re providing financial services over in Australia. Here’s a primer on what ASIC is, what they do, and some notable cases they’ve prosecuted in recent times.


ASIC is an independent authority of the Australian government. ASIC administer the Australian Securities and Investments Commission Act 2001 (ASIC Act). ASIC’s purpose is to regulate companies, and ensure compliance with corporate and financial security laws to protect Australian investors, consumers and creditors.

ASIC’s role involves:

  • Maintaining and improving the Australian financial system
  • Promoting fair and knowledgeable participation in the Australian financial system
  • Carrying out the law under the powers granted by the ASIC Act and related legislation

Who ASIC Regulates

Financial services businesses: ASIC oversees firms operating in this industry to ensure they operate in a fair, lawful and ethical manner.

Consumer credit: ASIC issues licenses and oversees businesses that lend money out. ASIC ensures such businesses maintain compliance with the rules found in the 2009 National Consumer Credit Protection Act.

Markets: ASIC acts as the supervisory body for the Australian Stock Exchange (ASX). ASIC ensures that market activity is fair and transparent, and that no bad actors are manipulating the market for their own benefit.

The overall goal of overseeing activity across these 3 broad parties is to protect participants in the Australian financial system from wrongdoing, and to encourage growth by building an open and law-abiding financial ecosystem.


ASIC was first founded in 1991 as the Australian Services Commission (ASC). It was founded to replace the National Companies and Securities Commission (NCSC) and the Corporate Affairs offices of various Australian territories. Its name was changed to the current ASIC in 1998.

In 2010, ASIC was granted additional powers and duties. ASIC now oversees consumer credit, financial broking services, and regulates the trading on various Australian securities markets.

Powers and Responsibilities

ASIC has 3 main powers and responsibilities:

Registration and Licensing

ASIC handles the registration of financial services companies, and manages publicly available registers of companies.


ASIC can ban or censure firms that do not comply with laws under the ASIC Act. ASIC also introduces legislation to make the financial markets more fair, more efficient, and more transparent.


ASIC can investigate breaches of financial laws. The body can levy fines and prosecute individuals and companies that have been found to violate such regulations.

Notable Cases

Westpac fined AUD 9.15 million as a result of ASIC investigation

In December 2019, The Federal Court of Australia filed an order against Westpac Banking Corporation, ordering the renowned lender to pay AUD 9.15 million for a string of regulatory breaches. The bank had allowed one of its former financial advisors, Mr. Sudhir Sinha, to provide financial advice to its clients that were in contravention of its best interests’ duties and other obligations under the 2001 Corporations Act. Westpac Bank was judged to have direct liability for these regulatory transgressions.

The judgement stems from a case first filed in June 2018, when ASIC lodged a civil suit against Westpac bank for breaching its duties under the 2001 Corporations Act. ASIC’s investigations into Westpac revealed various regulatory breaches. Mr. Sinha did not act in his clients’ best interests, had offered them unsound financial advice, and did not prioritise his clients’ financial interests. Westpac had known about these issues since as early as 2010, when internal reviews conducted by the bank surfaced these breach of duties. However, Mr. Sinha kept his position. Only 4 years later, in 2014, did Westpac fire Mr. Sinha, and the bank only reported Mr. Sinha’s unlawful conduct to ASIC in 2015.

During the trial, Westpac admitted that it had breached the Corporations Act. The presiding judge, Justice Wigney, found that Westpac had failed to properly monitor the behaviour of Mr. Sinha. Even when the bank knew about Mr. Sinha’s unlawful conduct, it failed to intervene as it should have. Instead, the bank simply let the rogue employee continue with his unlawful actions, which were a direct breach of the bank’s regulatory duties. Justice Wigney also found that Westpac stood to profit from Mr. Sinha’s actions, as his advice was bringing in clients and commission fees to the bank. The bank had placed profit above its duties to operate in an honest and transparent manner, which benefitted the bank and its advisors at the expense of their clients.

In its decision, the Court found Mr Sinha failed to act in the best interests of his clients, provided inappropriate financial advice, and failed to prioritise the interests of his clients, in four sample client files identified by ASIC.  Westpac is directly responsible for the breaches of the best interests obligations by Mr Sinha under section 961K of the Act.

If it had not been for ASIC’s thorough investigation and strong enforcement of financial securities laws, Westpac bank might have continued to profit at the expense of its clients.

ASIC initiates civil penalties against RI advice and ex-financial advisor, Jon Doyle

In October 2019, ASIC began court action against RI Advice Group Pty Ltd (RI Advice) and an ex-financial adviser, Mr. John Doyle. Before its recent acquisition by IOOF Holdings Limited, RI Advice operated as an ANZ financial advisory business.

In its civil suit, ASIC filed allegations that RI Advice had failed ensure with reasonable care that Mr. Doyle provided financially sound advice to his clients. RI Advice had also failed to ensure Mr. Doyle had acted in his clients’ best interests. These are duties required under the 2001 Corporations Act. Mr. Doyle worked for RI Advice from 2013 to 2016.

The civil suit also names Mr. Doyle as a defendant. ASIC filed claims that Mr. Doyle provided unsound advice that was not tailored to each individual client. This advice involved urging the clients to invest in risky and complex structured financial products: Instreet’s Masti S&P500/ASX 36 and 38, and the Macquarie Flexi 100 Trust. He had provided such advice without properly considering his clients’ financial background, risk appetite, and investment objectives.

Some of the clients that Mr. Doyle provided advice to were nearing retirement, which would make them unsuitable for such risky products. ASIC’s suit alleges that Mr. Doyle had acted in his own interests ahead of his clients, because he would have received commission fees for each of his client’s investments, with larger commissions for more exotic products like the structured funds he was recommending.

The lawsuit claims that RI Advice either had knowledge of, or should have had knowledge of, a significant possibility that Mr. Doyle was acting in a non-compliant manner with his duties under financial services laws. Mr. Doyle had repeatedly been pushing structured products to his clients, many of which were unsuitable for such high-risk investments. RI Advice did not operate the proper compliance processes to ensure such unlawful behaviour was not taking place.

Under Australia’s financial securities laws, RI advice is facing up to $1 million in fines per contravention. Mr. Doyle faces up to $200,000 per contravention.

How To Buy A Business In Singapore: The Essential M&A Guide

How To Buy A Business In Singapore: The Essential M&A Guide

Taking over a business for sale consists of 8 broad steps:

  1. Strategic Purpose of Acquisition
  2. Target Search
  3. Getting to know your target
  4. Valuation
  5. Offer and Negotiation
  6. Due Diligence
  7. Purchase Agreement
  8. Takeover and Integration

Strategic Purpose of Acquisition

The process begins with the buyer identifying the specific motivations for purchasing another firm. What are the benefits they are looking to get out of it?

Some of the most common reasons are:

  • Rapidly scale a business
  • Expand into new/overseas markets
  • Improve unit economics by combining business functions
  • Acquire new technology that would be difficult to self-develop

Formulating an overall strategy for how an acquisition helps your business will influence the types of companies you need to look at, and how much you will need to pay for the takeover.

Target Search

After the acquisition purpose has been confirmed, the buyer creates a list of potential companies to buy (the “targets”) based on the strategic criteria they have identified.

For instance, a buyer looking for rapid scale may focus their search on targets that have a large customer base and high growth rates. A buyer looking for exclusive technology will look for firms that have developed innovative software/hardware whose rights they can acquire.

Often, bigger buyers will hire an investment bank to help in the M&A process. These banks have a dedicated M&A department that will handle the entire process from start to finish for their clients. In exchange, investment banks typically ask for a portion of the final acquisition price (2-8% is typical), and a retainer fee ($50,000 to $100,000 a year).

