Wrongful Trading Under IRDA 2018 - Parliamentary Response

Singapore Ministry of Law

Published April 7th, 2026

Detected April 8th, 2026

Summary

Singapore Ministry of Law responded to parliamentary questions regarding wrongful trading enforcement under the Insolvency, Restructuring and Dissolution Act 2018. The Ministry clarified that investigations fall under the Official Receiver's purview, not ACRA. In the past three years, no suspected wrongful trading cases were reported to the Official Receiver. The response outlines both criminal penalties (fine up to $10,000, imprisonment up to 3 years, or both) and civil remedies available to creditors and insolvency officeholders.

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What changed

This parliamentary response provides clarification on wrongful trading investigations under section 239 of the IRDA 2018. The Minister confirmed that the Official Receiver handles such investigations (not ACRA) and that no suspected wrongful trading cases were reported in the past three years. The response defines wrongful trading as incurring debts without reasonable prospect of repayment when insolvent.

For affected parties including companies, creditors, and insolvency professionals, this response is informational. While no enforcement cases occurred in the past three years, companies remain subject to potential criminal prosecution and civil liability. Creditors and insolvency officeholders retain independent rights to pursue civil claims for compensation under section 239(1) of the IRDA 2018.

What to do next

Monitor for updates on wrongful trading enforcement

Penalties

Criminal penalties for wrongful trading: fine up to $10,000, imprisonment up to 3 years, or both. Civil liability: Court may declare the person personally responsible for some or all of the company's debts or other liabilities.

Source document (simplified)

Written Reply by Minister for Law Mr Edwin Tong SC on Wrongful Trading Investigated under Insolvency, Restructuring and Dissolution Act

07 APR 2026

7 April 2026 Posted in Parliamentary speeches and responses

Name and Constituency of Member of Parliament
Mr Melvin Yong (Member of Parliament for Radin Mas SMC)

Question
To ask the Minister for Law in the past three years (a) how many cases of wrongful trading under the Insolvency, Restructuring and Dissolution Act have been investigated by ACRA; and (b) of these, how many resulted in prosecution, civil action or other enforcement outcome.

Written Answer:

1. Investigations for the offence of wrongful trading 1 under section 239(6) of the Insolvency, Restructuring and Dissolution Act 2018 fall under the purview of the Official Receiver and not the Accounting and Corporate Regulatory Authority.

2. Such investigations are carried out when reports of suspected wrongful trading are made to the Official Receiver, either by Insolvency professionals or creditors. In the past three years, there have been no reports of suspected wrongful trading made to the Official Receiver. A person found guilty of wrongful trading may be punished with a fine of up to $10,000, imprisonment for up to three years, or both.

3. Civil claims for wrongful trading can be pursued to seek compensation, independent of such investigations. Creditors, contributories or the judicial manager or liquidator of a company 2 may apply to the Court to declare that a person who knows a company is trading wrongfully, or who as an officer of the company ought to have known that the company was trading wrongfully, be personally responsible for some or all of the company’s debts or other liabilities. If the Court makes such a declaration the Court may also make the appropriate consequential directions, including that monies recovered from the person be paid to the company’s creditors.

4. The Ministry of Law does not have statistics on the number of civil actions for wrongful trading in the past three years.

Under section 239(12) of the Insolvency, Restructuring and Dissolution Act 2018, a company trades wrongfully if, when insolvent, it incurs debts or other liabilities without reasonable prospect of meeting them in full, or if it becomes insolvent as a result of incurring such debts or liabilities.
Such an application under s 239(1) of the Insolvency, Restructuring and Dissolution Act 2018 can also be brought by any creditor or comtributory with the leave of either the insolvency officeholder or the Court.

Last updated on 7 April 2026

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