Your Business Partner Owes You Money: Director’s Loans and Personal Guarantees in Singapore

By Johnathan Lee, Advocate and Solicitor (Singapore). Updated 31 October 2026.

If you lent money to your company or to a co-director and the relationship has broken down, the first question is who actually owes you: the company, or your partner personally. Money paid into the company’s account is usually a debt owed by the company, which is a separate legal person, and your partner is not generally personally liable for it unless they signed something that makes them so. Against a company, you can send a letter of demand, sue, or in some cases serve a written demand under section 125(2)(a) of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) as a step towards winding up. A personal guarantee you signed for the company’s lease or loan is a separate contract and usually stays in force until the lender or landlord releases you.

Who owes me the money: the company or my partner?

Start with the money trail: whose account the money went into, and what was written at the time.

• You paid the company. The company is normally the borrower. Your claim is against the company, and your co-director is not liable simply because they are a director or shareholder.
• You paid your partner personally. Your partner is normally the borrower, even if they then put the money into the company. Your claim is against them as an individual.
• Your partner promised to repay a company debt. That is a promise to answer for the debt of another, which is a guarantee. Under section 6(b) of the Civil Law Act 1909, no action can be brought on it unless the promise, or a memorandum or note of it, is in writing and signed by your partner or someone authorised by them.

This decides who you sue and whose assets you can reach. A dormant company may have nothing left, while your partner may have assets but no obligation to you. It also matters whether the money was a loan at all: money put into a company may instead be recorded as share capital, which is not repayable as a debt.

How do I prove a director’s or shareholder’s loan?

Directors’ loans to small companies are often informal. When the relationship breaks down, the other side may say the money was capital or a gift. Gather the evidence while you still have access:

• bank statements showing the transfer, and any repayments or interest paid back to you;
• any loan agreement, promissory note, or exchange of messages or emails setting out the amount and when it is to be repaid;
• board resolutions or directors’ minutes approving the borrowing;
• the company’s financial statements and ledger, which often record an “amount due to director”.

Accounts approved by your co-director that record the money as owed to you can be strong evidence.

The Companies Act rules on director loans run the other way. Section 162 provides that a company, other than an exempt private company, must not make a “restricted transaction”, which includes a loan or quasi-loan to a director, subject to limited exceptions. Section 163 similarly restricts a company, other than an exempt private company, from lending to another company in which its directors are interested in 20% or more of the voting power, unless approved in general meeting. Directors who authorise a breach commit an offence. Many small companies are exempt private companies (broadly, a private company with no corporate shareholder and not more than 20 members), to which these two sections do not apply. Where they apply, they matter if your partner took money out of the company; they do not stop you lending to it.

Can I force the company to pay through a statutory demand and winding up?

A creditor may apply to court to wind up (close down and liquidate) a company on the ground that it is unable to pay its debts (IRDA ss 124(1) and 125(1)(e)). One way to show this is the written demand, commonly called a statutory demand. Under s 125(2)(a), if the company owes you a sum exceeding $15,000 then due, you serve a written demand at its registered office, and the company for 3 weeks neglects to pay, or to secure or compound the debt to your reasonable satisfaction, it is deemed unable to pay its debts.

Winding up is a blunt tool, for several reasons:

• Disputed debts. A debt that is genuinely disputed is a poor basis for winding up. In Tarkus Interiors Pte Ltd v The Working Capitol (Robinson) Pte Ltd [2018] SGHC 105 at [12], the High Court recorded that if the underlying debt is disputed, a winding-up application would be an abuse of process.
• Cost and control. The applicant prosecutes the winding up at its own cost until a liquidator is appointed (IRDA s 127(1)). After that, neither you nor your partner runs the company.
• Recovery. As an unsecured lender, you would usually share what is left with other creditors, and your own shares may lose their value.

A statutory demand suits a clear debt owed by a company that can pay but will not. Where the debt is disputed, a civil claim is usually safer.

I signed a personal guarantee. What am I liable for, and how do I get released?

A guarantee is your personal promise to pay if the company does not. What it covers depends on its wording:

• Specific guarantee. Covers one facility or lease, sometimes capped.
• “All monies” guarantee. Covers every sum the company owes the creditor, now or in the future, on any account. It can reach debts incurred long after you signed.
• Continuing guarantee. Stays in force as the balance changes, until ended as the document allows.

Resigning as a director or selling your shares does not, by itself, end a guarantee. Release usually comes from full payment, a written release (often in exchange for a replacement guarantor), notice ending liability for future debts where the guarantee allows it, or, in some cases, a material change to the loan or lease made without your consent.

That last route is narrower than many people expect. In ECICS Ltd v Capstone Construction Pte Ltd [2015] SGHC 214 at [20], the High Court described the general rule that a material variation of the principal contract not consented to by the guarantor discharges the guarantor, but held that parties can contract out of that rule. Bank and landlord guarantees often contain such a clause.