Small to mid-sized buyers will sometimes hire business brokers, which perform similar M&A functions to investment banks. These brokers charge lower fees, and specialise in executing smaller deals that would be too costly for a buyer to give to an investment bank.

Getting to know your target

If the buyer and target show a mutual interest in the transaction, they will both prepare a Letter of Intent or a Term Sheet. This is a legal document that sets out the material conditions of the takeover, signifying both parties want to move deeper into the process.

A Non-Disclosure Agreement (NDA) will also be signed to prevent sensitive transaction details from being leaked to competitors and other parties.

After these documents have been prepared, both parties will exchange corporate information like financial statements and business plans. This information will be assessed by the management and Board of Directors of both firms to get a better sense of the deal’s benefits, and potential risks.


Once the buyer has received the target’s financials and business plans, they will construct an M&A financial model to determine a purchase price.

This model can comprise several common valuation techniques:

On top of the standard purchase price, the buyer will often pay a takeover premium between 10-25%, depending on the strength of synergies provided by the target. Target firms that provide particularly strong synergies can even command premiums upwards of 50%.


Synergies are a crucial factor in determining the eventual price a buyer will pay, and the ultimate strategic benefit to the buyer.

Common synergies are:

  • Lower costs from combining business units (Marketing, R&D, Sales, etc.)
  • Faster growth from access to new markets, patents, or technology
  • Stronger pricing power from increased market share

Financial Impact

From a valuation standpoint, there are two outcomes: the deal is either earnings accretive or earnings dilutive.

An accretive deal means that net profit per share for the combined entity increases after the takeover, and a dilutive deal means that net profit per share decreases.

An accretive transaction is immediately beneficial to shareholders, since each share is now worth more than before. However, it is not necessarily true that accretive deals are always better than dilutive ones. A dilutive deal may temporarily reduce shareholder value, but if there are strong long-run synergies, then such a transaction can actually be accretive down the road, bringing great benefits to shareholders.

Offer and Negotiation

Once the buyer has completed their valuation, they will send their purchase offer to the target’s shareholders. Purchase offers can be made in cash, or stock, or a mix of both.

If there are multiple buyers competing to buy the same target, this is the stage where they will enter a bidding war to offer the best price and terms.

Negotiations will involve more than just purchase price. For example, a highly contested point will be the target’s Representation and Warranties. This is a legal obligation by the target to provide compensation to the buyer if the information they have provided is inaccurate. Buyers will want comprehensive warranties and large indemnification amounts, while targets will want the minimum possible to close the sale.

Due Diligence

At this stage, the buyer will conduct thorough checks on the target. This is to ensure that information provided by the target is accurate, and no material facts that could adversely affect the buyer have been concealed. Buyers will construct a due diligence checklist to ensure a thorough investigative process.

Some common items in a due diligence checklist are:

  • Independent audit of past 5 years’ (or longer) and projected financial statements
  • Review of all insurance policies
  • Review of compliance with government regulations
  • Review of potential legal liabilities
  • Review of physical assets and their operating condition
  • Technological audit of software or products (if applicable)
  • Interviews with target’s customers, suppliers, and employees

It is crucial for the buyer to allocate sufficient time and resources for a comprehensive due diligence process. Ensuring that all the facts are in order will save the buyer from serious repercussions later on, like having to initiate legal action against the target for misrepresenting information.

Purchase Agreement

After due diligence is complete, any discrepancies must be highlighted and mutually resolved. Material discrepancies will often result in purchase terms being altered. For instance, if some undisclosed legal liabilities are discovered, the purchase price will likely be lowered, and the buyer will demand greater indemnification from the target to protect themselves.

Regulatory approval may have to be sought if the target is operating in a heavily regulated industry (e.g. financial services), or if the deal has a risk of severely restricting market competition.

Once all negotiations have been finalised, both parties will then sign the Purchase Agreement.

Takeover and Integration

After the purchase agreement is signed, the buyer makes payment and legally assumes control of the target. Buyers in Singapore must notify the Accounting and Corporate Regulatory Authority (ACRA) within 14 days of the sale closing.

It is important to note that closing the deal is only the beginning of another long but critical process: the successful integration of buyer and seller.

Here are 5 key steps to ensure a smooth transition as both companies merge:

Establish clear targets: Leaders should set out what financial and non-financial results they want to achieve, and when they want to achieve it by. Focus on the key decisions needed to create an integrated company – any fine-tuning can come later. For instance, prioritise issues like creating a unified product/service mix with a clear marketing strategy; tweaking product features can be done after the integration is done.

Coordinate closely: Key integration decisions will require input from multiple business functions, and this input should be given quickly. With reference to the earlier example, a marketing plan for a combined product portfolio can only be created after the new portfolio has been decided upon.

Leaders must thus create an overall workflow for integration input. They must then communicate this workflow to their teams, so that everyone understands what they need to deliver, when they should deliver it, and how their delivery will affect other teams down the pipeline. This smooths day-to-day functioning and minimises the operational chaos that can overwhelm unprepared buyers.

Sell the idea: Integrating two companies often creates uncertainty for key stakeholders. Leaders should clearly explain to their customers what benefits an integrated company will bring to them, and which company they should reach out to for support issues. This minimises customer confusion, and reduces the probability of competitors stealing clients who are unsure of how their customer experience might change.

Leaders also need to sell the benefits of integration internally. Employees may be unsure of whether they will keep their jobs, or how their career progression will change in the new entity. When articulating the advantages of integration, diction is key. Focus on how it will help individual workers, rather than the organisation alone. “New leadership posts will be created to drive our combined product lines” is a lot more relatable than “greater market leadership will be achieved by merging products”.

Decide on a culture: Leaders should first diagnose what differences exist in cultures between both firms. Once these differences are identified, leaders can then decide how to close them: continue with one culture (often the buyer’s) or create a blend between the buyer and the target. Whichever the case, leaders should take time to explain why the culture they want to build is beneficial, and ensure that it is practiced daily. When managerial changes need to be made, buyers should also pick the right leaders who share their vision of what the combined firm should look like.

Focus on the business: While proper integration is important, buyers should not allow themselves to become consumed by the process. It is helpful to commit to a cut-off date where complete integration must be achieved. A good rule of thumb is that 80-90 percent of available time should be spent on continuing to drive the core business forward. Many changes are occurring during the integration period, so leaders must monitor business metrics closely to ensure that the combined entity is maintaining its speed and not veering off track.

Protecting Your Investment

After spending a large sum of money to buy a business, it only makes sense to ensure that the investment is protected from business interruptions that could damage shareholder returns. Proper insurance coverage ensures that the newly combined company will safely produce great dividends in the years to come.

After acquiring another firm, a buyer will have to replace almost all their insurance policies.

This is because:

  • Insurance policies of the acquired company cannot be transferred to the buyer.
  • Insurance policies often have a “Change of Control” clause that void coverage when a target is acquired.
  • Thus, the coverage limits of the buyer’s insurance will either be too low, or simply not applicable to protect both the buyer and target after they merge.

Example: Company A acquires Company B. The buyer will need to replace all their Premise-based policies like Property, Fire, and Money insurance to cover both the buyer and the target’s locations. Other policies like Public/Product Liability and Professional Indemnity will also need to be replaced to ensure sufficiently high coverage amounts.

Protecting a combined business after an acquisition is thus a highly complex issue. It is vital that buyers speak to an insurance expert who can guide them through the process. Click here to arrange an expert consult with our advisors today, or click here to see our full product range.

