If a dividend is paid but the company in question does not have any profits available, directors who have permitted such a payment have committed an offense and will be punished in a suitable manner.
A director who has wilfully paid or permitted such a payment is guilty of a criminal offense under section 403(2) of Singapore’s Companies Act and is liable on conviction to a fine of up to S$5,000 or a jail term of one year. The director will also be liable to the company’s creditors for the amount of debts owed to them to the extent that the dividends paid exceeded the available profit.
To be convicted of this crime, it must first be established that the director had known of circumstances which would have proven that there had been insufficient profits to properly declare dividends. However, this only applies if the director knew of such a fact at the time that the dividends were declared.
You can read more about directors’ breach of duty in this article here.