My partner is leaving. What happens to the lease and other contracts?

If the lease is in the company’s name, a change of shareholders does not change the tenant: the company remains bound. Problems arise where a partner signed personally or is the guarantor.

• Assignment transfers the benefit (the rights) to someone else. The person leaving generally remains liable for the obligations. Commercial leases commonly prohibit assignment without the landlord’s written consent.
• Novation replaces one party with another, so that the person leaving is released and the new party takes over both rights and obligations. A novation needs the agreement of everyone involved, including the landlord or other counterparty.

The landlord or bank decides whether to accept a replacement, and may ask for a fresh deposit or guarantee. An exit agreement between the partners can allocate these liabilities, but it does not bind the landlord or bank.

How can I exit the company, or force a buy-out?

The cleanest exit is usually a negotiated share sale, in a written agreement that also deals with repayment of your loans and release of your guarantees. Check the constitution and any shareholders’ agreement for pre-emption rights (a right of first refusal for other shareholders) or valuation clauses.

If negotiation fails and you are being treated unfairly as a shareholder, s 216 of the Companies Act allows a member to apply to court where the company’s affairs are being conducted, or the directors’ powers exercised, in a manner oppressive to members or in disregard of their interests, or where an act or resolution unfairly discriminates against or is otherwise prejudicial to them. The court may make the order it thinks fit, including an order for the purchase of your shares by other members or by the company, or an order that the company be wound up. In Over & Over Ltd v Bonvests Holdings Ltd [2010] SGCA 7 at [81], the Court of Appeal described “commercial fairness” as the touchstone for relief under s 216.

Under the IRDA, a member may also, subject to conditions in s 124(2), seek winding up on the “just and equitable” ground (s 125(1)(i)), where the court may instead order a share purchase (s 125(3)).

How do I recover the money through a letter of demand and the courts?

For most unpaid loans, the practical route is a letter of demand followed, if needed, by a court claim. Our guide to commercial disputes from letter of demand to judgment explains the stages.

Route	Best suited to	Main drawback
Letter of demand	Any debt, as a first step	No power to compel payment by itself
Court claim	Disputed or undisputed debts against the company or an individual	Time and legal costs; judgment must still be enforced
Statutory demand and winding up	Clear, undisputed company debts exceeding $15,000	Abuse of process if the debt is genuinely disputed; may destroy the company
Section 216 application	Shareholders treated unfairly, who want a buy-out	Expensive, evidence heavy proceedings

Keep the limitation period in mind. Under s 6(1)(a) of the Limitation Act 1959, actions founded on a contract generally cannot be brought after 6 years from the date on which the cause of action accrued. When that date falls depends on the loan terms.

When should I speak to a lawyer?

It is worth taking advice now if any of these apply to you:

• you are unsure whether the company or your partner owes you;
• your partner is now saying the money was capital, a gift or your share of costs;
• you have been removed as a director, locked out of the bank account or denied access to the company’s records;
• you are considering a statutory demand or winding-up application, or have received one;
• a bank or landlord has written to you as guarantor, or you want to be released from a guarantee before leaving;
• the loan was made several years ago and the limitation period may be running out.

Bring the bank records, any agreement, the latest accounts, the guarantee and the lease. See our civil disputes and litigation page.

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Frequently asked questions

Is my co-director personally liable for money I lent to our company?

Usually not. A company is a separate legal person, so a loan to the company is a debt owed by the company. Your co-director is normally personally liable only if they borrowed the money themselves or signed a written guarantee or other promise to repay it.

What is the minimum debt for a statutory demand against a company?

Under s 125(2)(a) of the IRDA, the debt must exceed $15,000 and be then due. If the company neglects for 3 weeks after service to pay, secure or compound the debt to your reasonable satisfaction, it is deemed unable to pay its debts. A winding-up application on a genuinely disputed debt may be treated as an abuse of process.

Does resigning as a director release me from my personal guarantee?

No, not by itself. A guarantee is a separate contract with the bank or landlord, and they must generally agree to release you. Ask them in writing, and check whether the guarantee lets you give notice to end liability for future debts.

Does a promise to guarantee a debt have to be in writing?

Yes. Under s 6(b) of the Civil Law Act 1909, no action can be brought on a promise to answer for the debt of another person unless the promise, or a memorandum or note of it, is in writing and signed by the person giving it or someone authorised by them.

Can the court order my business partner to buy my shares?

It can, if you prove oppression, disregard of your interests or unfair prejudice under s 216 of the Companies Act 1967. The court may order the purchase of your shares by other members or by the company. Many disputes are resolved by a negotiated buy-out before that stage.

This article is general information, not legal advice. It states Singapore law as at October 2026. Speak to a lawyer about your specific situation.