Should I Switch Insurance Companies?

Should I Switch Insurance Companies?

You’re thinking of switching insurance companies for your business. Maybe you’re shopping for a better price. Maybe your current coverage isn’t good enough. Or maybe your insurer botched a claim that you felt should have been paid.

Whatever the case, know that our online platform makes it easy for business owners to compare and switch insurance companies. If you’re wondering whether you should take the final plunge to change your insurer, we’ve come up with a simple 3-step checklist to help you decide. Read on to find out if another insurer deserves your business more:

Step 1: Review Your Current Policy and Insurer

Review your current policy to determine what coverage you have. Then create a list of all the protections you would like to have in your new policy. This makes it easy for you to compare your existing policy with the new one. If the new insurer offers you a better price but weaker coverage, you’ll be able to make a more informed decision about which policy you’d prefer.

During your review process, ask yourself these 3 quick questions:

Question 1: Is your current insurer meeting your protection needs?
Answer: If the policy you have with your current insurer isn’t providing you sufficient coverage, then you should consider upgrading your coverage to higher limits or more comprehensive terms. If your current insurer cannot provide this higher coverage, or cannot do so at a sufficiently affordable price, then it’s time to consider switching insurance companies.

Question 2: Are your current insurance premiums too high?
Answer: Do you feel you’re paying too much for your business insurance policies? If your current policies are priced too high, you should consider comparing policies from other insurers to see if you could save money. Provide’s online platform helps you save up to 25% on all types of business insurance policies.

Question 3: If you’ve filed claims before with your current insurer , how was your experience?
Answer: Was the claims investigation process smooth or troublesome? Did they pay out your claims on time or did they drag it out? How supportive was the customer service team in your time of need? If your answers to these questions are negative, then perhaps it’s time to give your business to someone else who might appreciate it more.

Step 2: Source Quotes

Once you know all the protections you want to have in your policy, start sourcing for quotes from different insurers.

The vast majority of insurers will not directly provide business owners with quotes due to the complexity of insurance products. You will need an insurance broker to help you with the sourcing process.

Provide is a digital broker that makes commercial insurance cheaper, faster, and exponentially more convenient for business owners. We provide instant quotes for a variety of products, and our prices are up to 25% lower than traditional offline brokers.

Click here to get a quote from our comprehensive product range, or click here to schedule a call with one our expert advisors.

Compare Quotes

Once you have a few quotes in hand, it’s time to see which suits you best.

If you feel you want better coverage, or your protection needs have changed, it’s helpful to rank which protections are most important to you.

Having an expert broker walk you through the pros and cons of each policy is immensely helpful.

Consider total costs: Consider the total costs of switching, beyond merely the quoted price. You should take into account the cost of longevity discounts and multi-policy discounts (if applicable) that you would lose if you switched insurers. If the new insurer offers a better rate even after these discounts, then go ahead and make the change.

Step 3: Cancel Your Old Policy

If you’ve decided to switch insurers, there are a few things you need to take note of.

Ensure coverage is in force: Before you cancel your old policy, check the date on which your new policy will activate. It’s a good idea to align the start date of your new policy with the cancellation date of your existing one.

This helps you avoid a situation where you have a gap in coverage. If a claim situation arises (e.g. an accident happens) and you did not have coverage during that period, you would not be able to file a claim with your insurer.

Give sufficient notice in writing: Insurers will have a clause outlining the number of days of written notice you must provide to cancel a policy. This often ranges from 7-14 days.

Cancelling a policy in writing also provides proof of your cancellation request, and when you made it. This removes all ambiguity from any dispute that may arise later (e.g. the processing department at the insurer forgot to cancel your policy and charges you for next year’s policy).

Check your policy terms: You will need to check whether your policy is pro-rated or short-rated.

A pro-rated policy means that if you cancel a 12-month policy after 9 months, you will be refunded for the remaining 3 months of coverage.

A short-rated policy means that if you cancel the policy before it expires, the insurer may deduct a cancellation fee from whatever refund you were entitled to. Sometimes, these fees can be large to disincentivise customers from switching their policies early. Check your policy wording document to make sure it’s worth switching.

A good broker should be able to answer all these above queries for you, and to handle all the administrative tasks of switching insurers.

Ready to Switch? Choose Provide.

Provide’s online platform makes it easy for business owners to compare the most popular types of business insurance. If you can’t find something you like, our expert advisors will be happy to tailor protection to your exact needs.

Click here to compare business package insurance, or click here to speak with our expert advisors who can handcraft a comparison of any policy type for you.

Top 3 Insurance Policies For Employees In A Small Business

Top 3 Insurance Policies For Employees In A Small Business

Running a small business can be very challenging – business owners often rely on small teams of employees, so it’s doubly important that each employee gives their absolute best every day so your business can flourish. If one, or even several employees become sick or injured, their absence can put noticeable strains on the smooth running of the business.

Employees getting sick or injured while on the job also creates serious liability issues for small business owners. Under the 2012 Work Injury Compensation Act (WICA) in Singapore, companies are legally required to provide WICA insurance for any employees who earn less than $1,600 a month, or for any employees who perform manual labour. The WICA statute also requires employers to compensate employees up to $73,000 for work-related injuries. If you have multiple employees getting injured in a single year, these costs very quickly add up and become a significant burden on the company’s cash position.

The potential to be hit by significant costs related to employee injuries means that small business owners must take appropriate steps to protect themselves. Here are the 3 best insurance policies that company owners should have to protect their business and their employees:

#1. Work Injury Compensation Insurance (WICA Insurance)

Work Injury Compensation Insurance protects businesses from legal liability when employees become injured or sick due to work-related causes.

What WICA Insurance covers: WICA insurance covers legal expenses to defend against work-injury lawsuits. It also covers employee medical expenses for injuries or illnesses sustained from work.

Employer Coverage:

  1. Lawyer’s fees for employee injury/sickness lawsuits
  2. Legal damages for employees injured/sick for work-related reasons

Employee Coverage:

  1. Medical expenses
  2. Lost salary while on medical leave (includes salary, bonus, overtime pay, food and housing allowances, but excludes CPF payment)
  3. Lump sum compensation for death, or total permanent disability

What WICA Insurance doesn’t cover:

  • Self-employed individuals
  • Pre-existing conditions
  • Self-inflicted injuries
  • Workplace fights
  • Injuries or illnesses that occur outside of work-related causes
  • Injuries or illnesses that occur in violation of company policies
  • Injuries or illnesses that occur from drug or alcohol use

How much WICA Insurance should small businesses have?

For small businesses, it’s advisable to have between $50,000 to $100,000 in Work Injury Compensation coverage per employee. Lower risk occupations involving mostly desk-bound work, or light outdoor supervisory roles can make do with $50,000. Manual workers should have at least $100,000.

Under Singapore law, businesses must cover their employees for the following minimum sums:

Death coverage: $57,000

Permanent disability coverage: $73,000

Medical expenses coverage: Up to $30,000, or 1 year of expenses from the date of accident, whichever is reached first

How much does WICA Insurance cost?

Non-Manual Worker: Starts from $25/year, per worker

Manual Worker: Starts from $50/year, per worker

As you can see, this type of coverage is very affordable for the benefits you’re getting! Prices may be higher for certain higher-risk industries, like manufacturing.

Get your instant WICA Insurance quotes here! With Provide, you save up to 25% on your premiums. Our digital operating model creates lower overheads, and we pass every dollar saved back to our clients.

#2. Group Personal Accident Insurance

Group Personal Accident Insurance protects employees if they suffer serious accidents, or accidentally die. This policy will provide cash payouts for accidental injuries or death, and also pays for employee medical expenses.

Singapore’s tight labour market means that small businesses face strong competition to hire and retain the best employees. Today’s workers increasingly expect good healthcare benefits from their companies. It’s become very common for business owners to offer good benefits (beyond just salary raises) as a strong employment incentive. A comprehensive Group Personal Accident policy is a great way to retain and attract talented employees. It’s also a fantastic method to keep employees safe, protecting your staff and their families from huge medical bills.

What Group PA Insurance covers:

  • Loss of Body Parts/Body Functions: Pays a lump sum for loss of arms, hands, fingers, legs, toes, sight, hearing, and more.
  • Total Permanent Disability: Pays a lump sum for permanent inability to work. Some insurers may have alternative definitions of this condition, like loss of a minimum number of specific body parts/functions.
  • Accidental Death: Pays a lump sum.

The following coverage features are offered in various combinations, depending on the insurer:

  • Medical Expenses/Hospital Cash: Pays for medical fees (up to a specified amount). Pays a daily hospitalisation benefit.
  • Temporary Disability (Partial/Total): Pays a daily cash benefit while temporarily disabled and unable to work.
  • Family Cover: Automatically covers employee’s child & spouse.
  • Reservist Cover: Covers employees performing reservist duty.

What Group PA Insurance doesn’t cover:

  • Individuals over 65-75 (depends on the policy)
  • Suicide
  • Pre-existing physical or mental defect or infirmity
  • Illness, diseases, infections, AIDS, HIV, and HIV-related illnesses
  • Childbirth, miscarriage, pregnancy or any other complications thereof
  • Injuries or death from criminal acts
  • Professional sports activities of any kind
  • Hazardous sports activities such as mountaineering, cave exploring, parachuting, hang gliding, hunting, racing of any kind (other than on foot), scuba-diving, bungee jumping and water ski jumping
  • Pilots or cabin crew, unless they’re travelling as fare paying passengers
  • Radioactive and nuclear weapon material accidents

How much Group PA Insurance should small businesses have?

Companies should look into having between $100,000 to $500,000 in coverage per employee. Lower coverage amounts are perfect for small companies that are looking to offer more than just salary as performance incentives, but are still operating on a lean budget. Higher coverage amounts are well suited for medium sized firms with larger salary budgets, that want to provide more competitive hiring and retention incentives.

Business Package Insurance will usually come bundled with Group PA insurance. However, this bundled Group PA insurance is most commonly only for 1-2 directors/officers. If you want to cover your staff, make sure to get a standalone Group PA policy.

How much does Group PA Insurance cost?

Premiums usually begin from $50/employee, for $100,000 in annual coverage.

With Provide, you’ll save up to 25% on premiums, with broad coverage & high indemnity policies guaranteed. Our digital operating model creates lower overheads, so we pass every dollar saved back to our clients.

Interested in protecting your employees with Group PA insurance? Get your Group PA insurance quote today!

#3. Group Health Insurance

Group Health Insurance is another strong incentive for hiring and retention. Given the high and increasing cost of healthcare in Singapore, employers that can offer good health insurance coverage for their staff immediately become highly attractive companies to work for. A 2018 survey found that health insurance was the number one benefit employees want when deciding which company to work for.

What Group Health Insurance covers:

The table below provides a broad overview of available coverage by plan type:

Coverage Inpatient Inpatient + Outpatient Inpatient + Outpatient + Vision + Dental
Annual Premium Starts from $400/staff Starts from


Starts from


Inpatient Treatment
Hospital room
Intensive care
Prescription medicine
Doctor/specialist fees
Surgeon’s fees
Anesthesiologist fees
Laboratory and diagnostic tests
Outpatient Treatment
GP consultation
Specialist consultation
Outpatient medical procedures (e.g. day surgery)
Prescription medicine
Home nursing
TCM/Chiropractor treatment
Psychiatric treatment
Dental Benefits
Routine dental work (scaling, polishing, fillings, simple extractions)
Complex dental work & major restoration (e.g. root canal, jawbone surgery)
Vision Benefits
Eye examination with optometrist or ophthalmologist
Contact lenses, corrective lenses, glasses frames


Common add-ons to Group Health Insurance:

The following types of coverage are usually purchased as a separate add-on to Group Health policies.

Critical illness: Critical illness protection gives you a lump sum cash payout in the event of major illnesses like:

  • Cancer
  • Organ failure
  • Heart attack
  • Stroke
  • and many more

Hospital Cash: Pays out a daily cash benefit while the insured is hospitalised. This helps defray the impact of lost wages while the person is recovering.

Maternity Benefits: Pays for pre-natal, childbirth, and post-natal treatments.

What Group Health Insurance doesn’t cover:

Pre-existing conditions: Most plans will ask each insured to declare pre-existing conditions, which will be excluded from coverage. If you need protection for a condition you already have, speak to an experienced broker like Provide, who can help you arrange coverage for certain pre-existing conditions.

Employees over 65-80 years old: The exact age at which applications are not accepted differs between different plans, but most insurers will not offer Group Health policies to new applications over 65-70 due to significantly increased health risks.

If you’re already insured by a Group Health Insurance plan, then most insurers will continue to cover you up till 70-80 years old.

Companies with fewer than 3 employees: Group health plans cost less per person than individual health plans, so a minimum size is necessary for insurance companies to provide savings.

How much Group Health Insurance should small businesses have?

Most small businesses will do well with an inpatient plan with annual coverage of up to $250,000. Inpatient H&S policies will protect employees from diseases or accidents that require expensive medical procedures to treat. It is precisely these large, out-of-pocket financial burdens that workers want to avoid and will need the most assistance to deal with. Consequently, companies that help employees with these costs already provide a significant incentive.

Plans that include outpatient treatment will often command a sizeable premium over inpatient-only plans. Consider undertaking an outpatient plan if your business is growing quickly, and you want to attract the best talent by offering comprehensive employee benefits.  The highest-end plans with vision and dental benefits are usually suitable for mid-sized companies that have more resources to spare.

How much does Group Health Insurance cost?

These are the typical prices SMEs can expect for Group Health Insurance:

Plan Type Annual Premium
Inpatient Starts from $400/employee
Inpatient + Outpatient Starts from $500/employee
Inpatient + Outpatient + Vision + Dental Starts from $600/employee

Annual premiums are largely based on: age and health condition of insured, and the number of insureds. The prices above are typical for staff in their 20s to 30s. Staff in their 40s and above may pay 30-50% more, to account for increased health risks.

Provide helps businesses get broad cover, high indemnity health insurance. Our experts have decades of experience crafting tailored health insurance plans for business owners. Contact us today for an expert consult on health insurance!

5 Best Corporate Governance Practices for Small Businesses

5 Best Corporate Governance Practices for Small Businesses

What would a country be like if it had no laws? I’m sure you can immediately imagine the uncontrolled havoc that people would be constantly wreaking. Having strong corporate governance principles in a company is much the same as having laws in a country. An established governance framework minimises the possibility of unethical or unlawful acts being committed, motivates each individual to do their best at all times, and maximises performance of the business as a whole.

Corporate governance is not just something practiced by large corporations. These governance principles are incredibly helpful to small businesses, because it maximises the work contributions of each employee – particularly helpful for SMEs that rely on small numbers of people. If you’re a small business owner, there’s no doubt that solid corporate governance practices will bring long-term benefits to your bottom-line.

What are the benefits of corporate governance for small businesses?

  1. Minimises wasteful expenses, corruption, and unethical/unlawful behaviour
  2. Maximises staff performance by holding everyone accountable for their actions and job results
  3. Builds a strong, highly motivated workforce by ensuring fair treatment and compensation
  4. Creates strong shareholder and investor confidence in the business
  5. Ensures effective management of business risks

5 Best corporate governance practices for small businesses:

1. Adopt strong internal controls for accountability

Having proper accountability structures means that all members of the company, from the most junior to the most senior, are held responsible for their actions. Employees are less likely to commit unethical/illegal acts like forging expenses, having personal interests in transactions, etc.

  • Conduct regular accounting audits to prevent fraudulent transactions.
  • Require approvals for high-value transactions.
  • Separate approval powers. Require at least two directors to approve the disbursement of company funds.
  • Standardise financial documents to make audits easier.

2. Assign clear roles and responsibilities to directors and officers

A distinct understanding of roles allows senior management to focus on maximising the performance of their business functions, and avoids unproductive job overlaps between different business managers.

  • Create job mandates in writing for the board chairman, each board director, the CEO, and all company officers. Each person’s role and responsibilities should be clearly understood.
  • Create separate board-level committees to perform key oversight functions. Committees are commonly grouped as such:
    • Audit
    • Nominating
    • Compensation
    • Corporate governance
    • Special committees, for high-value or complex transactions
  • Always remember “noses in, fingers out”: the board of directors should maintain oversight of the company, ensuring that senior executives are serving the best interest of shareholders. However, the board should respect that day-to-day management is best left to company officers, who are ultimately answerable to the board.

3. Set measurable performance targets, and make transparent compensation decisions

You don’t know what you don’t measure, and you can’t improve what you don’t know. Work teams – both big and small – benefit greatly from quantitative and qualitative measures to drive consistent performance improvement. Constant measurements also make it easier for business owners to allocate financial rewards where they’re most deserved.

  • Identify measurable KPIs for management. Ensure that KPIs are aligned to the results you seek, and will drive performance. Provide regular and honest feedback on performance to ensure best results.
  • Make fair and justifiable compensation decisions based on these measured performance targets. This allows executives to clearly understand what drives their incentives, and avoids contentious debates over the fairness of individual remuneration.
  • Establish a board-level Compensation Committee to engage in annual reviews of compensation.

4. Establish a thorough compliance process to mitigate unlawful or unethical behaviour

No, this isn’t about setting up thick layers of red-tape that kills new ideas. Having established compliance processes helps small business owners ensure their employees are conducting themselves in an upright fashion, minimising the liability of the company and of the directors.

  • Establish an official code of conduct that lays out specific actions to prevent conflicts of interests.
  • Establish a conflict of interest policy: company members must know when, and to whom, to declare personal interests in transactions, hiring, or any other company activity.
  • Implement a non-compliance process: compliance reports should be regularly generated, and the types of responses against non-compliance should be agreed upon.
  • If the non-compliance is serious enough, authorities and shareholders need to be informed.
  • Appoint a board-level compliance committee to oversee compliance with this code of conduct.

5. Regularly identify business risks and address them

Small companies, with their limited resources, are especially vulnerable to business risks. Technological disruption could make your goods or services obsolete. A big lawsuit could wipe out your finances. A cyber attack could destroy years’ worth of laboriously-accumulated customer data. Risk management is essential here to ensure your business continues to prosper for decades.

  • Directors and officers should assess the multi-varied risks the company faces: financial, technological, strategic, reputational, and compliance risks.
  • Develop a fundamental understanding of short-term and long-term risks the business faces. These assessments should be sufficiently deep to push management to question the sufficiency of current risk management systems, and to make regular improvements to them.
  • Ensure sure your business is protected by insurance policies that will cover you from a wide variety of risks. You should have coverage against property damage, employee injuries, and various legal liabilities, at the minimum. Engage an experienced insurance broker to provide advice and handle claims.

Engage an experienced risk management team to protect your business

Small companies, with their limited resources, are especially vulnerable to business risks. Technological disruption could make your goods or services obsolete; a big lawsuit could wipe out your finances; a cyber attack could destroy years’ worth of laboriously-accumulated customer data. Risk management is essential here to ensure your business continues to prosper for decades.

A central part of any business’ risk management strategy should be to have a comprehensive suite of insurance coverage to guard the business against common risks.

These include:

  • Property damage
  • Inventory/equipment damage
  • Business lawsuits
  • Personal liability as a director/officer
  • Customers defaulting on payments owed to you
  • Hackers attacking your website and database

As Singapore’s leading online insurance brokerage, Provide helps business owners to protect their companies. Our online platform makes business insurance cheaper, faster, and exponentially more convenient. Our brokers have more than 20+ years of experience serving both large corporations and small businesses. Get your online quote now!

D&O Insurance Basics: The Ultimate Guide for Business Owners

D&O Insurance Basics: The Ultimate Guide for Business Owners

What is D&O Insurance?

Directors & Officers (D&O) Insurance protects company directors & officers from lawsuits filed against them.

The moment you serve as a company director or officer (e.g. when you incorporate your own business), you are immediately exposed to a wide variety of legal liabilities: professional negligence, breach of fiduciary duty, misleading shareholders, wrongful employee dismissal – and a thousand more legal allegations that could cripple your finances.

These lawsuits could be filed against you by a dizzying multitude of parties – suppliers, customers, competitors, employees, creditors, regulators, or shareholders. Essentially, almost any party your business comes into contact with is a potential claimant.

When you are sued as a company director, your personal assets like savings in your bank, your house, and your car will be completely open to legal claims. If you don’t have D&O insurance, you will have to use your personal assets to pay for expensive legal fees and damages awarded, which often stretch into hundreds of thousands of dollars.

How does D&O Insurance work?

To understand how D&O insurance functions, we must first understand what a typical D&O policy looks like. D&O insurance is structured around 3 “sides”: A, B, and C. These “sides” are basically individual components of the D&O policy, with each section protecting you from different risks.

D&O Side A: Director Coverage

This side of D&O insurance protects directors when the company is unable to indemnify them against lawsuits. Side A is most commonly activated when companies go bankrupt, or when companies are prohibited by law from indemnifying directors against certain allegations.

Example claims: Your company goes bankrupt, and thus cannot pay for directors’ legal fees and damages. Side A of the policy will be activated to protect the directors.

A director is fined by government regulators for breaching certain legal statutes. Under Singapore law, companies cannot indemnify directors for regulatory penalties. Side A of the policy will pay for the director’s legal defense and damages.

D&O Side B: Company Reimbursement

This side of D&O insurance reimburses the company for legal fees and damages paid to defend directors. Side B is most commonly activated in D&O lawsuits, since companies will defend their directors, and then claim reimbursement from their insurer.

Example claims: You run a construction firm. Your customers sue you as a company director, alleging professional negligence that led to defective property construction. Your company spends $500,000 on lawyers and settlement fees. You can claim back these costs under Side B of your D&O policy.

D&O Side C: Entity Coverage

This side of D&O insurance protects the company whenever the firm and its directors are sued together. Private businesses enjoy broader Side C coverage than public companies – the latter are only entitled to activate Side C coverage for securities-related claims.

Example claims: Shareholders sue the directors of a public company for allegedly misleading numbers and facts published in the company’s financial statements.

What does D&O insurance cover?

Misrepresentation or misleading statements

Directors have a responsibility to be truthful when making agreements or providing information. If directors commit acts like presenting inaccurate financial statements, or publishing false advertisements, they can be held liable. Covers lawsuits alleging such misrepresentations.

Errors, Omissions, Professional Negligence

When performing a service, negligent acts can sometimes occur, resulting in financial loss or physical injury to third-parties. Covers lawsuits resulting from such negligence.

Breach of Warranty of Authority

Company officers may make decisions that exceed the scope of authority granted to them by the Board of Directors, resulting in financial loss or other damages. Covers liability from such acts.

Breach of Fiduciary Duty

If Directors and officers do not act in the best interests of the company, they can be held liable by shareholders. Covers liability from such acts.

Employer Liability

Directors can be held responsible for workplace practices like wrongful dismissal, employment discrimination, and sexual harassment. Covers employer liability from such allegations.


Covers lawsuits alleging defamation (written) or slander (spoken).

What does D&O insurance not cover?

Dishonest, Criminal or Fraudulent Conduct

Directors have a legal responsibility to act in good faith and to comply with regulations at all times. D&O policies thus will not cover lawsuits stemming from such behavior.

Insured vs. Insured Lawsuits

D&O insurance will not cover you if you are sued by another insured individual covered under the same policy (e.g. two directors in the same firm suing each other).

Breach of Contract

D&O policies often will not cover breach of contract claims. This is because a contract is not a liability imposed by law, but an obligation that is voluntarily entered into. There would be conflicts of interest if contract breaches were insurable, since insured individuals could break contracts at will without bearing any financial repercussions.

Prior and Pending Claims

D&O policies will not cover claims that have arisen before, or are currently being litigated, at the time you purchase the policy.

Key clauses in D&O insurance

Of the many clauses found in D&O policies, there are 5 crucial clauses that will have a significant impact on the effectiveness and breadth of coverage.

Advanced Defense Costs

Does your D&O policy pay your lawyer fees in advance, instead of having you pay first then seek insurer reimbursement later? Wherever possible, you should choose a policy that will give you advanced defense payments. Provide’s D&O policies feature this clause (URL) – this lifts a significant financial burden off the shoulders of small business owners.

Run-Off Coverage/D&O Tail Insurance

Directors & Officers can be held liable for management decisions that they made while they held office, even after they’ve resigned! Post-resignation liability is one of the biggest and most worrying liabilities that directors face, because such liability will follow directors for many years even after they no longer hold office. You should therefore select a D&O policy that contains run-off protection – Provide’s D&O policies offer this protection. This means that even when Directors & Officers leave the company, the D&O policy will still protect them from claims. Run-off protection usually lasts for 5-7 years, depending on the policy. For even greater protection, a stand-alone Side A policy (also called D&O tail insurance) can be purchased. D&O tail policies will provide an extended duration of run-off protection (often 10+ years).

Duty to Indemnify vs. Duty to Defend

Duty to Indemnify: The insurer is obligated only to reimburse the company for any expenses incurred while defending a claimable D&O lawsuit.

Private company D&O insurance is often written on a Duty to Indemnify basis. This means the insurer will only pay for lawsuits that are claimable events under the policy. If you’re sued for a reason that is not covered under the policy, you won’t be covered.

A Duty to Indemnify policy gives you control over the defense process: you are allowed to select your own lawyers to defend lawsuits (subject to insurer approval), you are responsible for making payment for legal expenses, etc. This level of control may be useful if you are defending an especially complex lawsuit.

Duty to Defend: The insurer is obligated to defend the company for any D&O lawsuit, even if coverage is in doubt and may not ultimately apply.

Sometimes, D&O policies are written on a Duty to Defend basis. The implications are exactly as it sounds – the insurer must defend the policyholder against all D&O lawsuits.

With Duty to Defend policies, the insurer will select lawyers for you, and manage the whole defense process. Although this means you do not control the defense proceedings, it doesn’t lower the quality of your defense in any way. Insurers have access to top legal firms who will have handled similar lawsuits many times before. It’s also always in the insurer’s best interests to win the case for you quickly, since it reduces the amount they have to pay out under your D&O policy. Having the insurer manage the defense process is especially useful for more routine D&O lawsuits, since the insurer will handle payments, legal arrangements, and other administrative tasks so that you can focus on your business.

A particular advantage of Duty to Defend policies is that if any part of your claim is covered, the insurer must defend the entire claim, even those parts of the claim that are not ordinarily covered. This “umbrella defense” provision provides Directors much broader coverage. It also avoids a problem commonly seen with Duty to Indemnify policies, where insurance payouts must be negotiated and split between covered and uncovered portions of the claim. This negotiation process, as you might expect, is often rife with frustrating disputes between policyholders and insurers. Having a Duty to Defend policy allows insured individuals to avoid frustrating arguments with insurers on coverage, and to instead focus on resolving the lawsuit.

Shrinking Limits

D&O policies are written with a “shrinking limits” provision. This means that the amount of coverage available for damages is reduced by the amount paid out for legal expenses. Make sure you select a policy that will provide sufficient payouts for both!

Why is D&O insurance essential for small businesses?

  1. Small businesses have limited resources to fight lawsuits: Unlike large corporations, SMEs typically do not have millions of dollars in cash reserves that they can draw on anytime to fund a lawsuit defense. Diverting significant amounts of liquid assets and cash flow away from operations, and towards legal fees, will often cause significant detrimental impacts on the small businesses.
  2. The cost of a single D&O lawsuit could easily bankrupt an SME and its Directors: A D&O lawsuit could easily cost between half a million to several million dollars to resolve. A single D&O claim, if not insured for, could essentially bankrupt a small business and its Directors.
  3. Small businesses often do not have in-house counsel: Unlike large corporations, very few SMEs have in-house lawyers that can review every decision your business makes with third-parties or with employees. This increases the likelihood of making management decisions that Directors may have to answer for in court. Having a D&O policy ensures that if management decisions ultimately result in a lawsuit, Directors are not left without recourse to protect themselves.

Will Limited Liability laws protect directors from personal lawsuits?

In Singapore, Limited Liability statutes only prevent directors from being held responsible for company liabilities. These laws do not apply to directors’ personal liabilities.

It is crucial to know that when plaintiffs sue, they will often file multiple lawsuits targeting both the company and the company’s directors. When you are sued personally as a director, Limited Liability laws will not help you. You will only be protected if you have a D&O policy in place.

What are common claims for D&O insurance?

It’s easier to understand how this type of insurance works with some D&O claims examples. Here are the top 6 most common claims made for D&O insurance:

  1. Shareholder Claims

Shareholders have a financial stake in the business, so when they feel their interests are not being appropriately represented, they can take Directors to court. Common shareholder lawsuits involve:

  • Errors or misleading statements in financial reporting
  • Breach of fiduciary duty leading to financial losses or bankruptcy
  • Mismanagement of company causing poor financial performance
  • Mergers & acquisitions
  • Decisions exceeding authority given to company officer
  1. Employment Claims

In this litigious age, it is increasingly common for employees to file civil suits against company directors for perceived workplace wrongs. Directors can be sued for:

  • Wrongful dismissal
  • Breach of employment contract
  • Employment discrimination (e.g. hiring, promotions)
  • Sexual harassment
  1. Customer Claims

Directors can face claims from customers if they fail to properly provide promised services or goods. Customers file suits against Directors for:

  • Fraudulent behaviour
  • Contract disputes
  • Professional negligence
  • Misleading promises/claims
  1. Creditor Claims

When a company owes money to a third-party, directors of the indebted company are legally required to act in good faith to both shareholders and creditors. Directors can be sued by creditors for:

  • Breach of fiduciary duty to creditors, leading to a loss on assets owed/impairment of ability to repay debt
  • Irresponsible or fraudulent accumulation of debt
  • Conducting business while insolvent
  1. Competitor Claims

In Singapore’s competitive business environment, it’s not uncommon for small businesses to be litigated by rival firms. Directors can be sued for:

  • Defamation/slander
  • Infringement of Intellectual Property
  • Theft of trade secrets
  • Collusion & other anti-competitive behaviour
  1. Regulator Claims

Comprehensive legal frameworks help ensure responsible business behaviour, but it also increases the chance of company directors inadvertently breaching regulations, and bearing painful penalties. This is especially true for businesses operating in tightly-monitored industries (e.g. financial services, law, and healthcare). Regulators can file lawsuits or fine Directors for:

  • Breaching industry regulations
  • Professional negligence that results in loss or injury to third-parties
  • Engaging in deceptive marketing
  • Causing pollution
  • Any other unlawful conduct

Having D&O insurance will protect you from this wide variety of legal liabilities. If you’re a director, do you want your personal assets to be exposed to so many risks without some kind of protection?

How much D&O insurance do private companies need?

When planning the amount of D&O coverage to purchase, it’s helpful to map out the potential costs of defending a D&O lawsuit.

Lawyer’s fees: A safe estimate would range between $50,000 to $100,000 a year. A typical D&O lawsuit will easily last a minimum of 2-3 years.

Damages/Settlement: A safe estimate is to have at least $500,000 set aside, exclusively for damages.

Given the combined cost of lawyer’s fees and potential damages, most SMEs should be looking at D&O policies beginning from $1 million in coverage.

How much does D&O insurance cost?

A million dollars of D&O coverage starts at only $3.80/day. That’s less than the price of a daily cappuccino!

In a year, small businesses should expect to pay no more than $1,500 for between $1-2 million dollars in coverage. The large amount of coverage you get for such affordable premiums is a strong incentive for business owners to protect themselves with a D&O policy.

There are 2 principal ways company directors can prepare for litigation:

Pay lawsuit expenses out-of-pocket Purchase D&O insurance
Easily $200,000 to $300,000/year $1,500/year

When you compare the costs side-by-side, it’s not difficult to see which is the better option for directors and business owners.

Where can I buy D&O insurance?

Provide is the easiest place to get online D&O insurance quotes. It takes only 60 seconds to get covered. You’ll save up to 25% on premiums compared to traditional brokers, with broad coverage and high indemnity guaranteed.

How To Get Liability Insurance For Your Small Business

How To Get Liability Insurance For Your Small Business

Are you a business owner wanting to protect yourself from damaging and expensive lawsuits? Unsure of how to get liability insurance for your business? Are you looking for a better, cheaper, easier way to protect your company from legal liability?

This easy-to-follow guide clearly explains:

  1. The different ways you can get business liability insurance
  2. Which way helps you save the most money, gives the best protection, and is the simplest to use

There are 3 main ways business owners can get liability insurance to protect themselves and their company.

Features Insurance Agent Traditional Insurance Broker Provide: Online Insurance Broker
No. of Insurers Maximum 3 Unlimited Unlimited
Expertise Depends on agent Depends on broker, usually higher than agent 20+ years experience serving large corporations and SMEs


Price Industry standard Industry standard 10-25% savings on all policies, forever
Speed 1-3 week(s) for quotes 1-3 week(s) for quotes Instant quotes for all essential SME policies.


1-2 week(s) for complex policies

Convenience No instant services. Must schedule calls/meetings. Send text messages/emails. No instant services. Must schedule calls/meetings. Send text messages/emails. 24/7 online platform to instantly buy coverage, change policies, get advice.



available for more complex needs.

Claims process Depends on agent Depends on broker Easily file claims online. Receive automatic updates on claims process.


Expert team to act as strong claims advocate.

In-person consults Yes Yes Yes


#1. Use an insurance agent

Business owners can use a commercial insurance agent to purchase insurance. Most insurance agents in Singapore are focused on personal policies like car, maid, and life plans, so make sure to approach an agent with specific experience in handling commercial policies.

It’s important to note that insurance agents are only legally allowed to represent a maximum of 3 insurers. There are 82 insurers in Singapore: 60+ global insurers (e.g. the AIG’s, Chubb’s, QBE’s of the world), with another 20 regionally-focused insurers. What this means is that if you have an insurance agent source commercial insurance quotes for you, you’re probably not going to get the best prices, or the best coverage options. Agents unfortunately don’t possess the ability to conduct a broad search across the insurance market.

There are more insurance agents in Singapore than insurance brokers because qualifying to operate as a broker is much harder. Brokers have to meet much more stringent insurance experience criteria, undergo a stricter review process by MAS, and must have much more paid-up capital.

#2. Use an online insurance broker

You can use an online insurance broker to purchase business liability insurance. Provide is Singapore’s 1st online business insurance platform, exclusively focused on protecting SMEs.

If you run a small business, you should consider using an online broker to protect your company. Provide helps SME owners get the best insurance protection rapidly, and to save lots of money in the process.

Our digital platform helps business owners:

  1. Save up to 25% on all insurance premiums
  2. Buy protection instantly
  3. Get broad coverage, high indemnity policies guaranteed
  4. Get access to industry experts who will provide tailored advice, and be strong claims advocates

If you’re looking for a better, faster, and easier way to get covered, choose Provide. Get started on a quote today. (URL)

#3. Contact an insurance broker for an in-person consultation

Lastly, there’s always the traditional route of calling up a commercial broker, and having a sit-down to review your needs and get quotes. Traditional brokers will solely operate via this route.

Provide also offers in-person consults with our insurance experts. Provide’s highly experienced brokers have 20+ years of experiencing protecting all types of companies, from large corporations to small businesses. If you prefer to meet with someone over using our online platform, our industry experts will come down to meet you, analyse your business, and provide thorough coverage recommendations. Arrange an expert consult now. (URL)

What types of liability insurance should small businesses have?

There are 4 main types of liability insurance that business owners can use to protect themselves and their company:

  1. Director & Officer (D&O) Liability Insurance
  2. Work Compensation Injury (WICA) Insurance
  3. Professional Indemnity Insurance
  4. Public Liability Insurance

How does liability insurance protect business owners and their companies?

Lawsuits are one of the single most damaging risks any company – let alone a small business – can face. Defending legal claims can easily cost a small business owner half a million dollars or more. These costs could very easily bankrupt an entire business. Business liabilities can even lead to business owners themselves being declared bankrupt, or in some cases going to jail.

This table below shows how the 4 types of liability insurance, put together as a suite, will protect business owners and their companies from expensive and dangerous litigation.

Insurance Types Personal Liability

(Directors & Officers)

Company Liability
D&O Insurance Protects directors & officers personal assets from legal exposure when they are sued.


Also protects against cost of criminal proceedings.

Protects company when the firm pays to defend its directors & officers against lawsuits.
Work Injury Compensation Insurance Prevents directors/officers from being convicted of criminal offence for failing to comply with WICA regulations. Protects company from legal liability when employees get injured/sick from work-related causes.


Note: All injured/sick workers can file injury claims against their employer under the WICA act.

Professional Indemnity Insurance N.A. Protects company from legal liability when company is sued for professional negligence, errors, omissions, defamation, and more.
Public Liability Insurance N.A. Protects company from legal liability when company is sued by third-parties (like customers or members of the public) for physical injury or financial damage.


How much should small businesses pay for liability insurance?

For small businesses with annual revenues of less than $5 million, use the following table as a liability insurance guide. These are easy-to-follow estimates for how much liability coverage you’ll need, and how much the premiums will be.

Liability insurance guide for businesses with <$5 million annual revenue
Liability Insurance Type What It Covers Recommended Annual Coverage Premium
D&O Liability Insurance Directors & Officers personal liability $1 million Starts from $0.80/day


Professional Indemnity Insurance Company liability for negligence, malpractice, breach of care, and more $1 million Starts from $3/day ($1000/year)
Public Liability Insurance Company liability to third-parties for damage or injury $500,000 Starts from $0.50/day ($100/year)
Work Injury Compensation Insurance Company liability to employees for injuries/illness $50,000 per employee Non-manual staff: Starts from $25/year per employee


Manual labour staff: Starts from $50/year per employee


At Provide, we believe that businesses deserve the most comprehensive protection, delivered at the most affordable prices. That’s why all our policies cost up to 25% less, with broad coverage & high indemnity guaranteed. Our digital platform creates lower overheads, and we pass every dollar saved back to you.

Get your liability insurance quotes today for:

  1. Public Liability Insurance Quote
  2. Work Injury Compensation Insurance Quote
  3. D&O Insurance Quote
  4. Professional Indemnity Insurance Quote

Top 6 Director Liabilities After Resignation in Singapore

director liability after resignation in singapore

Top 6 Director Liabilities After Resignation in Singapore

Resigning from being a company director is easy – just sign a few documents and you’re done. Unfortunately, managing legal liabilities after resignation is much more complex. Legal liabilities incurred while you served as a director do not cease to affect you once you resign – these liabilities will continue to follow you long after you thought you severed corporate ties.

In fact, directors can often be more vulnerable after they resign than when they are still with their company, because active board members at least have access to company indemnification and company resources should they be sued.

Here are the top 6 director’s liabilities after resigning in Singapore:

  1. Shareholder Claims

Shareholders have a financial stake in the business, so if they feel the business has underperformed and caused them financial damages, they can sue the Board and company officers for mismanagement. These lawsuits may allege that mismanagement stretched over a period of time. If you happen to have served as a director in a period identified in the lawsuit, you’ll have to defend your conduct as a director in court.

Shareholder lawsuits against ex-directors commonly involve:

  • Errors or misleading statements in financial reporting
  • Breach of fiduciary duty leading to financial losses or bankruptcy
  • Mismanagement of company causing poor financial performance
  • Mergers & acquisitions
  • Decisions exceeding authority given to company officer, which may be linked to poor oversight from directors

See: Pine Capital shareholders sue ex-directors in Singapore for breach of fiduciary duties, conspiracy

See: Goldman Sachs shareholder sues ex-director for criminal conduct

  1. Employment Claims

In this litigious age, it is increasingly common for employees to file civil suits against company directors for perceived workplace wrongs. When employees sue the company for employment-related issues, it’s not just direct managers or HR staff that get hit with legal claims. Senior management and directors are often named in such lawsuits as well. The more employees you have, the greater the risk of unaddressed workplace issues potentially metastasizing into an angry legal claim.

Ex-directors are usually sued for:

  • Wrongful dismissal
  • Breach of employment contract
  • Employment discrimination (e.g. hiring, promotions)
  • Sexual harassment

See: Former WeWork employee sues ex-director Adam Neumann for “virtually destroying” the company

  1. Customer Claims

Directors can face claims from customers if they fail to properly provide promised services or goods. When clients face financial damage or physical injuries, they can accuse directors of negligence, even if the directors were not the ones personally providing the service or goods.

When clients suffer personal damages significant enough to warrant a lawsuit, they can accuse company directors of all kinds of things. You can be accused of all manner of things, even if you didn’t actually commit the acts being said against you.

Customers file suits against ex-directors for:

  • Fraudulent behaviour
  • Contract disputes
  • Professional negligence
  • Misleading promises/claims

See: Director of construction firm sued for breach of contract

  1. Creditor Claims

Many small businesses will borrow money to improve cash flow and boost growth. However, when a business borrows money, its directors face additional legal obligations to act in the best interests of creditors in addition to shareholders. If company loans are not fully repaid in a timely manner, creditors can launch legal action against directors. Some common disputes involve: claims that company financial statements were misrepresented to obtain the loan; allegations that dividends to shareholders were paid out when creditors were still owed money.

Ex-directors can be sued by creditors for:

  • Breach of fiduciary duty to creditors, leading to a loss on assets owed/impairment of ability to repay debt
  • Irresponsible or fraudulent accumulation of debt
  • Conducting business while insolvent

See: Ex-directors of Singaporean public firm sued by creditors for breaching director’s duties

  1. Competitor Claims

In Singapore’s competitive business environment, it’s not uncommon for small businesses to be litigated by rival firms. If you’ve made public statements about your competitors, they may take issue with your words and allege that you defamed them. If you operate in an industry with lots of proprietary technology/data or closely-protected trademarks, you may be sued for IP infringement.  If you’ve poached employees away from competitors, they may even allege that you hired these employees to steal trade secrets – as Google famously accused Uber of doing for their self-driving car unit.

Competitors commonly sue ex-directors for:

  • Defamation/slander
  • Infringement of Intellectual Property
  • Theft of trade secrets
  • Collusion & other anti-competitive behaviour

See: Zillow sues Compass for IP infringement, hiring employees who stole trade secrets

  1. Regulator Claims

Singapore’s comprehensive regulatory regime ensures companies run their operations in a responsible fashion. However, with so many statutes to comply with, there’s a good chance that company directors may inadvertently breach regulations as they discharge their duties. Legal liabilities from breaching regulations can follow directors long after they’ve stopped holding office, surprising directors with painful penalties. This is especially true for businesses operating in tightly-monitored industries (e.g. financial services, law, and healthcare).

A construction company in Singapore, Genocean Pte Ltd, and their directors were fined $257,000 for converting private residences into worker dormitories, and for housing workers in overcrowded conditions. Although there were no ex-directors involved in this particular instance, this case is a perfect example of how directors who resign can still be held accountable by the courts. If you had served as a director with Genocean while these activities were being carried out, and later resigned, you would still be held accountable the illegal activities carried out by Genocean’s other directors. Maybe you didn’t know management was converting the residences. You can still be liable for breach of care. Maybe you knew it was going on, but you’re friends with the other directors and you felt pressured to just go along with it. In any case, because you served a director while these unlawful activities were carried out, regulators can still hold you liable long after you’ve resigned. Also, shareholders can sue you for mismanaging the company and causing them financial damages.

Regulators can file lawsuits or fine Directors for:

  • Breaching industry regulations
  • Professional negligence that results in loss or injury to third-parties
  • Engaging in deceptive marketing
  • Causing pollution
  • Any other unlawful conduct

See: Ex-company director in Singapore charged with cheating investors out of $3 million

How should directors looking to resign protect themselves from personal liabilities?

If you plan to resign from your directorship, there’s a few steps you can take to protect yourself from becoming the target of legal action:

  1. Implement good corporate governance practices (URL) while you serve as a director. Having strong corporate governance will minimise the chances of unethical or unlawful actions creating liability for directors.
  2. Have a well-drafted indemnification agreement between the company and you before you resign. An indemnification agreement is a document that limits the legal exposure of directors after they leave the company.
  3. Have a D&O policy that features protection for resigned directors. A comprehensive D&O policy, like the ones Provide offers, will pay for lawyer’s fees and damages if directors get sued. This protection lasts for between 5-7 years after they resign.

Where should directors looking to resign purchase a D&O policy?

Provide is the best place for to purchase a D&O insurance policy. You’ll save up to 25% on your premiums – our online platform creates low overheads, so we pass every dollar saved back to you. You’ll also have access to industry-leading D&O insurance experts, who will advise you on your liability exposures and how our insurance can best protect you.

Protect yourself from directors lawsuits with D&O Liability Insurance, starting from just $600/year. Get your free comparison quote today!